Los Angeles Times: 'The Age of Turbulence' by Alan Greenspan

We are live at the LA Times with my review of Alan Greenspan's The Age of Turbulence. Here is the beginning:

'The Age of Turbulence' by Alan Greenspan - Los Angeles Times: FOR nearly 20 years Alan Greenspan, as head of America's central bank, was the most powerful economic central planner the world has ever seen. What did he do? Roughly twice a year, the Federal Reserve chairman had to make a substantive decision about whether to raise, lower or keep the level of U.S. interest rates the same.

Why is that important? To lower interest rates is to make the future more valuable relative to the present; to raise interest rates is to make the future less valuable. When the future is more valuable, more people in the economy focus their eyes on it and more actions are taken that will have an effect in the future: the building of factories, investment in research, construction of houses and apartments. To lower interest rates is to shift economic attention and focus from the present to the future. To raise them is to shift that balance back again.

Isn't this odd? Don't we have a market economy? Why should a central planner be setting interest rates? The only reason is that this system appears to work less badly than the alternatives we have tried. Institutions and human psychology lead financial markets to bounce back and forth between exuberant greed and catatonic fear. Times of fear generate high unemployment. Times of greed are likely to be times of destabilizing inflation. Whether the justification is in the terms of Milton Friedman, John Maynard Keynes or -- as Greenspan put it early in the Clinton administration, confusing everybody -- the pre-Keynesian Swedish school, economies seem to function better when intelligent, skilled and public-spirited technocrats perform the calming, coordinating and leaning-against-the-wind role of managing interest rates to curb greed and fortify fear with some low-interest-rate courage.

Greenspan is world famous because he was very good and very lucky at this role...

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'The Age of Turbulence' by Alan Greenspan

The oracle speaks on life, money and politics. By J. Bradford DeLong, Special to The Times September 17, 2007

For nearly 20 years Alan Greenspan, as head of America's central bank, was the most powerful economic central planner the world has ever seen. What did he do? Roughly twice a year, the Federal Reserve chairman had to make a substantive decision about whether to raise, lower or keep the level of U.S. interest rates the same.

Related Stories - Greenspan: 'The Iraq war is largely about oil'

Why is that important? To lower interest rates is to make the future more valuable relative to the present; to raise interest rates is to make the future less valuable. When the future is more valuable, more people in the economy focus their eyes on it and more actions are taken that will have an effect in the future: the building of factories, investment in research, construction of houses and apartments. To lower interest rates is to shift economic attention and focus from the present to the future. To raise them is to shift that balance back again.

Isn't this odd? Don't we have a market economy? Why should a central planner be setting interest rates? The only reason is that this system appears to work less badly than the alternatives we have tried. Institutions and human psychology lead financial markets to bounce back and forth between exuberant greed and catatonic fear. Times of fear generate high unemployment. Times of greed are likely to be times of destabilizing inflation. Whether the justification is in the terms of Milton Friedman, John Maynard Keynes or -- as Greenspan put it early in the Clinton administration, confusing everybody -- the pre-Keynesian Swedish school, economies seem to function better when intelligent, skilled and public-spirited technocrats perform the calming, coordinating and leaning-against-the-wind role of managing interest rates to curb greed and fortify fear with some low-interest-rate courage.

Greenspan is world famous because he was very good and very lucky at this role. During his tenure at the Federal Reserve, he made roughly 36 substantive decisions about the direction interest rates should go. Six times I disagreed with him. Five of those six times, I was wrong. (The sixth? In the summer and fall of 2000, as the dot-com stock-market bubble crashed, I would have been cutting interest rates had I been sitting in Greenspan's chair; he waited for more information to see how much the fall in stock-market values would affect high-tech investment spending before he acted.)

That is an amazing record -- much better than Barry Bonds', and Greenspan clearly has never been on steroids. It is certainly much better than most economists I know could have done. Now this veritable rock-star economist-technocrat has written "The Age of Turbulence" with Peter Petre (who wrote the autobiographies of Gen. H. Norman Schwartzkopf and IBM head Thomas J. Watson Jr.). The voice in the book is Petre's. In a sense, this is too bad: Greenspan's voice is unique and a good window into his mind. But it is also nearly incomprehensible, even to trained professionals. And Petre has done a superb job of translating Greenspanese into English.

"The Age of Turbulence" is three books in one.

