Stiglitz: Greenspan and Bush to Blame for the US Crisis

Its difficult to react to an excerpt from an unpublished interview.

Although we strongly agree with what he has said here, we are dumbfounded that there is no mention of the big US banks and Wall Street, who were engaging in serial fraud and corruption of the system going back to Enron and beyond, encouraging accounting fraud and reckless speculation. Greenspan and Bush were obvious figureheads and enablers, having accomplished little or nothing in their private lives before their moment on the stage.

Are we at the point we predicted when the real perpetrators start looking for scapegoats and patsies to toss over the back of the sled to hold off the oncoming pack of wolves?

If so, Greenspan and Bush make a likely pair of shallow boobs to take the fall. But it won't fix anything. And where were all the professors and pundits during the period in which this was all happening? Playing dumb for the most part, or putting out weighty sounding defenses of these offenses for a few pieces of silver.

The scapegoat phase is predictable but fruitless overall. The system must be reformed; the banks must be restrained again. The theft of the public good will continue until this occurs. They will distort every program, pollute every dollar of aid, to their continuing looting of the public trust.

There is a growing call in the US to pull one's money out of the big Wall Street banks. We're not sure about the effective of this, since it keeps the stock and bond markets intact, but its a start. Petitions for redress have been ignored. We've elected the Democrats and they have done far too little, waiting for the safety of a likely Democratic president. So now the time for boycotts has begun it appears.

The system must be reformed. Glass-Steagall must be reinstated. The Wall Street Banks must be restrained from using the public money to finance their private speculations. We must stop privatizing gains and socializing their losses.

Greenspan, Bush to blame for U.S. crisis: Stiglitz
Reuters
Sun Apr 27, 6:48 AM ET

Former Federal Reserve Chairman Alan Greenspan and the government of President George W. Bush were to blame for the U.S. financial crisis, Nobel laureate economist Joseph Stiglitz said in a magazine interview.

"This man (Greenspan) has unfortunately made a lot of mistakes," said former World Bank chief economist Stiglitz, according to a preview of the interview to be published on Monday in profil magazine.

"His first one was to support all the tax cuts which were introduced under Bush -- they didn't stimulate the economy very much ... This task was then transferred more towards monetary policy, though then (Greenspan) created a flood of credits with low interest rates," Stiglitz was quoted as saying.

Earlier in April, Greenspan said in an interview with CNBC television that the U.S. economy was in recession and defended his chairmanship of the U.S. central bank against charges that his policy missteps had laid the groundwork for the crisis.

He said decisions during his charge had been rationally constructed based on evidence at the time.

Stiglitz said Bush's government was also to blame.

"I reproach them, that the economy was not as resilient as it could have been due to the ongoing tax cuts and the huge costs incurred by the war in Iraq," he was quoted as saying.

He said it was a myth that Europe could decouple itself from the United States.

"Especially the weak dollar will continue to hit the European economy hard, because it will make it much harder to export," he said.

(Reporting by Karin Strohecker; Editing by David Holmes)