WSJ take on Greenspan's new book

Greenspan spoke in favor of Bush's tax cut (although he wanted some changes like triggers that never occurred). He lowered the fed funds rate to 1% which spurred huge speculation in real estate. The problem is that Bush's tax cuts have really been heavily focused on the rich who have lower marginal propensity to consume. Fiscal discipline has been a slippery slope with republicans failing to provide private accounts for Social Security but managing to massively cut taxes for a barrage of special interests. So we ended up with both massive monetary stimulus and fiscal stimulus for the 2000-2001 recession. The problem is the monetary stimulus went into malinvestment in housing and the fiscal stimulus went to: wealthy people (estate tax, foreign earnings repatriation, business investment/Cayenne tax credit, dividend tax cut) and overseas (Iraq War). So there was poor allocation of resources of both stimuli.
 
Interesting analysis on what the Fed is going to do.





<a href="http://www.cnbc.com/id/20822824">www.cnbc.com/id/20822824</a>





BTW: I never understood the interest in Money Honey. I think Erin Burnett is much more attractive than Maria.
 
As a follow-up. . .here is some analysis as to the impact of the proposed rate cut.





<a href="http://www.cnbc.com/id/20834638">www.cnbc.com/id/20834638</a>
 
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