The first tells us who Greenspan is. It is the one that will speak to non-economist non-financier readers. The stories are wonderful: of a professional-caliber jazz clarinetist in New York in the 1950s, playing his sets and then reading his economics books during the breaks while fellow musicians go backstage to party and get high. Of a 26-year-old "math junkie" being knocked back on his heels by his philosophical guru, Ayn Rand, objectivist author of "The Fountainhead" and "Atlas Shrugged," when she pulls Descartes' "I think, therefore I exist" move on him. Of an economic advisor trying to educate, serve and guide Presidents Nixon, Ford, Reagan, Bush I, Clinton and Bush II. (Nixon wasn't just anti-Semitic, Greenspan tells us, but anti-everyone: "I don't know anybody he was pro.") Of inviting NBC News correspondent Andrea Mitchell, now Mrs. Greenspan, back to his apartment to read his essay on monopolies.

The second book gives Greenspan's view of the world and is, I think, least successful. He is trying to convey complicated and subtle technocratic ideas about the global economy -- its current structure and how it functions -- in a way that is comprehensible to general readers whose purchases drive bestseller lists. My students will read it because it will be on the midterm. But the book's target audience is likely to find this world tour a slog, and they are not incentivized by midterms.

The third book -- Greenspan's account of public policy -- is making the biggest splash as news. But it is news only in a very peculiar sense. That Greenspan and other committed small-government Republicans have been horrified at the turn their party has taken and have desperately sought some way to take it back from the cynical media consultants and political hacks who now run things is well-known -- to readers of Ron Suskind's "The Price of Loyalty" and Bruce Bartlett's "Imposter" and a host of people who know people who know Bush administration undersecretaries. Greenspan's much-quoted judgment in the book -- that current Republican office holders "deserve to lose" elections because they sold their principles for power and "ended up with neither" -- should come as no secret. Yet stories over the last few days have breathlessly reported selected phrases from the new book, characterizing them, as the Washington Post's Bob Woodward did, as "unusually harsh criticism [of] President Bush and the Republican Party" for abandoning "the central conservative principle of fiscal restraint."

It is not surprising that a prominent economist with a lifelong commitment to sound money and sound public finance does not like the policies the current government has followed.

One piece of this third book is worth noting: Greenspan's defense of his tenure as Fed chief. Why does he need a defense? Thirty-five out of 36 decisions is a very good batting average. But one could indict him on four counts: that he should not have, but did, support the Bush tax cut of 2001; that he should not have, but did, encourage new U.S. homeowners to get adjustable-rate mortgages -- ARMs -- in the early 2000s; that he should have done something to abort the dot-com bubble of the late 1990s; and that he should have done something to prevent the real estate bubble of the 2000s.

The first two counts are misdemeanors, and Greenspan pleads guilty. He says that he was warned that his testimony on the proposed 2001 tax cut would send a different message than he intended and that he ignored those warnings, which proved correct. Greenspan says his support for a tax cut was nuanced and partial, provided there were triggers to prevent budget deficits but that his statements were interpreted by the news media and politicians as a blanket endorsement. He adds that he did not understand how institutionally corrupt and thus unconcerned about good budget policy his Republican Party had become by early 2001. He says he did not properly understand in the early 2000s the large effect low teaser interest rates and prepayment penalties would have in leading new and financially strapped homeowners into deals that were not in their best interest.

The other two counts could be considered economic felonies, and here Greenspan stands his ground. Given the state of investor psychology, he says, he could have aborted the stock market and housing bubbles of the late 1990s and the early 2000s but only by paying an unacceptable price in idled factories and unemployed workers. He may be right and he may be wrong in this judgment -- I don't know. I do know that this is a judgment call, a difficult aspect of monetary policy.

I also know that Greenspan's judgment on monetary policy is very good, and looks to be better than mine.

J. Bradford DeLong, a former deputy assistant U.S. Treasury secretary, is a professor of economics at UC Berkeley.

Comments

[lib]

So a supposed market economy has a supposed libertarian economist tinkering away to sway the market left and right! Laissez faire is the wolves' advice to the chickens!

[anne]

http://economistsview.typepad.com/economistsview/2007/09/paul-krugman-sa.html

September 17, 2007

Paul Krugman: Sad Alan's Lament
Edited by Mark Thoma

Paul Krugman takes issue with Alan Greenspan's contention that he didn't mean to endorse the Bush tax cuts:

NY Times: When President Bush first took office, it seemed unlikely that he would succeed in getting his proposed tax cuts enacted. The questionable nature of his installation in the White House seemed to leave him in a weak political position, while the Senate was evenly balanced between the parties. It was hard to see how a huge, controversial tax cut, which delivered most of its benefits to a wealthy elite, could get through Congress.

