The One Person Who Is Most Responsible for Our Current Economic Misery

[Yavin4]

Alan Greenspan. Why? During the last 12 years or so of his tenure, he used interest rates to manipulate political outcomes.

In the 90s, when we had a tech bubble, he consistently raised rates and openly tried to talk down the markets. Of course, Clinton was president then.

In the millenium, when we had a houding bubble, he consistently kept rates at historically low level for extended periods of time, and he openly encouraged housing speculation by praising sub prime and other "create" lending practices. Of course Bush was president during this time.

[babylonsister]

1. A differing opinion is 'Foreclosure' Phil Gramm is responsible. And

he's McLame's economic advisor?

http://www.motherjones.com/news/feature/2008/07/foreclosure-phil.html

[Yavin4]

4. That Just Supports My Point

When there was mass speculation in the tech markets in the 90s, Greenspan openly criticized it with his famous term, irrational exuberance.

Then, where there was massive speculation in housing, he praised it.

As Fed Reserve chairman, Greenspan had the power to slow bubbles from happening and to provoke governmental regulation of bubbles.

I'm not nearly as smart as Greenspan, but I saw this collapse coming since 2002.

[appal_jack]

2. class-war taxes too

Greenspan pushed for the FICA tax hike (paid by working Americans) back in the '80's in order to "keep Social Security solvent." Yet he happily looked the other way as all the presidents since (but mostly B* 41 and B* 43) spent the proceeds on wars and tax breaks for the rich.

Greenspan is a criminal.

K&R

-app

[Yavin4]

6. Yeah, I Forgot About That Factoid

During Clinton's presidency, he pushed hard for a balanced, disciplined government, which Clinton delivered, even though it hurt his party to balance the budget.


However, during Bush II, he openly encouraged Bush's tax cuts, knowing that he killed any chance for fiscal discipline.

[ingac70]

3. Clinton could have appointed another chairman.

What do you expect from a Reagan pick? Fed chair ain't a lifetime appointment.

[Yavin4]

5. It Would Have Roiled the Markets if He Did

By the time Clinton was in office, Greenspan had become a rock star. "The Maestro" if you will. Firing him would have sent the markets reeling, and it would have damaged Clinton politically.

[ingac70]

9. He wouldn't have had to fire him...

the Fed chairman serves four year terms.

[CC]

7. He may have his part in it but as far as I am

concerned it all lays at Bushco and the repukes feet. They ran and are running this country into the ground on purpose and no one has really tried to stop them.

[ingac70]

8. you are totally correct.

It has been on purpose.

[jobycom]

10. Not sure about that. Greenspan's intention

was to control the wildest swings of the market so that we wouldn't crash as hard after our meteoric rise. So, under Clinton, for instance, when everything was working, he tried to rein it in by holding back on the money supply so that the economy wouldn't go too far in debt (as happened in the 20s), then crash and burn as the money dried up and people had too much debt to spend their way out. It was supposed to make the crash softer, and considering that the first fall came during the early Bush reign, it might have worked.

The problem came because Bush's policies weakened the economy, and the deregulation of the lending industry--regulations that were created to prevent another 30s style depression--weakened our ability to recover from the debt we've created. Greenspan's actions under Bush were attempts to stimulate a failing economy. It may not be that he was trying to control political outcomes as that political outcomes were controlling him.

My take is that Greenspan's job was to control the money supply, but he could do nothing about the base economy. He could influence it by controlling the money supply, but he couldn't create production and growth directly. Bush's policies stifle competition and growth, which limited what Greenspan had to work with. He couldn't control money that wasn't being created.

Republicans understand that capital grows businesses, but they don't understand what capital itself is based on. It's based on money, and money is based on labor. Crush labor, and capital dries up--that's the fatal flaw in an unbridled free market, and it leads to feudalism. Reaganomics fails, for precisely that reason--it tries to stimulate the economy by stimulating the upper income levels into investing more money. That can have some short-term gains, especially at the local level, but it misunderstands where wealth is really created. Wealth grows from the bottom up. When you empower the wealthy over labor, you stifle the power of labor to create growth. The wealthy spend all their money in speculative games, rather than in creating genuine wealth.

Greenspan isn't responsible for that. Although maybe Greenspan's methods work better in a thriving economy, but lead to problems in a bad economy.

Still, it's BushCo's fault. And it can still be recovered, if we do everything right from this point on. Fat chance of that, really.