Alan Greenspan -- Stopped Clock of the U.S. Economy
Even a stopped clock, the saying goes, is right twice a day. Taken figuratively, it means that even the people who have been most disastrously, abysmally wrong can occasionally get something damn near right. In that sense, former Fed chairman Alan Greenspan may be well on his way to being the stopped clock of the American Economy.
Greenspan's latest foray into mainstream media relevance is an interesting departure from conservative messaging on economic matters. The oracle apparently has more to say, this time on extending the Bush tax cuts.
Former Fed Chairman Alan Greenspan said that the push by congressional Republicans to extend the Bush tax cuts without offsetting the costs elsewhere could end up being "disastrous" for the economy.
In an interview on NBC's "Meet the Press," Greenspan expressed his disagreement with the conservative argument that tax cuts essentially pay for themselves by generating revenue and productivity among recipients.
"They do not," said Greenspan.
"I'm very much in favor of tax cuts but not with borrowed money and the problem that we have gotten into in recent years is spending programs with borrowed money, tax cuts with borrowed money," he said. "And at the end of the day that proves disastrous. My view is I don't think we can play subtle policy here."
This is on the heels of a Bloomberg interview in which Greenspan said that he would end the Bush tax cuts, and Congress should do the same.
This man was awarded the Presidential Medal of Freedom in 2005 by George W. Bush. Somehow I doubt President Obama is going to be quite as grateful for Greenspam now acknowledging the obvious, instead of telling Congress in 20001 what Bush wanted him to say (Tax cuts? Great idea!) so that Greenspan would ensure his reappointment as Chairman of the Federal Reserve. I wonder if he now thinks groveling at the feet of that walking photo op was worth insuring that the surpluses Clinton generated would turn into the largest deficits in US history.
Oh wait. I forgot. After he left the Fed he went to work for "Paulson & Co. as an adviser on economic issues and monetary policy", the firm that made billions of dollars betting that the market for collateralized debt obligations (i.e., mortgage backed securities) would collapse.
Paulson & Co. was the Hedge Fund that shorted the infamous ABACUS CDO deal which it created amd that Goldman Sachs marketed. Goldman settled fraud charges brought by with the SEC yesterday in connection with that transaction. Paulson has made billions of dollars for his fund since Greenspan became an economic adviser. I wonder what Greenspan got paid for his "advice," don't you?
Right. The Bush tax cuts passed at least in part because Greenspan assured lawmakers the policy would improve the economy and that the nation could afford them. Republicans heralded his genius and followed his advice. We now know he, and they, were wrong.
Now, however, comes the fun part. Nearly a decade after following his guidance and passing reckless tax cuts that failed to produce, Republicans on the Hill get to scramble to tell us that Alan Greenspan has no idea what he's talking about.
Does Alan Greenspan have any idea what he's talking about now? Did he then? If he were on trial, this might be the point at which a prosecuting attorney would ask "Which Alan Greenspan should we believe?"