A buck that can't be passed

[flashl]

LONDON: There is enough blame to go around for the global housing bubble, but give Alan Greenspan and the U.S. Federal Reserve their due: they did more than their share.

In a piece Monday in The Financial Times titled "The Fed is blameless on the property bubble" Greenspan argues that the debacle was not caused by loose monetary policy from the Fed or lax regulation, but rather by collective foolish behavior of investors that could not be predicted. In The Wall Street Journal on Tuesday, he was quoted as saying: "I am now being blamed for things that I didn't do."

...

Up to a point, Mr. Chairman, up to a point.

The Fed sets U.S. short-term interest rates and is the dominant, but not only, force in guiding long-term ones, which in turn are one of the most powerful forces in determining global interest rates.

...

"Greenspan is also responsible for those other property bubbles in large part because the climate of low long-term rates which was established by the Fed led to the easy borrowing terms in markets all around the world," said Stephen Lewis, economist at the fund manager and private bank Insinger de Beaufort in London. "To have a 1 percent rate when the real economy was growing at 4 percent would seem to be highly incautious."

Albert Edwards, global strategist at Société Générale Cross Asset Research in London, was blunter: "He is the midwife of serial bubbles that are unraveling."

IHT

[DCKit]

1. Midwife? A paternity test is in order. n/t

[Demeter]

2. That Deserves a DUzy

Wish I knew how to get you one.