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You are right. A look at the St. Louis Fed's site shows that rates ranged from 8.2% in January 1009 down to 2.96% in April and December of 1993 and then back up to 6.05 in April of 1995 and back down into the mid 5s by Jan. 1996, where it remained until 1Q 2000, when it began its climb back to above 6.5% by Sept. 2000, (happy election, W), to drop back down to mid 5s in Feb 2001, from where it dropped to 1.01% by Sept. 2003.

And that was surely an improvement over the drastic rates that prevailed in the early 90s and in the 80s. A case could be made that Greenspan didn't really turn malignant until "W" took office. But with the Clinton Administration running a budget surplus in 2000 a significant tightening by the Fed could reasonably be expected to burst the tech bubble, which may have been the intent. So Greenspan could more likely be accused of keeping policy too tight under Clinton.

Of course there was the ongoing deregulation of the financial sector and the policy direction of supporting sending manufacturing offshore that had been explicit in NAFTA but which showed up more strikingly with China. Perhaps, as you suggest, diplomatic pressure on various financial agreements was more important to the various '90s bubbles. On the home front refusing Brooksly Born  the authority to regulate derivatives, for which she had been advocating for some time, which came to a head in May, 1998 and which was strenuously opposed by Greenspan, Rubin and Summers, who were joined by in early May by Arthur Levitt, Chairman of the SEC.

Had she gotten the authority in early 1998 that would certainly have been blamed as THE cause of the LTCM collapse later that year and attempts likely would have been made to hang the Russian and Asian crises around her neck as well. Had she gotten the authority earlier, say in 1995, some of these crises may have been averted or mitigated, but we will never know.

Thanks for forcing me to look at the record regarding interest rates. Somewhere I had gotten a false impression of Greenspan's activities in the '90s.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Apr 26th, 2011 at 03:08:26 PM EST
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