Monday, May 3, 2010

The Maestro is Back

Dean Baker writes a post on his blog that points out that the media give "The Maestro", Alan Greenspan, unjustified deference. Greenspan seemed to be a "master" of economics until the day his de-regulatory style resulted in a crushing $9 trillion collapse in the US economy (stocks & housing). Greenspan was a deficit hawk and a constant worrier about inflation, but he was cavalier and unconcerned about over-leveraging, bubbles, and now unemployment and wealth destruction. The media -- in this case the Washington Post -- just hasn't caught on...
Ben Bernanke, Who Missed an $8 Trillion Housing Bubble, Warned About the Deficit

In an article reporting on the debate over extending unemployment insurance benefits the Washington Post told readers: "on Wednesday, Federal Reserve Chairman Ben S. Bernanke warned that growing budget deficits imperiled the economy's long-term stability."

It is worth noting that in his capacity as a Federal Reserve Board governor from 2002 to 2005, chief economic adviser President Bush, and then Fed Chair since January of 2006, Bernanke never raised any concerns about the housing bubble and the threat it posed to the economy. Based on this history, readers may question Mr. Bernanke's ability to assess threats to economic stability. The Post should have informed readers of Bernanke's record on this issue.
This kind of "analysis" by the press helped lead the country into a catastrophe. Greenspan is the one who supported Bush on tax cuts for the rich because he worried that Clinton's financial prudence had left the US with diminishing bonds to buy in the future. Well... Greenspan has got his wish. The US Treasury is pumping out bonds at a clip of well over a trillion dollars a year to paper over the hole in the economy that Bush -- and Greenspan -- created through their ideologically motivated "economic" policies.

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