Fed up with Bush & Co.

“I’m just very disappointed,” he said glumly, as he sat in his living room. “Smaller government, lower spending, lower taxes, less regulation — they had the resources to do it, they had the knowledge to do it, they had the political majorities to do it. And they didn’t.”

Grandfather Greenspan is fed-up with the Bush League (NYT article).

And what does Greenspan, who recently put out a memoir entitled The Age of Turbulence, have to say in response to accussations that the Fed contributed to factors precipitating the housing bubble and hence its eventual burst?

“There has been a bit of historical revisionism going on,” Mr. Greenspan grumbled. The real force behind soaring real estate prices, he said, was a global one: a drop in worldwide inflation and interest rates, in part because of the end of the Cold War and the rise of China as a manufacturing colossus.

I think the Fed knew exactly what he was doing: making the best the best play he could in the short-run in an otherwise no-win situation. He was facing (it's true) much larger forces in the global capital markets, still waiting to have their effect in the future. But in addition, he was well aware (and warning) that a high national deficit, low savings/investment rates, and high consumer debt rate was a 'recipe for disaster' (if i may borrow that phrase). If you were sitting there watching both Americans and the government throw the long-term to the wind, then looking out the window at foreign markets and seeing multi-decade set-up for a dollar-drop waiting to peak... wouldn't you just go ahead and allow one more (inevitable) sweet bubble to rise before the reality hit?