Roach: Greenspan Comes Clean, Sort Of
As one of the few economist who has an objective voice regarding the current global situation, Stephen Roach of Morgan Stanley is well positioned to point out the Federal Reserves shortcomings. So when he uncovers the Fed chairmans' admission of titanic blunders, I listen.
"At long last, Federal Reserve Chairman Alan Greenspan has owned up to the central role he has played in sparking unprecedented global imbalances..Greenspan’s admission came when he finally made the connection between the excesses of America’s property market and its gaping current account deficit"..Greenspan is quoted "the growth of home mortgage debt has been the major contributor to the decline in the personal saving rate in the United States from almost 6 percent in 1993 to its current level of 1 percent."
The piece is too long to comment on, blow by blow. Check it out for yourself. As Roach said "The Federal Reserve is trapped in a moral-hazard dilemma of its own making". And the rubber of that dilemma will hit the road that is the housing bubble.