Alan Greenspan, who led the U.S. Federal Reserve for 18 years and was revered in the financial markets, was a "very bad'' Fed chairman.
That's the blunt verdict of Patrick Artus, chief economist of Natixis SA and one of France's most listened-to pundits: He is an economic adviser to the French government.
In his latest book ("Les incendiaires: Les banques centrales depassees par la globalisation'' or the arsonists: central banks overtaken by globalization), Artus, 56, blames Greenspan and other central bankers for being so focused on inflation that they failed to prevent real-estate and stock-market bubbles which, in turn, burst and caused pain. [...]
[Interviewer Farah] Nayeri: Joseph Stiglitz went on the record on Nov. 16 as saying that Greenspan had "made a mess'' and that the U.S. now faced a recession. Do you agree?
Artus: Yes. Greenspan was an arsonist and a fireman combined. He derived all his glory from his reaction to the savings-and- loans crisis, to the collapse of Long-Term Capital Management LP, and to Sept. 11, 2001. But LTCM and the savings-and-loans crisis were his doing. He absolutely failed to see where the malfunctions in the U.S. economy were.
Greenspan came up with a phrase, "irrational exuberance,'' in 1997, but he didn't do anything about it.
Nayeri: How would you sum up his track record, then?
Artus: He was a very bad Federal Reserve chairman. He created four major crises: savings and loans, LTCM, new-technology shares, and subprime mortgages.
Nayeri: But surely you will acknowledge that Greenspan saved the planet at crucial turning points?
Artus: Yes, but after the fact. He's congratulated for his role as fireman, but he's the one who started the fire.
