Feb 18, 2011

Alan Greenspan says "Not bad", gives his monetary policy credit following '08 Dow plunge

Greenspan brought up the fateful day in September 2008 when the Dow Jones industrial average plunged 6.98 percent. However, life picked up for him after the initial shock.

"The morning after we learned of the news," he said, "I was able to look myself in the mirror and say, 'Hey, not bad.'"

According to Paulson, the recovery process has been rather "tepid." Greenspan attributed the slow recovery to excessive government activism.

"What I'd suggest is that we calm down; let the economy heal by itself," he said. "But we are doing better now with the halting of more stimului and programs like 'Cash for Clunkers."

Greenspan also emphasized that the future health of the housing sector would depend on the phasing out of "contradictory" government-instilled institutions like Freddie Mac and Fannie Mae, whose objective of providing affordable housing conflicted with the necessity to "maximize profit for shareholders."

~Alan Greenspan, former Fed chairman, "Greenspan, Paulson discuss politics and economy", NYU Washington Square News, February 17, 2011

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