I’m not entirely sure what to make of what Alan Greenspan has to say on his own behalf. But I am quite sure that he’s dodging what I would think would be the main issue Alan Greenspan needs to address regarding Alan Greenspan and the housing bubble, namely the time Alan Greenspan fueled the bubble in 2004 by urging people to go get Adjustable Rate Mortgages. Now I don’t know how much impact that advice had. Or how much impact advice given in the other direction might have had. But I do know that it was weird for Greenspan to even be commenting on the issue. And that his advice was bad advice. In retrospect, it looks disastrous. Even at the time, many observers found it bizarre.
At the time, recall that Greenspan was treated as an oracular figure. An economic miracle-man who’d run the show from Reagan through Bush and Clinton into Bush II. An irreplaceable “maestro” whose unique genius was the architect of our prosperity. So I’m inclined to say that his remarks on all kinds of subjects had influence.
In retrospect, he says we were in the early days of an unsustainable worldwide housing bubble that it would have been inappropriate for the Fed to pop by raising interest rates. He could have said that at the time. “Some people say current housing prices are sustainable, others say they’re an unsustainable bubble that I should pop with interest rates; in my judgment, both are wrong—the bubble is real but interest rates are the wrong cure.” Instead, Greenspan urged people to run out and get ARMs!
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