In his new book "The Map and the Territory," to be released on Tuesday, Mr. Greenspan, 87, goes on a hunt for what has gone wrong in American politics and in the U.S. economy. He doesn't blame the current administration for today's partisan divide. The culprit? "It's the benefits," he says, pointing to the disagreements between Republicans and Democrats over how to deal with the growth of entitlements.Everything will be fine, once we put granny on a catfood diet.
He said he is baffled by all the blame that has been piled on him. Since the recession, critics have said the increased money supply and low interest rates during his tenure at the Fed from 1987 to 2006 led to bubble investments. Mr. Greenspan first heard that theory, he says, in 2007, when John Taylor, a professor of economics at Stanford University who has advised Republicans, made the connection between easy money and the housing bubble.Here's a tip for you, WSJ: There are other critics who don't buy the magic of the markets, greed is good claptrap that you do.
"I've always considered myself more of a mathematician than a psychologist," says Mr. Greenspan. But after the Fed's model failed to predict the financial crisis, he realized that there is more to forecasting than numbers. "It all fell apart, in the sense that not a single major forecaster of note or institution caught it," he says. "The Federal Reserve has got the most elaborate econometric model, which incorporates all the newfangled models of how the world works—and it missed it completely."Oh, sure.
Mr. Greenspan set out to find his blind spot step by step. ... Studying the minutiae of the events leading to the financial crisis brought to mind some lessons from his famous friendship, from the 1950s on, with the late Objectivist philosopher Ayn Rand. He says that Rand didn't influence him politically—he was always a libertarian—but she did point out tensions in his philosophy about life. "She caught me in contradictions, which shook me, and I said, 'My God, she is right,' " he says.That first blind step was a doozy. A shame that you didn't retrace far enough.
With his new book, Mr. Greenspan hopes to provide politicians and the public with a road map to avoid making the same mistakes again. His suggestions include reducing entitlements, embracing "creative destruction" by letting facilities with cutting-edge technology displace those with low productivity, and fixing the political system by encouraging bipartisanship. He hasn't yet sent a copy to Janet Yellen, the nominee to be the next Fed chief. Though they are good friends, he says, "she and I don't agree on lots of things and never have, but I enjoy talking to her because she has arguments and logic behind it."While you have a crazy lady's 'philosophy' and a burning desire to make granny pay for the mess. And of course, a Nobel Prize that ought to be rescinded.
P.S. The crooks were allowed to abscond with the loot. This does not mean there were no crooks.
Cross-posted at Whiskey Fire. Mouse over pics for captions, and click them for larger versions.
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