Wednesday, September 28, 2005

Astute Comments on Greenspan's Policy

On The Housing Bubble 2 Blog, a poster named mike_in_fl writes the following:

What's truly ridiculous is that Greenspan says he can do nothing to recognize or pop building asset bubbles -- and won't really HIKE rates to tame them. But he has absolutely no problem CUTTING rates when stocks plunge (2001), when there's a terrorist attack (later in 2001, when the bond market goes haywire (1995), etc., etc. In essence, he's saying he can accurately spot a bust and deal with it, but not a boom. How come he doesn't just let the busts play out, too, since "Relying on policymakers to perceive when speculative asset [busts] have developed and then to implement timely policies to address successfully these misalignments in asset prices is simply not realistic"

Who's to say the Dow shouldn't fall 500 points? Or tech stocks plunge? Or home prices drop?
Excellent comments. It would be great for Greenspan to answer those questions.


  1. wow! I saw your blog mentioned in the NY Times... are you single?

    Ilana J

  2. Ilana,

    lol. :-) Don't you better things to do then check out my blog.

  3. If Greenspan has said in the past- "The primary role of the FED, is too keep inflation down, and not become involved regulating the overall economy......'
    Then if he says the FED can and should not recognize asset bubbles, then why did it/he reduce interest rates to levels that caused the current bubble?
    Seems like he is talikg out of both sides of his mouth.
    Frankly speaking AG is the biggest political hack and brown noser to the republican party and their regressive 'Robber Barron' and 'Guilded Age' economics, that has ever existed in modern times. He has lost his objectivity and has become as devisive and polarizing a figure as the president he serves.