Enterprising Investor Forum

Greenspan on housing issues Tuesday, February 26, 2008

This is part of an interesting interview where Greenspan discusses how the troubles came about, what the Fed knew and what they could have done to avoid being in the drastic situation that has unfolded.

He actually admits that he was aware that these practices where going on but that he had no notion about how significant they were he actually says “I didn’t get it”:

Some economists actually think that Greenspan created the housing bubble and the credit crunch by keeping interest rates too low and they find it ‘interesting’ that he has now been hired by Paulson seeing that the fund was one of the only winners in making aggressive bets against subprime home loans in the United States (making an estimated 12 billion USD profit from shorting the sector).

This is a rare glimpse of Greenspan under pressure and being questioned for his practices but he entirely stands behind his decisions and the fact that – he believes that – he took the best possible course of action.

Enjoy!