'They Deserved to Lose'; Former Fed Chief Defends Pre-Bubble Rate Cuts

Wall Street Journal, By Greg Ip & Emily Steel, September 15

In a withering critique of his fellow Republicans, former Federal Reserve Chairman Alan Greenspan says in his memoir that the party to which he has belonged all his life deserved to lose power last year for forsaking its small-government principles.

In "The Age of Turbulence: Adventures in a New World," published by Penguin Press, Mr. Greenspan criticizes both congressional Republicans and President George W. Bush for abandoning fiscal discipline.

The book is scheduled for public release Monday. The Wall Street Journal bought a copy at a bookstore in the New York area.

Mr. Greenspan, who calls himself a "lifelong libertarian Republican," writes that he advised the White House to veto some bills to curb "out-of-control" spending while the Republicans controlled Congress. He says President Bush's failure to do so "was a major mistake." Republicans in Congress, he writes, "swapped principle for power. They ended up with neither. They deserved to lose."

Former Fed Chairman Has Praise for Clinton

Washington Post, By Bob Woodward, September 15

Alan Greenspan, who served as Federal Reserve chairman for 18 years and 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.

Greenspan, who had an eight-year alliance with Clinton and Democratic Treasury secretaries in the 1990s, praises Clinton's mind and his tough anti-deficit policies, calling the former president's 1993 economic plan "an act of political courage."

But he expresses deep disappointment with Bush. "My biggest frustration remained the president's unwillingness to wield his veto against out-of-control spending," Greenspan writes. "Not exercising the veto power became a hallmark of the Bush presidency. . . . To my mind, Bush's collaborate-don't-confront approach was a major mistake."

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The WaPo has a collection of articles about Greenspan: Alan Greenspan's Tenure as Fed Chair

BBC, September 15

The former chairman of the US Federal Reserve Alan Greenspan has said President George W Bush pays too little attention to financial discipline.

In a book to be published next week, Mr Greenspan says Mr Bush ignored his advice to veto "out-of-control" bills that sent the US deeper into deficit.

And Mr Bush's Republicans deserved to lose control of Congress in last year's elections, he charges.

Mr Greenspan, 81, stepped down last year after nearly 19 years in the post.

The Independent, By David Usborne in New York, September 15

It is not quite a mea culpa, but Alan Greenspan is now admitting that he was aware that the successive interest cuts under his stewardship of the Federal Reserve were encouraging an explosion in sub-prime lending but that he was slow in realising the dangers that the trend carried for the economy.

He makes the confession in an interview with the CBS current affairs programme 60 Minutes, to be broadcast in the United States tomorrow evening.

Mr Greenspan, 81, agreed to appear to help promote his long-awaited book, The Age of Turbulence, being released on Monday. Instead, his comments are likely to spark fresh criticism of his actions at the tail end of his 18-year tenure as Fed chairman, when he repeatedly lowered interest rates, glutting the market with cheap credit and encouraging lenders to offer loans to homebuyers and investors at rock-bottom adjustable rates. Their sudden spiking has triggered today's worldwide credit crisis and threatens to tip the US into recession.

His successor, Ben Bernanke, is widely expected once again to loosen monetary policy with a rate cut next Tuesday, perhaps of a quarter point or even more.

According to excerpts released by CBS, Mr Greenspan will concede that he "didn't really get it" with regard to sub-prime lending and the risks it presented until too late. He argues, however, that there was little the bank could have done, and that the policy of lowered rates was still correct.

The Observer, Peter Beaumont & Joanna Walters, September 16

New York - The man once regarded as the world's most powerful banker has bluntly declared that the Iraq war was 'largely' about oil.

Appointed by Ronald Reagan in 1987 and retired last year after serving four presidents, Alan Greenspan has been the leading Republican economist for a generation and his utterings instantly moved world markets.

In his long-awaited memoir - out tomorrow in the US - Greenspan, 81, who served as chairman of the US Federal Reserve for almost two decades, writes: 'I am saddened that it is politically inconvenient to acknowledge what everyone knows: the Iraq war is largely about oil.'

In The Age of Turbulence: Adventures in a New World, he is also crystal clear on his opinion of his last two bosses, harshly criticising George W Bush for 'abandoning fiscal constraint' and praising Bill Clinton's anti-deficit policies during the Nineties as 'an act of political courage'. He also speaks of Clinton's sharp and 'curious' mind, and 'old-fashioned' caution about the dangers of debt.

Greenspan's damning comments about the war come as a survey of Iraqis, which was released last week, claims that up to 1.2 million people may have died because of the conflict in Iraq - lending weight to a 2006 survey in the Lancet that reported similarly high levels.

...brought to mind a conversation I had abut the topic with a friend of mine three(?) years ago. He was all about how it was for the Oil. The position did seem a crowded one. Especially early on amongst the those who doubted every word emanating from the WH.

No doubt Iraq's oil figures into the equation rather heavily, but not entirely, and perhaps not even principally. Economics, old scores, the neo-con prescription for all things geo-political, all played a roll as well. That's what I said at the time, and it still seems to fit right. These are obscenely ambitious people we are talking about after all. Everything they do is cross-collateral-ized and cross-pollinated to create their own reality. Or so they think.

I lean towards a simpler explanation for Greenspan's remark about Oil in Iraq. Its a hot button that when pushed all other considerations fade from view. Sure, it was about the Oil. Except, alone, it doesn't wash. I don't have the figures at hand so I won't make a complete fool of myself in trying to guess right here and now. But, what are the dollar figures for how much oil we import through the straits? 'X' How much money have we spent for insurance? 'X+++' The idea being that we spend more for protection and access, by far, than we do for the product itself. The only reason this can make sense is if doing so protects the monied interest of Very Serious Monied Persons.

Jujitsu, point Greenspan. Don't mind the man behind the curtain. "You (rhetorically and aimed at no one in particualr) think its all about the Oil? Um,Ya? Oh, Right! Ya! That's the ticket." (Bush thrown under the bus, again)

U.S. Defense Secretary Robert Gates rejected on Sunday former Federal Reserve Chairman Alan Greenspan's statement that the Iraq war "is largely about oil," saying the conflict is driven by the need to stabilize the Gulf and put down hostile forces [which need, naturally, has nothing whatsover to do with oil].

was based on a pack of lies.

"I wasn't here for the decision-making process that initiated it, that started the war," Gates said. But he added, "I know the same allegation was made about the Gulf War in 1991, and I just don't believe it's true."

Mr. Gates should have a sit-down with April Glaspie.

Vietnam was initiated on false information; no one was punished for that, even though it cost us the lives of 50,000 Americans and perhaps a million Vietnamese and damned near destroyed the country.

In a way, the two wars are very similar. Engaged under false pretenses and continued under the same excuses of giving Democracy to the poor huddled masses. We can't pull out and leave those masses to anarchy, can we? Meanwhile, the debt and bodies keep stacking up.

... at least at first. For a while Colin Powell went around talking about the threat to "the American way of life" and James Baker said it was about "jobs, jobs, jobs." But then they shut them up and it became about babies being tossed out of incubators. I think there would have been legal consequences to admitting that they were going to war over oil.