Alan Greenspan’s critics are crying foul over the former Federal Reserve chairman’s new spin on why the economy is hitting the skids.
In numerous interviews promoting his book “The Age of Turbulence” – for which he received an $8 million advance – Greenspan claims the White House’s spending binge is largely to blame for the current credit crunch.
But some analysts and portfolio chiefs say Greenspan was the problem from the start. In fact, many market observers loudly predicted the coming mess four years ago, mostly to deaf ears.
“Greenspan’s now warning about double-digit inflation, but it’s because of what he did that we’re even having the inflation problem,” said Peter Schiff, CEO of Euro-Pacific Capital Partners.
“Greenspan says, ‘You don’t know a bubble until it pops.’ But he created the stock market bubble and the housing bubble and set up the commodities bubble – all because of the cheap money he threw around for so long,” Schiff added.
Schiff’s new book, “Crashproof: How to Profit in the Coming Economic Collapse,” dubs Greenspan’s over 18-year reign at the Fed as the “most inflationary and irresponsible in American history.”
“Greenspan kept rates too low for too long, and there’s no reversing the damage anytime soon,” said Schiff, whose fund showed a return of 400 percent over the past two years by investing against Greenspan’s moves.
“We’re on our way to a train wreck,” Schiff warned in an interview with The Post two years ago. “We’ve been living in this fantasy bubble for too long.”
Meanwhile, Wall Street is awaiting word from Fed Chairman Ben Bernanke, who inherited Greenspan’s cheap money mess, on whether the Fed will cut rates today.
While investors have factored in the rate moves, earnings reports due this week from five of Wall Street’s biggest banks are another matter. Investors are hoping profits won’t be hit as hard as some analysts expect.
Lehman Brothers reports today, with Morgan Stanley tomorrow, followed by Goldman Sachs and Bear Stearns on Thursday, and Merrill Lynch on Friday.