For three years now, we have watched Alan Greenspan try to rebuild the wreckage of his reputation by explaining in dozens of different ways how the housing bubble wasn’t his fault because it was impossible for anyone to foresee in advance.Unfortunately, all this is doing is cementing his new reputation as a man who is still deep in denial.
We don’t believe that Alan Greenspan acted in bad faith when he kept interest rates too low for too long, denied the housing bubble, and continuously sang the praises of derivatives and deregulation. We believe he was doing what he thought was right at the time.
But a lot of it was wrong. Especially the part about the housing bubble. And if Greenspan wants to remain on the public stage and be perceived as something other than a man who just can’t face facts, he needs to acknowledge that.
The acknowledgement doesn’t need to be be complicated. It just needs to be forthright. Like this:
“From 2003-2005, many analysts viewed the extreme nationwide rise in house prices as a sign of an unsustainable bubble. At the time, I found their analysis unconvincing. I thought the price increase was justified by the fundamentals. In hindsight, they were right, and I was wrong.”
That’s it. That’s all he has to say. If Alan Greenspan says that, everyone will stop viewing him as a ludicrous old fool and start listening to him again. Until then, he’s finished.
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