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Home Publications Blogs Beat the Press The Downturn and the Large Deficits are Due to Alan Greenspan and Ben Bernanke

The Downturn and the Large Deficits are Due to Alan Greenspan and Ben Bernanke

Sunday, 29 August 2010 21:34

This fact would be worth mentioning in an article that discusses Federal Reserve Board Chairman Ben Bernanke's attitude toward the deficit. If Greenspan and Bernanke (who was a Fed governor from 2002) had paid attention to the $8 trillion housing bubble, and prevented it from growing to the point where it could do so much damage, then the country would not be in a serious downturn today, and we would not be running a large budget deficit.

It is only due to the incompetence of the people running the Fed that we are facing such severe economic problems. In other lines of work, like dishwashers and custodians, people would be fired for such incompetence, but those running the Fed are not held accountable in the same way as most workers.

Comments (6)Add Comment
written by izzatzo, August 29, 2010 11:53
Funny how Greenspan could call the Iraq war as caused by oil rather than weapons of mass destruction or 9-11, as though he knew it all along, but when it came to the financial crisis, he claimed insufficient warning of it due to a data lag on sub-prime loans, implying the crisis could have been averted with timely data.
the genius of Kevin Smith
written by frankenduf, August 30, 2010 8:04
he had the perfect expression for this: "failing upwards"- describing the essence of the insulation that exorbitatnt wealth creates, at the expense of efficiency or functionality
written by liberal, August 30, 2010 8:53
izzatzo wrote,
he claimed insufficient warning of it due to a data lag on sub-prime loans

Here's what I don't get: doesn't the Fed randomly sample mortgages and look at their content to keep track of what's going on?

Apparently not. What a bunch of blithering idiots.
written by skeptonomist, August 30, 2010 9:38
The incipient bubble was called as early as 2002 by Dean and Robert Shiller on the basis of prices. Mortgage data were confirmatory, but Greenspan was actually encouraging trick mortgages at this time.
How about the current treasury bond bubble?
written by Tom Faranda, August 30, 2010 11:49
Housing bubble = yesterday's news. How about getting off that obsession and looking at the current bubble? what's going to happen went interst rates tick up?
written by bakho, August 30, 2010 7:00
There is no bond bubble. There cannot be a bond bubble. Bonds have a fixed date of maturity. If you hold onto the bond, it eventually turns into cash. Where did the bond bubble nonsense come from?

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.