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Alan Greenspan is preparing to hit the publicity trail to promote his eagerly-awaited memoirs, just as the feted former chairman's tenure at the US Federal Reserve is facing a revisionist onslaught.
Economists and commentators blame him for the current turmoil in the credit markets - and for the ominous signs of an economic slowdown to come.
Rather than being the victory lap of television studios he once envisaged, the interviews Greenspan has planned to coincide with publication on Monday of his book, The Age Of Turbulence, will see him trying to shore up the legacy of his 18 years in charge of US monetary policy, which ended in January 2006.
The timing of the book launch could hardly be more symbolic, coming just a day before the most important test of Greenspan's successor, Ben Bernanke. On Tuesday, the Fed will consider an interest rate cut which may be needed to prevent the bursting of a bubble in the housing and credit markets from wrecking the rest of the US economy.
Greenspan stands accused of allowing these bubbles to inflate by holding rates too low for too long in a bad habit his critics say stretches back over his tenure, from the first few months where he cut rates sharply in the wake of the 1987 market crash. "With hindsight, it is possible to see his modus operandi was to blow one bubble after another," said Tom Schlesinger, executive director of Virginia-based Financial Markets Centre.
Aggressive moves to cut interest rates in 1987 were credited with preventing the stockmarket crash from affecting the rest of the US economy, which kept on growing, but a similar move to restore confidence after the collapse of the hedge fund Long-Term Capital Management in 1998 has been blamed for inflating the dot.com bubble, which burst in 2000.
Economists are debating the extent to which his final period of interest rate cuts at the start of the decade - including a full percentage point cut after the September 11 attacks of 2001, and further reductions that took the main Fed funds rate down to just 1 per cent - was a factor in the cheap credit explosion. Low interest rates certainly helped to generate a speculative house price bubble and a whole industry offering mortgages to borrowers previously deemed uncreditworthy - and who are now proving themselves so.
- Independent
