Saturday, September 15, 2007

Greenspan's Memoir critical of Bush

Alan Greenspan who retired in early 2006 after 18 years as chairman of the Federal Reserve has some harsh words for his fellow republicans especially the Bush White House in his memoir 'The Age of Turbulence.' He had served under six presidents as either Fed chairman or adviser. He now runs a private consulting company; his only formal public role is adviser to British Prime Minister Gordon Brown.

From the 1980s stock market crash to the bursting of the tech bubble – he used a deft hand in managing the US economy. But some economists have begun to question his wisdom of cutting short-term interest rates to 1% in mid-2003 and keeping them there for a year, the cause that they attribute helped foster a housing bubble that is now bursting.

In his book, Greenspan defends the policy. "We wanted to shut down the possibility of corrosive deflation," he writes. "We were willing to chance that by cutting rates we might foster a bubble, an inflationary boom of some sort, which we would subsequently have to address....It was a decision done right."

Greenspan, who was the leading Republican economist for the past three decades, levels unusually harsh criticism at President Bush and the Republican Party in his new book, arguing that Bush abandoned the central conservative principle of fiscal restraint.

While condemning Democrats, too, for rampant federal spending, he offers Bill Clinton an exemption. The former president emerges as the political hero of "The Age of Turbulence: Adventures in a New World," Greenspan's 531-page memoir, which is being published Monday. He describes Bill Clinton as "a fellow information hound" with "a consistent, disciplined focus on long-term economic growth."

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