• $25
  • $50
  • $100
  • other
  • use Paypal

CALLING ALL COUNTERPUNCHERS! CounterPunch’s website is one of the last common spaces on the Internet. We are supported almost entirely by the subscribers to the print edition of our magazine and by one-out-of-every-1000 readers of the site. We aren’t on the receiving end of six-figure grants from big foundations. George Soros doesn’t have us on retainer. We don’t sell tickets on cruise liners to the “new” Cuba. We don’t clog our site with deceptive corporate ads or click bait. Unlike many other indy media sites, we don’t shake you down for money every month … or even every quarter. We ask only once a year. But when we ask, we mean it. So over the next few weeks we are requesting your financial support. Keep CounterPunch free, fierce and independent by donating today by credit card through our secure online server, via PayPal or by calling 1(800) 840-3683.


Why Greenspan Owes America an Apology


Alan Greenspan will go down in history as the person most responsible for the enormous economic damage caused by the housing bubble and the subsequent collapse of the market. The United States is still down almost 9m jobs from its trend path. We are losing close to $1tn a year in potential output, with cumulative losses to date approaching $5tn.

These numbers correspond to millions of dreams ruined. Families who struggled to save enough to buy a home lost it when house prices plunged or they lost their jobs. Many older workers lose their job with little hope of ever finding another one, even though they are ill-prepared for retirement; young people getting out of school are facing the worst job market since the Great Depression, while buried in student loan debt.

The horror story could have easily been prevented had there been intelligent life at the Federal Reserve Board in the years when the housing bubble was growing to ever more dangerous proportions (2002-2006). But the Fed did nothing to curb the bubble. Arguably, it even acted to foster its growth with Greenspan cheering the development of exotic mortgages and completely ignoring its regulatory responsibilities.

Most people who had this incredible infamy attached to their name would have the decency to find a large rock to hide behind; but not Alan Greenspan. He apparently believes that he has not punished us enough. Greenspan has a new book which he is now hawking on radio and television shows everywhere.

The book, which I have not read, is ostensibly Greenspan’s wisdom about the economy and economics. But he also tells us that his problem as Fed chair was that he just didn’t know about the flood of junk mortgages that was fueling the unprecedented rise in house prices during the bubble years. He has used this ignorance to explain his lack of action – or even concern – about the risks posed by the bubble.

Greenspan’s “I didn’t know” excuse is so absurd as to be painful. The explosion of exotic mortgages in the bubble years was hardly a secret. It was frequently talked about in the media and showed up in a wide variety of data sources, including those produced by the Fed. In fact, there were widespread jokes at the time about “liar loans” or “Ninja loans”. The latter being an acronym for the phrase, “no income, no job, no assets”.

The fact that banks were issuing fraudulent mortgages by the millions, and that the Wall Street crew was securitizing them as fast as they could get them, was not top secret information available only to those with special security clearance. This was the economy in the years 2002-2006.

It was impossible to look at the economy in these years and not see the role of the housing bubble and the tsunami of bad mortgages that fueled it. The run-up in house prices led to a near record pace of construction. Typically housing construction is around 4.5% of GDP. It peaked at 6.5% in 2005. Greenspan didn’t notice? Who did he think was going to live in all these units, the building of which had created record vacancy rates as early as 2003?

And he didn’t notice that the spike in house prices had led to a surge in consumption pushing saving rates to nearly zero? He actually co-authored several pieces on exactly this topic with another Fed economist. Between the 100% predictable collapse of residential construction and the plunge in consumption that would follow the loss of the housing wealth that was driving it, we were looking at a loss of more than $1tn in annual demand. What did Greenspan think would fill this gap, purchases of Ayn Rand’s books?

Greenspan had all the information that he could have possibly needed to spot the housing bubble and to know its collapse would be really bad news for the economy. More than anyone else in the country he was in a position to stop the growth of the bubble.

Suppose that, instead of extolling the wonders of adjustable rate mortgages, Greenspan used his public addresses to warn people that they were buying into an overpriced housing market; and he warned investors that the subprime mortgage backed securities they were buying were filled with fraudulent mortgages. Suppose further that he used the Fed’s research staff to document these facts.

Greenspan could have used the regulatory powers of the Fed to crack down on the bad mortgages being issued by the banks under the Fed’s jurisdiction, as his fellow governor Edward Gramlich urged. And, he could have arranged to have a meeting with other federal and state regulators to see what they were doing to prevent mortgage fraud in the financial institutions under their jurisdictions as well.

