Paul Krugman Is too Tired to Comment on Alan Greenspan...

Brad DeLong
BradBlog

He writes:

Rantings of an Ex-Maestro: Some people have asked me for reactions to this piece by Alan Greenspan (pdf) on how Obama’s activism is preventing economic recovery. I could go through the weak reasoning, the shoddy econometrics that ignores a large literature on business investment and ignores simultaneity problems, etc., etc.. But never mind; just consider the tone. Greenspan writes in characteristic form: other people may have their models, but he’s the wise oracle.... Sorry, but he doesn’t get to do that any more. 2011 is not 2006. Greenspan is an ex-Maestro... who saw no evil, heard no evil, refused to do anything about subprime, insisted that derivatives made the financial system more stable, denied not only that there was a national housing bubble but that such a bubble was even possible.

If he wants to redeem himself through hard and serious reflection about how he got it so wrong, fine — and I’d be interested in listening. If he thinks he can still lecture us from his pedestal of wisdom, he’s wasting our time.

So let me take up the task.

Greenspan writes:

What is most notable [about today]... is the unusually low level of corporate illiquid long-term fixed asset investment.... This contrasts starkly with the robust recovery in the markets for liquid corporate securities.... What, then, accounts for this exceptionally elevated level of illiquidity aversion?... I infer that... the effect can be explained by the shock of vastly greater uncertainties embedded in the competitive, regulatory, and financial environments faced by businesses... deriving from the surge in government activism...

I don't see how this hangs together in any coherent fashion at all.

(More here.)