Greenspan's formula of reducing market regulation by substituting it with post-crisis intervention is merely buying borrowed extensions of the boom with amplified severity of the inevitable bust down the road. [It] has adopted the role of a cleanup crew of otherwise avoidable financial debris rather than that of a preventive guardian of public financial health. [...] Greenspan, notwithstanding his denial of responsibility in helping through the 1990s to unleash the equity bubble, had this to say in 2004 in hindsight after the bubble burst in 2000: "Instead of trying to contain a putative bubble by drastic actions with largely unpredictable consequences, we chose, as we noted in our mid-1999 congressional testimony, to focus on policies to mitigate the fallout when it occurs and, hopefully, ease the transition to the next expansion." By "the next expansion", Greenspan meant the next bubble, which manifested itself in housing. [...] Greenspan also supported President George W Bush's $1.3 trillion tax cut of 2001 and the additional $674 billion tax cut of 2003, which instead of helping the economy merely shifted debt from the private sector to the public sector in the form of fiscal deficits and sovereign debt. Instead of increasing savings from the tax cut, the private sector promptly took on more debt. The tax cut so favored the rich that the tax savings from the low-income earners mostly go to pay interest on the loans funded by tax savings of the rich.
[...]
Greenspan, notwithstanding his denial of responsibility in helping through the 1990s to unleash the equity bubble, had this to say in 2004 in hindsight after the bubble burst in 2000: "Instead of trying to contain a putative bubble by drastic actions with largely unpredictable consequences, we chose, as we noted in our mid-1999 congressional testimony, to focus on policies to mitigate the fallout when it occurs and, hopefully, ease the transition to the next expansion."
By "the next expansion", Greenspan meant the next bubble, which manifested itself in housing. [...]
Greenspan also supported President George W Bush's $1.3 trillion tax cut of 2001 and the additional $674 billion tax cut of 2003, which instead of helping the economy merely shifted debt from the private sector to the public sector in the form of fiscal deficits and sovereign debt. Instead of increasing savings from the tax cut, the private sector promptly took on more debt. The tax cut so favored the rich that the tax savings from the low-income earners mostly go to pay interest on the loans funded by tax savings of the rich.
When asset prices rise, it reflects a change in the money supply/asset relationship, meaning more money chasing the same number of assets. Thus when asset prices rise, it is not necessarily a healthy sign for the economy. It reflects a troublesome condition in which additional money is not creating correspondingly more assets. It is a fundamental self-deception for economists to view asset-price appreciation as economic growth. A housing bubble is an example of this.
The last article of the same analyst Henry C K Liu is
Why the subprime bust will spread
Also notice a parallel article (by other analyst)
The subprime dominoes in motion