Those are the actions that we had a right to expect from a Fed chair faced with the growth of a dangerous asset bubble. That is what Alan Greenspan would have done if he had been earning his salary. Instead, he did nothing. He cheered on the bubble until it burst and then he said it wasn’t his fault.

This man has nothing to tell the country about the economy and the media is not doing its job to imply otherwise. If Greenspan doesn’t have the decency to keep himself out of public view after all the damage he has done to the country, then the media should do it for him. The only thing he has to say that would be newsworthy is that he’s sorry.

Mark Weisbrot is an economist and co-director of the Center for Economic and Policy Research. He is co-author, with Dean Baker, of Social Security: the Phony Crisis.

This essay originally ran in the Guardian.



Mark Weisbrot is co-director of the Center for Economic and Policy Research, in Washington, D.C. and president of Just Foreign Policy. He is also the author of the forthcoming book Failed: What the “Experts” Got Wrong About the Global Economy (Oxford University Press, 2015).

October 13, 2015
Steve Martinot
The Politics of Prisons and Prisoners
Heidi Morrison
A Portrait of an Immigrant Named Millie, Drawn From Her Funeral
Andre Vltchek
Horrid Carcass of Indonesia – 50 Years After the Coup
Jeremy Malcolm
All Rights Reserved: Now We Know the Final TTP is Everything We Feared
Paul Craig Roberts
Recognizing Neocon Failure: Has Obama Finally Come to His Senses?
Theodoros Papadopoulos
The EU Has Lost the Plot in Ukraine
Roger Annis
Ukraine Threatened by Government Negligence Over Polio
Matthew Stanton
The Vapid Vote
Louisa Willcox
Tracking the Grizzly’s Number One Killer
Binoy Kampmark
Assange and the Village Gossipers
Robert Koehler
Why Bombing a Hospital Is a War Crime
Jon Flanders
Railroad Workers Fight Proposed Job Consolidation
Mel Gurtov
Manipulating Reality: Facebook Is Listening to You
Mark Hand
Passion and Pain: Photographer Trains Human Trafficking Survivors
October 12, 2015
Ralph Nader
Imperial Failure: Lessons From Afghanistan and Iraq
Ishmael Reed
Want a Renewal? Rid Your City of Blacks
Thomas S. Harrington
US Caught Faking It in Syria
Victor Grossman
Scenes From a Wonderful Parade Against the TPP
Luciana Bohne
Where Are You When We Need You, Jean-Paul Sartre?
Kevin Zeese - Margaret Flowers
The US Way of War: From Columbus to Kunduz
Paul Craig Roberts
A Decisive Shift in the Balance of Power
Justus Links
Turkey’s Tiananmen in Context
Ray McGovern
Faux Neutrality: How CNN Shapes Political Debate
William Manson
Things R Us: How Venture Capitalists Feed the Fetishism of Technology
Norman Pollack
The “Apologies”: A Note On Usage
Steve Horn
Cops Called on Reporter Who Asked About Climate at Oil & Gas Convention
Javan Briggs
The Browning of California: the Water is Ours!
Dave Randle
The BBC and the Licence Fee
Andrew Stewart
Elvis Has Left the Building: a Reply to Slavoj Žižek
Nicolás Cabrera
Resisting Columbus: the Movement to Change October 12th Holiday is Rooted in History
Weekend Edition
October 9-11, 2015
David Price – Roberto J. González
The Use and Abuse of Culture (and Children): The Human Terrain System’s Rationalization of Pedophilia in Afghanistan
Mike Whitney
Putin’s “Endgame” in Syria
Jason Hribal
The Tilikum Effect and the Downfall of SeaWorld
Gary Leupp
The Six Most Disastrous Interventions of the 21st Century
Andrew Levine
In Syria, Obama is Playing a Losing Game
Louis Proyect
The End of Academic Freedom in America: the Case of Steven Salaita
Rob Urie
Democrats, Neoliberalism and the TPP
Ismael Hossein-Zadeh
The Bully Recalibrates: U.S. Signals Policy Shift in Syria
Brian Cloughley
Hospital Slaughter and the US/NATO Propaganda Machine
Paul Street
Hope in Abandonment: Cuba, Detroit, and Earth-Scientific Socialism
John Walsh
For Vietnam: Artemisinin From China, Agent Orange From America
Hadi Kobaysi
How The US Uses (Takfiri) Extremists
John Wight
No Moral High Ground for the West on Syria
Robert Fantina
Canadian Universities vs. Israeli Apartheid
Conn Hallinan
Portugal: Europe’s Left Batting 1000