The man is everywhere on Monday – splashed across the front pages of the UK and US press. Former Fed chair Alan Greenspan certainly isn’t scrimping on interviews in the promotion of his new book, The Age of Turbulence: Adventures in a New World.
But the trouble is that much of what Mr Greenspan is saying seems to be from a very old world indeed.
The housing boom, it turns out, is the fault of the Reds. The end of Communism, argues Greenspan, unleashed hundreds of millions of workers on global markets, putting downwards pressure on wages and prices and therefore on long-term interest rates.
The WSJ reports Mr Greenspan’s defence against the charge from economists that in cutting short-term interest rates to 1% in 2003 and keeping them low, his chairmanship of the Fed helped to foster the housing bubble that is now bursting.
Yves Smith at Naked Capitalism also wonders at Mr Greenspan’s revisionist account of recent history. “Greenspan seems to have forgotten that some of the people in his audience not only have good memories, but also loud voices of their own,” writes Smith, pointing to an op-ed by Paul Krugman in Monday’s New York Times which takes issues with Mr Greenspan’s depiction of himself as an old-school, small government Republican chastising the Bush regime for its lack of fiscal discipline.
Krugman tells us, au contraire, the Bush tax cuts looked doomed until Greenspan spoke in their favor before the Senate Budget Committee. While some claim that Greenspan was upset as how his remarks were interpreted, he could easily have corrected any misperception.
For us poor Brits, there is even worse news in the world according to Greenspan. The UK is “more exposed” to the fallout from the squeeze on credit than the US, Mr Greenspan told the Telegraph, thanks to the stack of mortgages based off the standard variable rate, which has been pushed higher by the instability in the money markets.
In another echo from a bygone age, he warns that interest rates may have to reach double digits to control the coming surge in inflation in Britain.
Heavens above! Double-digit interest rates. How very late-80s.