Alan Greenspan, the former head of the US Federal Reserve has released his memoirs, ‘The Age of Turbulence’, just as the economy goes into open crisis and ahead of a critical Federal Reserve Bank meeting.
The man dubbed ‘the Oracle’ will tell his own tale of nearly two decades at the helm of one of the world’s most powerful financial institutions.
Greenspan, who calls himself a lifelong Republican, writes that he advised the White House to veto some bills to curb ‘out-of-control’ spending while the Republicans controlled Congress.
He says President George W Bush’s failure to do so ‘was a major mistake’.
Republicans in Congress, he writes, ‘swapped principle for power. They ended up with neither. They deserved to lose’ in the 2006 Congressional elections.
He praises the intelligence of presidents Nixon and Clinton.
He adds that: ‘I am saddened that it is politically inconvenient to acknowledge what everyone knows: the Iraq war is largely about oil.’
His memoirs are due out just as the institution he led for so many years holds its most anticipated meeting in years, tomorrow, awaiting some sign that might help counter the effects of the subprime mortgage crisis that has rattled markets, led to a squeeze in credit and the threat of recession.
Greenspan defends himself from critics who say he is responsible by lowering interest rates in 2003: ‘They are mistaken. It was our job to unfreeze the American banking system if we wanted the economy to function.
‘This required that we keep rates modestly low.’
81-year-old Greenspan now operates a consulting firm Greenspan Associates.
• Meanwhile, the subprime mortgage crisis in the US and signs of economic frailty, including the particularly weak August jobs data, have prompted speculation that the Federal Reserve will cut interest rates by as much as half a percentage point next week from the current 5.25 per cent.
Howard Archer, the chief UK and European economist at Global Insight, said the record level of the euro is not all bad news for European firms.
‘Euro zone consumers could benefit from cheaper prices for some imported goods. There is also some good news for euro zone companies,’ he said.
The price of oil was near record highs on Thursday after a report showed US crude inventories fell in the latest week, driving oil futures above $80 a barrel for the first time.
Some, however, point to the potential dangers of a strong euro to the economies of countries that use the currency – including Germany, the world’s largest exporter.
‘In this situation, everything that has a disadvantageous effect on exports is a problem, and the rising euro is part of that,’ Peter Bofinger, a member of the German government’s independent economic advisory panel, was quoted as telling the daily Berliner Zeitung.
‘If the rate climbs further, politicians should think about supportive buying in favour of the dollar,’ he added, according to the report.