Ex-Chairman Greenspan says FED policies didn't cause woes

Washington Post, March 21, 2008 page D1: Many economists blame Greenspan for lax bank supervision and for keeping interest rates too low, too long from mid-2003 to mid-2004. That, the theory goes, fueled the housing bubble nd spawned subprime and adjustable rate mortgages for common people, vast number of whom can't make their payments now. Banks bought those mortgages in bundles that are worth far less than they originally were. That has led to big write-offs shaking the entire financial system. Greenspan said that a market crisis was inevitable. "If it weren't the subprime crisis it would have been something else. That is because an era was ending that had seen disinflationary forces from developing nations such as China and a protracted period in which there was an underpricing of risk."(sic) I would stress the federal budget deficit(due to the War since 2003?) and trade deficits(more imports,less exports). Moreover,the lifestyle of the people must be taken into consideration. Not all economists are ready to let the former FED chairman off so easily. Please be the judge to evaluate the current financial turmoil in USA. Professor John K. Galbraith made a negative comment in an interview about Greenspan in "Keys for Economic Understanding."( 1976) with his insightful wisdom. My comment: Greenspan is more inclined for private interest instead of public interest with the background as an investment banker. Inflation Hitting Basics Harder than Luxuries as the headline in Washington Post,March 21, 2008 Page A1: Prices for groceries, gas and health care -things folks need - are rising faster than items they can cut back on. Inflation is also high in China lately. We shall watch the policies from the leaders to work for the interest of ordinary folks hopefully. That is the issue for readers to find out the realistic outcome. Human frailties such as greedy behavior? Or other scenarios? Francis Shieh,a lifelong student in economics. March 21, 2008 at 10.04 a.m.