The Stinging Reproach of a Former Fed Chairman

Alan Greenspan has been popping up all over the press lately - after 18 years of Greenspeak, it looks like the former Fed chief wants to set the record straight...at least from his point-of-view.

"I have no regrets on any of the Federal Reserve policies that we initiated back then because I think they were very professionally done," Mr. Greenspan told CNBC yesterday.

And to the Journal, he said: "I don't remember a case when the process by which the decision making at the Federal Reserve failed."

The Financial Times recently ran a piece titled, "The fed is blameless on the property bubble." James Saft, writing for Reuters says that Big Al argued that the epic bubble was not caused by loose monetary policy, but by "the fall in global long-term interest rates, which, as chairman...of the most powerful central bank in the world, apparently had nothing to do with him."

Albert Edwards, global strategist at Societe Generale Cross Asset Research in London puts it bluntly: "He was the midwife of serial bubbles that are unraveling."

Former Fed chief Paul Volcker remains unconvinced by Greenspan's protests, questioning his cheerleading of the "bright new financial system," that "for all its talented participants, for all its rich rewards, has failed the test of the marketplace."

And in a speech to the members of the Economic Club of New York, Volcker chided Bernanke for "toeing 'the very edge' of the bank's legal authority in orchestrating last month's bailout of beleaguered investment bank Bear Stearns," reports The New York Times.

"Out of perceived necessity, sweeping powers have been exercised in a manner that is neither natural nor comfortable for a central bank," Volcker said.

Kate Incontrera
The Daily Reckoning Australia

P.S. to get The Daily Reckoning direct to your inbox sign up to our free e-mail newsletter or if you prefer to use RSS, subscribe to the Daily Reckoning RSS feed.

Related Articles:

• Fed’s Aggressive Attempts to Put More Money and Credit in Circulation and the Asset Bubbles
• Bank’s Inflation Projections Will Not Return to the 2 Per Cent Target Figure Until Early 2010
• Alan Greenspan Bears Blame for Intensity of Financial Crisis
• Gold Standard Doubles as the Greenspan Fed Makes Real Interest Rates Negative
• A Dollar Crash Will Have Disastrous Implications for Global Financial Markets