Tuesday, July 28, 2015

Clinton's "Delphic oracle" Alan Greenspan

Clinton's "Delphic oracle" Alan Greenspan

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Sen. Hillary Clinton addressed a wide range of issues during her session that lasted about an hour with the Daily News editorial board, and some of her most interesting comments dealt with the topic du jour: America's struggling economy. She'd spoken on financial issues earlier in the day on the Penn campus, and she was pressed about one of her more controversial ideas: Naming Alan Greenspan, the former Federal Reserve chairman, to what she called "a high-level emergency group" to deal with the problem of high risk mortgages.

She told the Daily News that she'd suggested Greenspan, former Fed chair Paul Volker and former Treasury Secretary Ronald Rubin because "each one is supporting one of the three of us" -- an apparent allusion to Clinton, Barack Obama, and John McCain, the three remaining presidential contenders.

But she was especially prodded on the choice of Greenspan. As some critics have pointed out, the former Fed chair was inactive as the housing bubble grew, and in fact seemed to encourage some of the bad practices that blew up in Wall Street's face. As noted here:

He said a Fed study suggested many homeowners could have saved tens of thousands of dollars in the last decade if they had ARMs. Those savings would not have been realized, however, had interest rates shot up.

"American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional fixed-rate mortgage," Greenspan said.

 

So the Daily News asked, why Greenspan, that wasn't he off-base on the housing bubble, and here was her response:

"Not only that, but the Fed didn't act while he was there. But he has a calming influence still to this day on Wall Street -- don't ask me why because I never understand what he's saying -- but nevertheless people respond to that Delphic oracle approach. I think it would be wise to include him. And recently he's come out and vert smartly so that we have to deal with housing and maybe we need to have some kind of buyout mechanism for mortgages. So he's moved on his understanding and depth of the problem -- but you know you could pick three others. You just have to have some demonstrable involvement of presidential leadership...

So now we have John McCain saying he doesn't know much about the economy, and Hillary Clinton liking Greenspan even though she has no idea what he's saying -- God help the United States of America.

She did speak clearly, otherwise, and forcefully on the economy, saying that economic problems today are worse than in 1993, when her husband took office, because of foreign indebtedness and oil dependancy. She also made a rather alarming prediction:

"In 1993 we were in a recession -- I think we'll be in a recession in 2009 when the next president takes office," she said. Since many economists believe the economy has been in a recession since the start of 2008, that would mean a longer and deeper slowdown than leaders are hoping for.

She blamed part of the problem on President Bush's management style, saying Bush "needs to have the same level of engagement with the economy" that he has with Iraq. "Part of his credentials when he ran was he would be the first MBA president -- but he hasn't demonstrated much concern about what's going on."

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Will Bunch
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