Greenspan was wrong a lot more than 30%. He was wrong from the first day Ronald Reagan gave him the job, and was still wrong 20 years later when they dragged his cold, stinking carcass away from the biggest disaster to strike the US and world economies since 1929.
His tenure began in 1987 with the biggest stock market crash since '29, and ended in 2006, with the biggest stock market crash since '29 on its way. Perfect bookends to a breathtakingly incompetent career.
The final disaster began in 2004 when the Fed began to raise interest rates from 1% to 5.25%. By the time the crash was over, in 2009, the mortgage market was in shambles, home sales and values plunged to historic lows, the stock market returned to the values of a decade before, and tax revenues began their long decline.
Congress started this disaster by lowering mortgage lending standards, and the Fed finished it off with disastrous interest rate policy.
Into a mortgage market filled with adjustable rate loans made to borrowers with bad credit, no down-payment, and insufficient income, the Fed's blunder raised mortgage payments by a factor of two or three. The Fed should have known the certain impact of its Fed Funds policy on mortgage securities.
But they didn't, because they are clueless.
And the idiot Greenspan led the way.
* * * * * J B K * * * * *
San Francisco
Alan Greenspan acknowledged Wednesday that mistakes were made during his long tenure as chairman of the Federal Reserve, but he argued that the low interest rate policy he championed at the central bank didn't inflate the housing bubble.
In testimony before the Financial Crisis Inquiry Commission, Greenspan said the recent financial meltdown was possibly "the most severe in history." He admitted that regulators failed to grasp the severity of the crisis, but he maintained that his policies and predictions were correct most of the time.
"When you've been in government for 21 years, as I have been, the issue of retrospect and what you should have done is a really futile activity," Greenspan said. "I was right 70% of the time. But I was wrong 30% of the time, and there were an awful lot of mistakes in 21 years," he added.
http://money.cnn.com/2010/04/07/news/economy/Greenspan_financial_crisis_commission/index.htm
