I was reminded, as I was reading Paul Krugman’s recent blog post on Alan Greenspan (see below,) that he is wedded to Andrea Mitchell of MSNBC. I was also reminded that Greenspan was Chairman of the Fed during… the Clinton years. Then, I started to remember how the press portrayed the Greenspan and Clinton relationship as very close, friendly even. The memories flooded right back… Since I am not one to rely solely on memory, I dug up this morsel from an EPI article for your edification:
“A closer look at the Greenspan-Clinton era suggests that the chair’s genius stems more from his political talents than his economic insights. Thus, on the basis of dubious economics and weak history, he convinced Bill Clinton to give top priority to the elimination of the deficit, as opposed to the public investments in education, health, and infrastructure that Clinton had promised the Democratic faithful in his campaign. In effect, Clinton spent much of his presidency shortchanging the Democratic Party’s constituency so he could pay down the debts run up by his two Republican predecessors. As a result, George Bush II is the lucky recipient of a massive fiscal surplus, which he fully intends to use for military spending and tax cuts to promote the interests of the Republicans’ higher-income clientele.
As Woodward reports, Greenspan argued that federal deficits would ignite inflation, frightening Democrats with the memory of the late 1970s, when double-digit increases in consumer prices enabled Ronald Reagan to drive Jimmy Carter out of the White House. What Woodward doesn’t tell us is that Greenspan’s dire warnings were not supported by economic evidence. Other than in wartime, there is no clear relationship between federal deficit spending and inflation. Moreover, the economic scenario of an overheated peacetime economy triggering a politically unacceptable wage-price spiral has never happened in modern times.”
Remember, Hillary’s top economic advisers are all from the Clinton era, with one decoy from among the current pool of progressives. Regardless, the chief economic perpetrator remains Lawrence Summers. Yes, the same Lawrence Summers who headed the World Bank, was Bill Clinton’s Secretary of the Treasury who pushed for the repeal of Glass-Steagall, went on to Harvard University for a short spell, and then became the Chairman of Economic advisers under President Obama. He is the same Larry Summers you might have signed a petition against when he was in the running to become the current Chairman of the Fed. Why does he matter? Well… Aside from filling a central role, Summers, himself, comes from a well-connected family, but over a career, he’s made connections of his own and built himself quite the track record. Some of that track record is a joint one with Alan Greenspan over, get ready for this, Enron!
During the California energy crisis of 2000, then-Treasury Secretary Summers teamed with Alan Greenspan and Enron executive Kenneth Lay to lecture California Governor Gray Davis on the causes of the crisis, explaining that the problem was excessive government regulation. Under the advice of Kenneth Lay, Summers urged Davis to relax California’s environmental standards in order to reassure the markets.
It is quite galling to read some of the things Paul Krugman describes below about the former chairman’s personal views and know that his spouse, Andrea Mitchell edits and delivers our news, renders analyses and all of the people mentioned in this piece have been in the same social circles for decades. Yes, years ago, she and then new hubby Alan gave an interview in which Andrea spoke at length about how she avoided discussing certain topics with Alan at home. Casting aside Greenspan’s really gross socially-conservative views, let us keep in the front of our minds what it is the Clintons and Summers did, together, with Greenspan and how that legacy haunts us to this day.
All these cozy relationships should creep voters out. The media should fulfill its duty in reminding readers of all of the connections between these people and the events they had a direct influence over. Enron did quite a bit of damage. The deregulation of the banking system did far more. The housing bubble has yet to find a resolution. Student debt is crushing our kids and their parents. Greenspan had a hand in that.
Why, oh, why would we ever let any of these people anywhere near our government ever again? I wrote a few weeks ago that I am not ready for Hillary. I am still a feminist.
The Worst Ex-Chairman Ever – NYTimes
When Alan Greenspan left the Fed, he had nearly divine status in the eyes of the financial press and, I’m sorry to say, quite a few economists. In retrospect, of course, his reputation has faltered badly; whether or not you blame Fed policy for the housing bubble (you shouldn’t), Greenspan denied the bubble’s existence and even its possibility as it was inflating, while actively blocking efforts to tighten financial regulation.
But it’s his track record since leaving office that is truly remarkable. He has been an inflation and debt fear monger, helping to make his successor’s already hard job a bit harder — and famously complained about ungrateful markets that keep failing to deliver the crises he predicts.
Now I have in my inbox a notice that as the Fed holds its annual meeting in Jackson Hole, Greenspan will address a counter-conference organized by a group called the American Principles Project. The group combines social conservatism — it’s anti-gay-marriage, anti-abortion rights, and pro-“religious liberty” — with goldbug economic doctrine.