Then Alan Greenspan, the chairman of the Federal Reserve, testified before the Senate Budget Committee.

Until then Mr. Greenspan had presented himself as the voice of fiscal responsibility, warning the Clinton administration not to endanger its hard-won budget surpluses. But now Republicans held the White House, and ... Greenspan ... was a very different man.

Suddenly, his greatest concern ... was to avert the threat that the federal government might actually pay off all its debt. To avoid this awful outcome, he advocated tax cuts. And the floodgates were opened. ...

Mr. Greenspan now says that he didn't mean to give the Bush tax cuts a green light, and that he was surprised at the political reaction to his remarks. ... But ... if Mr. Greenspan wasn't intending to lend crucial support to the Bush tax cuts, he had ample opportunity to set the record straight...

His first big chance to clarify himself came a few weeks after that initial testimony, when he appeared before the Senate Committee on Banking, Housing and Urban Affairs.

Here's what I wrote following that appearance: "Mr. Greenspan's performance yesterday ... was a profile in cowardice. Again and again he was offered the opportunity to say something that would help rein in runaway tax-cutting; each time he evaded the question... He declared ... that he was speaking only for himself, thus granting himself leeway to pronounce on subjects far afield of his role as Federal Reserve chairman. But when pressed on the crucial question of whether the huge tax cuts that now seem inevitable are too large, he said it was inappropriate for him to comment on particular proposals.

"In short, Mr. Greenspan defined the rules of the game in a way that allows him to intervene as he likes in the political debate, but to retreat behind the veil of his office whenever anyone tries to hold him accountable for the results of those interventions."...

[T]wo years later, when the administration proposed another round of tax cuts, even though the budget was now deep in deficit..., guess what? The former high priest of fiscal responsibility did not object.

And in 2004 he expressed support for making the Bush tax cuts permanent —... tax cuts he now says he didn't endorse — and argued that the budget should be balanced with cuts in entitlement spending, including Social Security benefits, instead. ...

In retrospect, Mr. Greenspan's moral collapse in 2001 was a portent. It foreshadowed the way many people in the foreign policy community would put their critical faculties on hold and support the invasion of Iraq, despite ample evidence that it was a really bad idea.

And like enthusiastic war supporters who have started describing themselves as war critics now that the Iraq venture has gone wrong, Mr. Greenspan has started portraying himself as a critic of administration fiscal irresponsibility now that President Bush has become deeply unpopular and Democrats control Congress.

[anne]

http://economistsview.typepad.com/economistsview/2007/09/the-iraq-war-is.html

September 17, 2007

"The Iraq War is Largely about Oil"
Edited by Mark Thoma

Alan Greenspan explains his comment about oil and the Iraq war:

Greenspan Says Hussein's Removal Was 'Essential', by Bob Woodward, Washington Post: Alan Greenspan, the former Federal Reserve chairman, said in an interview that the removal of Saddam Hussein had been "essential" to secure world oil supplies, a point he emphasized to the White House in private conversations before the 2003 invasion of Iraq.

Greenspan ... made the striking comment in a new memoir out today that "the Iraq War is largely about oil." In the interview, he clarified..., saying that while securing global oil supplies was "not the administration's motive," he had presented the White House with the case for why removing Hussein was important for the global economy.

"I was not saying that that's the administration's motive," Greenspan said in an interview Saturday, "I'm just saying that if somebody asked me, 'Are we fortunate in taking out Saddam?' I would say it was essential."

He said that in his discussions with President Bush and Vice President Cheney, "I have never heard them basically say, 'We've got to protect the oil supplies of the world,' but that would have been my motive." Greenspan said that he made his economic argument to White House officials and that one lower-level official, whom he declined to identify, told him, "Well, unfortunately, we can't talk about oil." Asked if he had made his point to Cheney specifically, Greenspan said yes, then added, "I talked to everybody about that." ...

Greenspan ... added that he was not implying that the war was an oil grab. "No, no, no," he said. Getting rid of Hussein achieved the purpose of "making certain that the existing system [of oil markets] continues to work, frankly, until we find other [energy supplies], which ultimately we will."

One more person telling the administration what they wanted to hear prior to the war....

[anne]

There we have the insane cost-benefit University of Chicago analysis of in which war and occupation of Iraq was supposed to be both costless and infinitely beneficial of terms of Middle East dominance extended to a Federal Reserve energy analysis. This is why getting the costs of Iraq right is so important, and why we shoul not tolerate the continual under-reporting of costs.

