Eat those words, Al.
N.Y.Times Krugman on AG, quoting AG's July testimony to Congress on monetary policy. "Although the uncertainties of earlier this year are as yet not fully resolved, the U.S. economy appears to have withstood a set of blows .... Not surprisingly the depressing effects of recent events linger .... Nevertheless, the fundamentals are in place for sustained healthy growth."
Krugman admits he pulled off a mini time warp in his quoting AG.
He was quoting from AG's July 2002, not his July 2003 remarks to Congress.
Krugman blames the huge sell-off in the bond market on AG's July 2003 remarks. "As far as I can make out," he writes, "Mr. Greenspan's optimism is entirely based on models predicting that tax cuts and low interest rates will get the economy moving. But that's what the models said last year, too: the report that accompanied his July 2002 testimony predicted an employment rate of 5.25 to 5.5 percent by late 2003 {the rate is now 6.4 percent). Maybe tax cuts mainly for the affluent aren't as effective as the models say."
Krugman On AG: He's prepared to forgive AG for his recent fumbles "if it weren't for the huge fiscal damage he has inflicted on the republic in these past few years."
Krugman cites chapter and verse for AG's transgressions: "Let's not forget that back in 2001, Mr. Greenspan lent crucial political aid to the first Bush tax cut, arguing that such a cut was necessary to prevent, yes, excessive budget surpluses and too rapid a payoff of the federal government's debt."
Krugman on summing up AG's blunders: Greenspan's legacy is in tatters. History will remember him not as the maestro of the new economy, but as an accomplice in America's descent into dept.For his own self-esteem, he has to believe that things will somehow turn out allright. Thus his sudden, destructive breakout of optimism.
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