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Jeffrey Sachs, a prolific economist, author and professor at Columbia University, had unusually harsh words in a speech today at the World Business Forum directed at Alan Greenspan, former chairman of the Federal Reserve — placing him with much of the blame for the current financial crisis. (Find more World Business Forum coverage here)
“The essence of the current downturn is finance,” Mr. Sachs said. “It's a Wall Street crisis. A crisis made down the block.” He said, and “if you look under the rubble you can figure out what happened and why.”
First, “a long bout of easy credit championed by Alan Greenspan and the Fed outside of the normal boundaries of monetary policy,” which came together with “a nearly complete deregulation of the financial sector contrary to almost everything we know about the risks of a highly leveraged financial system.”
“This is flagrant irresponsibility,” he said. “This isn't a matter of one's market philosophy, just profound irresponsibility.” Later, though, he said Mr. Greenspan's ideology was possibly at fault, given his “Ayn Rand” philosophy that markets take care of themselves “until he discovered the flaw of his theory later.”
Mr. Sachs also spoke harshly of the Clinton and Bush administrations. “We arrived at this cliff through the aggressively irresponsibility of two U.S. administrations in a row,” he said, accusing them of bending to the will of the nation's biggest lobbying group — the financial industry.
“Where were the regulators? Consciously and deliberately kept out of the scene,” he said. “This led to a bubble financially that was most notable in the housing sector?and Alan Greenspan added fuel to the fire by keeping interest rates around 1%” from 2002 through early 2005.
“You get credit for stopping a Depression but I don't want to give too much credit because the people who stopped it were the people who started it also,” said Mr. Sachs.
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Greenspan and Bernanke, the worthless fiat purpleback federal reserve note and quintessential NWO globalist enabler criminal paper hangers of the last one hundred years! I’ll go for it! They make the “Teapot Domers” and the Capone gang look like eagle scouts. We need another Nuremberg review.
Man of the Year… Ben Bernanke!
Ex apostle and Suo Marte, keep up the good work. I’ve sent you both a “Get Out Of Hell” free card for your good deeds just in case. Kafka, I had to send two because of the strippers proclivity. By the way, he says they only accept Swiss Francs now for lap dances, no purpleback federal reserve notes. Well. back to the trenches, Helicopter Ben doesn’t stop printing the worthless fiat monopoly money so I’m getting busier all the time. Chow baby.
@ C. Jeffery Small and Jeff Montgomery - You gentlemen are EXACTLY correct:
1. Yes, Greenspan’s “too loose too long” fed funds rate errors between 2000-06 are the root cause of this crisis; “the FED did it”.
2. However, this cause is more a result of the FED’s existence, than it is the actions of the Chairman per se. For, as Friedman & Schwartz proved about 50 years ago, Benjamin Strong’s same “easy money” interest rate policy errors caused the 1929 recession and the FED then turned the recession into the Great Depression in 1933, at least according to Bernanke himself during his March 2009 interview w/ 60 Minutes.
Moreover, in Ayn Rand’s world, there would be NO FED.
Sachs’ obviously intentional distortion of Ayn Rand’s views is a giant disappointment and only undermines his credibility.
“Recovery” really means the resumption of predatory practices that went unchecked until they no longer worked. Greenspan publicizing his economic comments as though he has no culpability shows great hypocrisy and a total lack of self irony.
Real Time Economics offers exclusive news, analysis and commentary on the economy, Federal Reserve policy and economics. The Wall Street Journal's Phil Izzo and Sudeep Reddy are the lead writers, with contributions from other Journal reporters and editors. Send news items, comments and questions to realtimeeconomics@wsj.com. Read more Economics coverage.
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