Did Greenspan Engineer the 2001 Recession?

[ulTRAX]

Here's an interesting article from January 2000.
http://www.businessweek.com/2000/00_04/b3665067.htm This section is of most interest:

"UNDER CONTROL. The key reasons: The broadest measures of stock wealth, such as the Wilshire 5000 index, are no longer growing much faster than personal income (chart). Coupled with the slight chill brought to the housing market from higher mortgage rates and the relentless rout in the bond market, the fabled wealth effect---the boost to consumption from higher asset values--may be finally coming under control. And in Greenspan's view, without the wealth effect, it is much less likely that the economy will continue to grow at an unsustainable rate."

Yet even though this is Greenspan's view in January, according to http://www.federalreserve.gov/fomc/fundsrate.htm the FED makes three more interest HIKES in 2000 to further slow the economy...
February 2 .25 ... 5.75%
March 21 .25 ... 6.00%
May 16 .50 ... 6.50%

The rest is history... so much for Greenspan's "soft landing".

Was this incompetence? Or a partisan move to sabotage already slowing Clinton economy for the 2000 election to hurt Gore?

[alcuno]

1. Sabotage.

I remember people screaming about him not lowering rates in the summer and fall of 2000. Then he began cutting in, I believe, January of 2001. Too late.

[Name removed]

2. Deleted message

Message removed by moderator. Click here to review the message board rules.

[ulTRAX]

4. ??????????????????????

Not everything need be a conspiracy. While Paul Volker's tight money policy began under Carter.... let's not also forget the 78-80 oil "crisis" where crude oil prices went up 300%.

[bushbeater]

5. Exactly!!! That's what I'm talking about

It was all planned!!!

[Name removed]

6. Deleted message

Message removed by moderator. Click here to review the message board rules.

[ulTRAX]

8. I Sick and Tired of Posts Being Nuked

I saw NO reason for that post to be Nuked.

[orwell]

3. Damage UnControl

Was this incompetence? Or a partisan move to sabotage already slowing Clinton economy for the 2000 election to hurt Gore?

Actually, it was probably both. Greenie wanted to cool off the market. Instead of doing it the right way through increasing margin requirements in 1999, he did it by increasing interest rates which not only axed the market but nailed the economy as well.

Greenie pumped up the money supply in preparation for the Y2K catastrophe that never materialized. Then he had to drain to bring money supply under control once he realized that Y2K was mostly hype.

He got off the interest rate increases as soon as Bush was selected by the Supremes. By then, the damage was done.

O

[BillZBubb]

7. Greenspan has a long history of moving rates to help Repugs

2000/2001 was no exception. In fact it was probably his most blatant power play.