What we have from the Chicago and Fed war-guys, was a $2 trillion dollar cost-benefit analysis mistake; a monumtental economic mistake beyond the moral tragedy.

[Scott Pauls]

"The second book gives Greenspan's view of the world and is, I think, least successful."

I would ask - is the "second book" successful in presenting an accurate representation of Greenspan's view of the world? In the review, you seem to be saying that this section will bore the target audience but I, a person with little economic training, would be very interested in reading it if it indeed gave me an accurate view. I think that could be quite valuable!

[anne]

Curious listening on public radio to this intensely political person criticize Paul Krugman for being political while explaining how important it was for us to invade Iraq. When a Federal reverve chair shows just how intensely political political creature he is, and how he would help drive us to the moral and strategic disaster that is Iraq, possibly a career need be examined altogether differently. I am not amused.

[Peter K.]

"Greenspan ... added that he was not implying that the war was an oil grab. "No, no, no," he said. Getting rid of Hussein achieved the purpose of "making certain that the existing system [of oil markets] continues to work, frankly, until we find other [energy supplies], which ultimately we will.""

I haven't seen anything written by war critics to counter this. Not by Juan Cole, nor anyone else.

The problem with the global economy is that it is trickle down, and not very good trickle down. It basically benefits only the wealthy, for whom Greenspan went to bat for with greenlighting the tax cuts. (Interesting that he now admits he was a partisan player.) But the fact is, if Middle East oil is disrupted in a major way, the global economy will tank and all sorts of liberal pet projects, like universal health care, will be off the table. And that won't be the worst of it. The only hope for the ME is democracy. The current despotic regimes are leftover from the Cold War, where each side in the great tug of war, supported their "bastards."

Credit to Krugman though, he called Greenspan on the tax cut at the time and he was right.

[Charles]

The LAT put your review in Entertainment, rather than Business?

Hm.

I would like to plead Greenspan guilty to an economic felony he would probably wish not be remembered, namely his handling of the recession of the early 1990s. This caused serious dislocation in Southern California and New England as they tried to cope with the downsizing of defense.

I would say that the real role of the Fed is to use monetary policy to minimize the disparity between theoretical and actual output to the extent that monetary policy can accomplish that. The Bush I recession was a good example of how a stubborn Fed can actually damage the economy.

[wood turtle]

Economy in the tank, lower the interest rate.

Economy heated up, raise the interest rate.

What's to know? Why is he considered such a genius?

[Maynard Handley]

"Greenspan ... added that he was not implying that the war was an oil grab. "No, no, no," he said. Getting rid of Hussein achieved the purpose of "making certain that the existing system [of oil markets] continues to work, frankly, until we find other [energy supplies], which ultimately we will.""

And exactly what nefarious plots was Hussein (who, let us recall, made the only money he got through oil) planning in this regard? You know, ACTUALLY planning, as opposed to the same insane fantasies that claimed he had multiple nuclear weapons programs going.

The only thing Iraq was planning that impacted oil that I know about was a plan to sell it priced in euros, not dollars. Upsetting to the pride of the US, sure, but hardly the stuff of massive devastation of world markets.

[Rambuncle]

"Greenspan ... added that he was not implying that the war was an oil grab. "No, no, no," he said. Getting rid of Hussein achieved the purpose of "making certain that the existing system [of oil markets] continues to work, frankly, until we find other [energy supplies], which ultimately we will.""

I haven't seen anything written by war critics to counter this. Not by Juan Cole, nor anyone else.

What is there to counter? Where is the proof that it was necessary to eliminate Hussein to maintain oil markets? It is an opinion, and impossible to prove either way.

[sglover]

"Greenspan ... added that he was not implying that the war was an oil grab. "No, no, no," he said. Getting rid of Hussein achieved the purpose of 'making certain that the existing system [of oil markets] continues to work, frankly, until we find other [energy supplies], which ultimately we will.'"

I'm grateful to have a suspicion validated. Given its inflated self-regard, economics is a pretty shoddy discipline to begin with, but in Greenspan it's had its Lysenko moment.

At least Krugman can see clearly.

[bigTom]

Anne (unfortunately) seems to have it right.

[JonF]

Re: But the fact is, if Middle East oil is disrupted in a major way, the global economy will tank and all sorts of liberal pet projects, like universal health care, will be off the table.

