Nobel Laureate Economist Joseph Stiglitz: Greenspan, Bush To Blame For U.S. Crisis

Greenspan, Bush to blame for U.S. crisis: Stiglitz

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Reuters US Online Report Top News
Apr 27, 2008 05:48 EST

VIENNA (Reuters) - Former Federal Reserve Chairman Alan Greenspan and the government of President George W. Bush were to blame for the U.S. financial crisis, Nobel laureate economist Joseph Stiglitz said in a magazine interview.

"This man (Greenspan) has unfortunately made a lot of mistakes," said former World Bank chief economist Stiglitz, according to a preview of the interview to be published on Monday in profil magazine.

"His first one was to support all the tax cuts which were introduced under Bush -- they didn't stimulate the economy very much ... This task was then transferred more towards monetary policy, though then (Greenspan) created a flood of credits with low interest rates," Stiglitz was quoted as saying.

Earlier in April, Greenspan said in an interview with CNBC television that the U.S. economy was in recession and defended his chairmanship of the U.S. central bank against charges that his policy missteps had laid the groundwork for the crisis.

He said decisions during his charge had been rationally constructed based on evidence at the time.

Stiglitz said Bush's government was also to blame.

"I reproach them, that the economy was not as resilient as it could have been due to the ongoing tax cuts and the huge costs incurred by the war in Iraq," he was quoted as saying.

He said it was a myth that Europe could decouple itself from the United States.

"Especially the weak dollar will continue to hit the European economy hard, because it will make it much harder to export," he said.