Greenspan here, Greenspan there, Greenspan everywhere
You can't get away from him!
The Alan Greenspan book blitz is underway in earnest. The foretaste we got on Friday has turned into a feast — or perhaps an orgy of gluttony. Interviews, book excerpts, reactions to the interviews and book excerpts — it's more than one person can take, really.
So in the interest of both my sanity and your time, let us examine just two telling things, starting with the line of the book that got a lot of people in a lather over the weekend: "I'm saddened that it is politically inconvenient to acknowledge what everyone knows: The Iraq war is largely about oil."
The White House is rushing to distance itself from that comment, and when Greenspan was pushed to clarify, he gave Team Bush the breathing room it dearly desired. In essence Greenspan said for him the war was largely about oil:
Clarifying a controversial comment in his new memoir, former Federal Reserve Chairman Alan Greenspan said he told the White House before the Iraq war that removing Saddam Hussein was "essential" to secure world oil supplies, according to an interview published on Monday.
Greenspan, who wrote in his memoir that "the Iraq War is largely about oil," said in a Washington Post interview that while securing global oil supplies was "not the administration's motive," he had presented the White House before the 2003 invasion with the case for why removing the then-Iraqi leader was important for the global economy.
"I was not saying that that's the administration's motive," Greenspan said in the interview conducted on Saturday. "I'm just saying that if somebody asked me, 'Are we fortunate in taking out Saddam?' I would say it was essential."
And so we see Greenspan brought the same degree of prescience to the world energy market that he brought to the stock market and the housing market. Since this "essential" move took place, Iraqi oil production has crashed by some estimates to only half of what it was before, and the price of a barrel of oil has more or less quadrupled.
Then there's Greenspan's insistence that the housing bubble isn't his fault. In a New York Times interview, he contorts himself into the most remarkable of explanations:
Mr. Greenspan, 81, acknowledged that the housing frenzy had been pumped up in part because of very low interest rates and in part because of the growing willingness of mortgage lenders to underwrite dubious and often fraudulent loans that were much bigger than many borrowers could realistically afford.
But he said it was a mistake to blame the Fed, which needed to reduce interest rates in order to fend off the recession of 2001 and what many economists thought was a real risk of the kind of “deflation,” an across-the-board drop in consumer prices, that had plagued Japan…
“There has been a bit of historical revisionism going on,” Mr. Greenspan grumbled. The real force behind soaring real estate prices, he said, was a global one: a drop in worldwide inflation and interest rates, in part because of the end of the Cold War and the rise of China as a manufacturing colossus.
“The housing boom is not an American phenomenon — it’s a worldwide phenomenon,” Mr. Greenspan said. “The evidence is quite overwhelming that what we are going through is a consequence of the fall of the Soviet Union and the shift of a billion workers from central planning in to the labor market.”
No, a worldwide increase in the money supply has nothing, absolutely nothing, to do with a worldwide increase in housing prices. Move along, nothing to see here. But even more maddening is the implicit insistence that the 2001 recession and threat of "deflation" had nothing, absolutely nothing, to do with his own decisions earlier that allowed the stock bubble to develop. And nobody in the establishment media will press him on that.
Why not? I see no grand conspiracy theory here, merely the fact that the housing bubble is an immediate, proximate thing and the stock bubble by contrast is a distant memory. That's no excuse of course, but it is the explanation.
If you have a masochistic streak and want to read Greenspan's gobbledygook, do yourself a favor and pair it with the refreshing tonic of the Bill Bonner-Lila Rajiva release (and New York Times bestseller) Mobs, Messiahs, and Markets. Amazon is making the books available together at a discount.