I would think it would be the other way: if the economy tanks things like universal healthcare would become overwhelmingly popular andi ndeed quite necessary. Remember, Social Security rode in on the tails of the Great Depression.

[Peter K.]

JonF:

"I would think it would be the other way: if the economy tanks things like universal healthcare would become overwhelmingly popular andi ndeed quite necessary. Remember, Social Security rode in on the tails of the Great Depression."

Didn't the German Communists argue this right before they were routed by the Nazis? Which way it goes probably depends on other cultural and political circumstances.

[sglover]

"Re: But the fact is, if Middle East oil is disrupted in a major way, the global economy will tank and all sorts of liberal pet projects, like universal health care, will be off the table.

I would think it would be the other way: if the economy tanks things like universal healthcare would become overwhelmingly popular andi ndeed quite necessary. Remember, Social Security rode in on the tails of the Great Depression."

If, say, an Iranian adventure sends the price of oil into orbit, our politics will almost certainly get very, very interesting. I don't think there are any ironclad laws of politics, but if there were, one of them would certainly be, "Lost wars are never friendly to progressive causes". Bad as Iraq already is, it still doesn't affect the great majority of Americans in any tangible way. Every informed, non-delusional person knows Iran will be different, and like Iraq, it will be lost on the day the war begins.

Hey, maybe the sainted Greenspan thinks we need to attack Iran for oil, too?

[andres]

""Greenspan ... added that he was not implying that the war was an oil grab. "No, no, no," he said. Getting rid of Hussein achieved the purpose of "making certain that the existing system [of oil markets] continues to work, frankly, until we find other [energy supplies], which ultimately we will.""

I haven't seen anything written by war critics to counter this. Not by Juan Cole, nor anyone else.""

There's a first time for everything, Peter. Though I really doubt I'm the first, I'll give it a shot.

To argue that invading Iraq was necessary to stabilize world oil markets is disingenuous at best and downright dishonest as well. That purpose had already been accomplished in 1991, where the invasion of Kuwait nearly led to the toppling of Saddam Hussein even without a US invasion, thanks to both Kurdish and Shiite revolts. By 2003, Saddam Hussein had neither the relative military capability and probably not the willingness to try to disrupt the world oil supply with another invasion.

And in spite of the corruption associated with it, Iraq's oil exports were coming along under the Oil for Food and various other programs and were helping to keep the price of oil low relative to the almost continual increase that took place after 9/11.

If oil was a major factor in the decision to invade (and the real question with regards to the US oil companies and the neocons is: who was manipulating whom?) then it was entirely an oil grab where Iraq's new government would have little choice but to sell to US companies at below world market prices even as higher demand and dwindling long term reserves were driving the world market price upwards. I could be wrong, but that is what the Iraq catastrophe smells like after four years.

[christofay]

Like Hillary voting to support Cheney's war for oil, we can see here an expert making a major mistake in his support for Bush's main central planner.

What the expert calls Greenspan's successes I think are beyond one man's control. The great moderation is the only Greenspan success that I can think of in Prof Delong's view which narrowly is focused on one govt managed statistic. In the meantime we had mega-big asset price inflation in stocks and housing.

On the other hand, the present recession and depression can rightly be called the Bush/Greenspan Recession as their heavy hands are primarily responsible for our present banana republic finances.

Yes, a rising not a setting sun, "When the future is more valuable, more people in the economy focus their eyes on it and more actions are taken that will have an effect in the future: the building of factories, investment in research, construction of houses and apartments."

Building factories, we don't do that here any more.

Investment in research, Lou Gertsner slashed R&D, the source of outsize future profit margins, during his years at IBM. I'm loving your reports on your GM Prius, it's showing American factories have a future.

Houses and apartments, borrow up. The American working class and middle class creating the feedstock for investment product for the top 20% to play with.

[Neil B.]

No, we don't really have a market economy. How could we, and how could we avoid a central planner setting interest rates, with a fiat currency system based on monetization of debt - run by the Federal Reserve?

[Neil B.]

No, we don't really have a market economy. How could we, and how could we avoid a central planner setting interest rates, with a fiat currency system based on monetization of debt - run by the Federal Reserve?

[christofay]

Don't buy the book.

The Age of Flatulence: Always on the Right and Never Comprehensible, ghost written for an Alan Greenspan looking to replenish the coffers

The Age of Flatulence, Part II, for those who can stand the smell

[walkingtheline]

@Peter,

You are aware of the oil-for-food program and sanctions against Iraqi oil sales? Saddam was selling as much oil as he could get away with, and as quickly as possible too. Considering that less Iraqi oil is reaching international markets than before the invasion, the war should be considered more disruptive to the oil market than anything else. This was not unexpected.

