No Fan of Greenspan

Despite constant praise from the media during his tenure at the Federal Reserve, some people think Alan Greenspan has done us in.

And yesterday it happened. Stephen Roach, the chief economist for Morgan Stanley & Co. (nyse: MWD – news – people ), one of the most powerful investment banks and one of the 50 largest companies in the world, says Greenspan has "driven the world to the economic brink."

Writing in an upcoming issue of Foreign Policy, Roach says that when Greenspan steps down as chairman of the Federal Reserve next year, he will leave behind a record foreign deficit and a generation of Americans with little savings and mountains of debt. Americans, Roach says, are far too dependent on the value of their assets, especially their homes, rather than on income-based savings; they are running a huge current-account deficit; and much of the resulting debt is now held by foreign countries, especially in Asia, which permits low interest rates and entices Americans into more debt.

Contrast that with a later part of the article that points out how others have viewed Greenspan.

Many have credited Greenspan with saving the world following the 1997-98 Asian financial crisis. Time magazine went so far as to put the gnome of Constitution Avenue on its cover, under the headline "Committee to Save the World."

Unfortunately, we can only speculate as to how things would have been different if Greenspan weren't around. There isn't any way to know for sure. But I would point out that the criticisms Roach levies have been around for a while as general criticisms of the American economy. Our debt consumption has yet to drag us under as the doomsdayers keep saying it will. Maybe we've been lucky and have staved it off a few more years, or maybe it isn't the critical issue the doomsdayers think it is.