I know you’re just pointing readers to the Greenspan interview, but I hope you’re not indirectly promoting his book. Given his remarkably bad record at seeing how things tend to turn out, I can’t imagine he’s offering much more than the “investors are so irrational” explanation, which is isomorphic with “I don’t know what the hell’s going on.”
I’ve never been a fan of the mumbling obfuscator, who droned his way through congressional hearings like some wrinklier version of the Delphic sibyl, inhaling the fumes of the rotting corpse of corporate statism. But it’s not just me. Here’s Krugman’s take (from his column yesterday):
I just reread an op-ed article by Alan Greenspan in The Wall Street Journal, warning that our budget deficit will lead to soaring inflation and interest rates. What about the reality of low inflation and low rates? That, he declares in the article, is “regrettable, because it is fostering a sense of complacency.”
It’s curious how readily people who normally revere the wisdom of markets declare the markets all wrong when they fail to panic the way they’re supposed to. But the really striking thing at this point is the date: Mr. Greenspan’s article was published in June 2010, almost three and a half years ago — and both inflation and interest rates remain low.
So has the ex-Maestro reconsidered his views after having been so wrong for so long? Not a bit. His new (and pretty bad) book declares that “the bias toward unconstrained deficit spending is our top domestic economic problem.”
(back to me) So on top of being, by all appearances, terrible at his job, Greenspan thinks that low inflation and low interest rates, at a time of soaring personal debt, are bad things. I guess high inflation, high interest rate, and stratospherically high rates of foreclosures and homelessness would help him sleep easier at night.