GREENSPAN WANTS THE CREDIT, NOT THE BLAME

by Alexander Cockburn

Thirty years ago, when America was a lot more liberal than it is now, Alan Greenspan was widely derided as a right-wing economic kook blissed out on the philosophy of Ayn Rand. Then, in 1987, Ronald Reagan made him chairman of the Fed, and Greenspan got respect at last. Congress fawned on him, as did the press. He learned to make headlines with quirky epigrams, like his crack about the "irrational exuberance" of the markets in the late '90s.

He quit in 2006 at the age of 80, sat down to write his memoirs, and tossed in the words, "The Iraq War is largely about oil," no doubt calculating that the sentence would give the book a handy shove as it came out of the gate. It did. "The Age of Turbulence" was released last weekend, and there in the headlines was "Largely About Oil," sending the book up the Amazon rankings like a bullet.

Greenspan is scarcely a pioneer with the oil motive, but leftists have fallen on his line like the children of Israel on manna, speedily installing it in their armory of useful quotations, alongside Eisenhower's parting whack at the military-industrial complex. In respectable circles, the remark has been less cordially received since fighting wars for oil is something you don't talk about in front of the children or indeed in the hearing of families who've lost kin in Iraq.

The White House is incandescent with rage since many Americans think "Bush," "Cheney" and "Big Oil" all mean the same thing. Greenspan has also been sharply disobliging about Bush and the Republicans' delinquencies in running up the deficit. By contrast, he lavishes praise on Bill Clinton for far-sighted wisdom in taking his -- Greenspan's -- advice. This irks Democrats, not least Hillary Clinton, since it reminds people that her husband did indeed heed Greenspan's counsel, which was to serve up Wall Street's menu while simultaneously trashing the welfare system.

His place on the bestseller lists and in the quotation dictionaries assured, Greenspan is now saying that he never heard Bush or Cheney explicitly invoke the "O" word as a rationale for war, "but that would have been my motive." As he explained it to The Washington Post, what he was trying to say in his memoir was that he, Chairman Greenspan, thought the war should be about oil and that although securing global oil supplies was "not the administration's motive," he had made the case to the White House that removal of Saddam Hussein was important for the global economy. "I was not saying that that's the administration's motive," Greenspan said. "I'm just saying that if somebody asked me, 'Are we fortunate in taking out Saddam?' I would say it was essential."

It's been amazing to see the former Fed chairman waltz through TV interviews, like the one the docile Lesley Stahl conducted of him on CBS's "60 Minutes." It was Greenspan, along with Bill Clinton's Treasury Secretary Robert Rubin, who promoted the whole wave of deregulation that produced the fake boom of the 1990s and, in recent years, the explosion in speculative instruments that are now vaporizing. Decorum in the interviews of Greenspan is unrelenting, even as he bleats that he didn't foresee the housing bubble and the devastation now being wrought across America by the subprime mortgage binge.

Greenspan couldn't possibly have missed what was coming with the housing and mortgage market crisis. The housing bubble has been obvious for years, just as the stock market bubble of the late 1990s -- Greenspan's "irrational exuberance" -- was also obvious. Greenspan simply didn't want to annoy Wall Street.

Greenspan's single greatest claim to "maestro" status is that he managed to hold down inflation while unemployment fell below 5 percent since the mid-1990s and even below 4 percent at the end of his friend Clinton's tenure. As Greenspan himself has acknowledged, the main factor here was quite straightforward, what Bob Woodward reported Greenspan as calling the "traumatized worker" effect.

Now, Greenspan didn't just hypothesize -- he celebrated. In his notorious comment in July 1997 in congressional testimony, he saluted the economy's performance as "extraordinary" and "exceptional," then remarked that a major factor contributing to this achievement was "a heightened sense of job insecurity and, as a consequence, subdued wages."

Thus, for Greenspan, a "heightened sense of job insecurity," creating "traumatized workers," was a cause for celebration. This from the country's -- and, by extension, the world's -- most important economic policy-maker. We can safely assume that Greenspan doesn't bother to express troubled reminiscences about this part of his legacy.