"The situation we face in financial markets today was largely the creation of a Federal Reserve under Alan Greenspan's long tenure," says University of Maryland business and economic historian David Sicilia. "It's a shame he wasn't as forthright then as he is now as a prominent private citizen."
Newswise — University of Maryland historian David Sicilia, a specialist in economic and business history and author of The Greenspan Effect: Words that Move the World's Markets (2000), calls the dire economic warnings Greenspan made yesterday "clear-eyed," but adds that Greenspan helped create the current situation in the financial markets.
Sicilia calls the current credit crisis "the worst in postwar history."
Find Sicilia's comments, contact information and background below.
Sicilia Bio:http://www.history.umd.edu/Faculty/DSicilia/bio/index.htmlSicilia Web page:http://www.history.umd.edu/Faculty/DSicilia/index.htmlOther UM economic experts: http://www.newsdesk.umd.edu/experts/hottopic.cfm?hotlist_id=145
SICILIA COMMENTS:
"When he stood at the helm of the Federal Reserve, Mr. Greenspan was famous for hedging and obfuscation in his public commentary, so as not to roil markets. As a private citizen, his tongue has loosened. On ABC's This Week yesterday, Greenspan bluntly characterized the financial crisis as 'once-in-a-century,' and speculated about its likely broader economic impact. Today's news about Lehman's bankruptcy underscored Greenspan's dire warnings.
"Greenspan's assessment seems clear-eyed. Viewed in historical perspective, the current credit crisis surely is the worst in postwar history, and is likely to usher in a prolonged recession that may indeed bring back the crippling stagflation of the 1970s.
"There are doubters, but most investors will not see Greenspan's latest utterances as news. One cannot help wonder whether the former Fed Chairman's strong words are intended in part to distance himself from a crisis he helped create. Where were similarly strong warnings, not mention actions, when the mortgage market became overheated during Greenspan's final term? Why didn't Greenspan's Fed try to regulate derivatives and hedge funds? And what about its unofficial policy of bailing out 'too-big-to-fail' giants, beginning with Long Term Capital Management in 1998? In that way Greenspan's Fed helped create a dilemma by professing the virtues of the marketplace, while interfering with its operation."
"The situation we face in financial markets today was largely the creation of a Federal Reserve under Alan Greenspan's long tenure. It's a shame he wasn't as forthright then as he is now as a prominent private citizen."
RSS