Comments from Joseph Stiglitz on the Mess Greenspan Made

Brief comments from Joseph Stiglitz. I have always found his books and articles interesting. It is name worth checking out on Google or Amazon.com. Text in bold is my emphasis. From Bloomberg:

Joseph Stiglitz, a Nobel-prize winning former World Bank economist, said the U.S. economy risks tumbling into recession because of the subprime crisis and a ``mess'' left by former Federal Reserve Chairman Alan Greenspan.

``I'm very pessimistic,'' Stiglitz said in an interview in London today. ``It's not just the housing sector. Over the last five to six years our economy has been bolstered by the real estate sector.

``Americans have been taking money out of their houses to finance a consumption binge,'' Stiglitz said. ``Last year alone mortgage equity withdrawal was between $850 billion to $950 billion. That game is over.''

Stiglitz said that the U.S. faces ``a very major slowdown, maybe recession.''

``Alan Greenspan really made a mess of all this,'' Stiglitz said. ``He pushed out too much liquidity at the wrong time. He supported the tax cut in 2001, which is the beginning of these problems. He encouraged people to take out variable rate mortgages. That helped create the subprime crisis.''