If there was an oil motive involved, it would seem to be a desire to eliminate the sanctions in order to free more Iraqi oil for sale on the market. This is a profit motive, and I don't think it has anything to do with "stabilization", although I'm not even sure what that word is supposed to mean in this context anyway. It does sound rather soothing though, which is probably the effect intended.

[Peter K.]

walkingtheline:
"If there was an oil motive involved, it would seem to be a desire to eliminate the sanctions in order to free more Iraqi oil for sale on the market. This is a profit motive, and I don't think it has anything to do with "stabilization", although I'm not even sure what that word is supposed to mean in this context anyway. It does sound rather soothing though, which is probably the effect intended."

I take them at their word, post-9/11 they felt the Middle East needed an overhaul. Bin Laden was from Saudi Arabia, our "ally." His second in command from Egypt. After the Cold War, the Middle East was/is a mess, with a buch of dictatorships not doing much for their people.

They keep saying the long-term goal is democracy ("stabilization") in the Middle East. Obviously, our "allies" in Egypt and Saudi Arabia don't like it. Bush keeps mentioning South Korea, which took 20-30-40 years. And still has US troops there. Why do some people expect Iraq to turn into Sweden overnight?

I do think the war planners greatly underestimated how much years and years of Saddam plus sanctions destroyed Iraqi society. They glibly thought Iraq would quickly be selling tons of oil to pay for its reconstruction.

[Peter K.]

"And shame on Brad for buying in to and contributing to this phony image of Greenspan as some magical, omniscient "Maestro" pulling the strings of the economy behind the scenes... We'd have expected such a portrait from a defanged Bob Woodward, but, e tu, Brad?"

haha, obviously Brad is angling for a gig in the impending Clinton adminstration.

[Blissex]

«What we have from the Chicago and Fed war-guys, was a $2 trillion dollar cost-benefit analysis mistake; a monumtental economic mistake beyond the moral tragedy.» Not to worry! The full costs of the war have been easily funded by tax cuts! :-).

[PeonInChief]

On the issue of Hussein and oil: It had become clear by the beginning of the Bush administration that the sanctions would probably collapse within a couple of years. People in countries without stupid pills in the water were asking whether or not it made sense to continue the sanctions when the main effect of them was killing Iraqi children. Further there was a good deal of information about indicating that the Iraqis didn't have any major weapons systems and that, in particular, their nuclear program had been entirely dismantled. Contrary to the assertion of the Democrats who said they had been misled by the Administration, simple google searches would lead to the documents supporting this statement.

Having tried to oust Hussein through covert action (and having failed), the US government had few options. If the sanctions collapsed without US approval, the Iraqis might well have paid their Arab brethren back, not by raising the price of oil, but by crashing it. The Saudis would be especially vulnerable to that kind of oil shock. (And yes, having really cheap oil is not good for the world economy either.)

This is what I think Greenspan was referring to in his book, without explaining that the oil shock might have been the collapse, rather than an increase, in oil prices.

[PeonInChief]

On the issue of Hussein and oil: It had become clear by the beginning of the Bush administration that the sanctions would probably collapse within a couple of years. People in countries without stupid pills in the water were asking whether or not it made sense to continue the sanctions when the main effect of them was killing Iraqi children. Further there was a good deal of information about indicating that the Iraqis didn't have any major weapons systems and that, in particular, their nuclear program had been entirely dismantled. Contrary to the assertion of the Democrats who said they had been misled by the Administration, simple google searches would lead to the documents supporting this statement.

Having tried to oust Hussein through covert action (and having failed), the US government had few options. If the sanctions collapsed without US approval, the Iraqis might well have paid their Arab brethren back, not by raising the price of oil, but by crashing it. The Saudis would be especially vulnerable to that kind of oil shock. (And yes, having really cheap oil is not good for the world economy either.)

This is what I think Greenspan was referring to in his book, without explaining that the oil shock might have been the collapse, rather than an increase, in oil prices.

[Derek]

A little disappointed in Brad's review of Greenspan. I expected better. Those weren't "misdemeanors." Supporting the tax cuts was either stupid or a transparent effort to "brown-nose" so he could continue being Fed chairman. Recall Suskind's book - "The Price of Loyalty." It is more than a little disingenuous to now claim he was misunderstood. That is just so much BS. Thank God, we have Krugman.