Regarding "Subprime market surprised Greenspan" (Tuesday Business B10), it's astounding that former Fed chairman Alan Greenspan tries to absolve himself of the mortgage crisis that crashed our economy in 2008 by saying that "neither he - or anyone - could have forecast the irrational risk-taking....in assets like homes or tech stocks", much less "known how or when to defuse the threats that triggered the crisis". And yet, that is exactly what Greenspan did when in 1996 he coined the term "Irrational Exuberance" to describe the tech bubble that so skewed financial markets in the 90s.
In fact, in March of 2000 Yale Professor Robert Schiller wrote a book that expanded on Greenspan's warnings and predicted the tech bubble crash that happened that same year. It was titled "Irrational Exuberance". About the housing bubble Greenspan states "...we didn't know about it. It was a big surprise to me how big the subprime market had gotten by 2005". Really? Schiller did an update to his book in 2005 that dealt explicitly with the housing bubble and again predicted a crash. And he was far from alone among mainstream economists in his views.
Sad to say, Alan Greenspan is confirming all the worst things we have suspected about not just him but his successor Ben Bernanke: The Fed's easy money policies always lead to bubbles and disaster, and the authors of these policies accept none of the blame and they learn nothing from the past, thus dooming us to repeat it.
Pete Smith
Cypress, TX
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