By Ken Hart
Former Federal Reserve Chief Alan Greenspan is making a lot of waves with his new memoir, "The Age of Turbulence." The official subtitle is "Adventures in a New World," but based on his comments in interviews, it should be "It's Not My Fault!"
This man has been portrayed as a financial genius, an elderly Harry Potter of the economy. And maybe some of that is deserved. But let's not forget that he failed to adequately prepare the economy for the bursting of the dot-com bubble in the late '90s, just as he suggests that he was taken off-guard by the current collapse of the housing market. Other economists, such as a professor at Stanford, say that Greenspan's own post-2001 interest rate cuts artificially inflated the housing boom; Greenspan retorts that the housing boom was a "global" phenomenon and that he takes absolutely no blame (a strong view that he reiterated on the "Today" show Monday morning).
Other folks with much better knowledge of economics than me can debate Greenspan's financial merits, but Greenspan raised a bigger ruckus by: 1) attacking the fiscal policies of George W. Bush, and 2) making this statement in his book:
"I am saddened that it is politically inconvenient to acknowledge what everyone knows: the Iraq war is largely about oil."
Immediately - and understandably - bloggers and politicians on the left seized on this as an affidation - from a Republican insider! - of what we already knew: Iraq was invaded not because of WMD, but because of the advantage the U.S. would gain by seizing an oil-rich nation in the center of the Middle East.
Almost as immediately, however, Greenspan started backtracking from this comment. In an interview with the Wall Street Journal, Greenspan said:
"My view of Saddam over the 20 years … was that he was very critically moving towards control of the Strait of Hormuz and as a consequence of that, control of the oil market."
The Strait of Hormuz is very important - much of the world's oil supply travels through it, and Greenspan said on the "Today" show that if Saddam got control of it, oil prices could practically triple in a short period of time. Sounds bad, right?
A financial wizard Greenspan may be, but he clearly got a D in geography. As has been pointed out elsewhere, Iraq doesn't touch the Strait of Hormuz. After the Gulf War, Saddam had no naval capability, and his air force was grounded. So, to take control of the Strait, he would have needed to send his troops across miles of hostile territory to seize one or more ports ... and, oh yeah, go toe-to-toe with the U.S. Navy once he got there.
As for the Bush fiscal policy, Greenspan has taken criticism for backing Bush's disastrous tax cuts for the wealthy -- the results of which are now being felt. Greenspan now says, in essence, that he backed "a" tax cut, not necessarily Bush's tax cuts. Again, Greenspan maintains that he bears no blame for the current fiscal problems.
What's going on here? It certainly sounds like Greenspan, like many other Republicans who see the GOP Gravy Train running off the tracks, is trying to salvage his legacy and cover his butt by saying that he was an innocent bystander to everything that happened during the Bush Administration. He even tries to have it both ways by saying that recession odds have grown yet the economy "is not doing badly." No matter what happens, he wants to be seen as the Economical Karnak.