Greenspan takes center stage in 'Age of Turbulence'

"Sometimes I get criticized, and I deserve to be criticized, and that's part of the game," Greenspan says. "But this one, I'm innocent."

Greenspan argues that the Fed mainly has influence over short-term interest rates, which affect adjustable-rate mortgages, a small portion of the overall mortgage market. Long-term interest rates, which influence fixed mortgage pricing, are somewhat beyond the Fed's control and became more so earlier this decade.

"We tried to push them up in 2004, and we failed," he says. "What we found was that the global forces of disinflation were far too powerful for even the Federal Reserve. We tried again in 2005, and we failed."

Greenspan notes that if the housing bubble was the Federal Reserve's fault, why were similar such bubbles — many of them worse than what was seen in the USA — created around the globe?

Greenspan argues that the growth of the subprime mortgage market has helped expand homeownership in the USA, a worthy endeavor despite the downside that has been seen in recent months as people who were less creditworthy have struggled to make escalating payments on adjustable-rate mortgages.

"Subprime is risky," he says. "But it's so urgent that we get broad ownership, especially of homes, that from a societal point of view and from an economist's point of view, there's no question in my mind … that it is worth it."

Regarding a speech he once gave arguing adjustable-rate mortgages made more economic sense than fixed-rate mortgages for some, Greenspan says, "I'd reproduce that speech word-for-word today."

Memoir penned in the bathtub

Greenspan started writing The Age of Turbulence a day after he retired from the Fed in January 2006. He has taken little time off.

"I was trying to hold the whole book in my head at the same time, and I knew if I took two weeks off it would just spill away and I'd have to pick up again," he says in the interview.

He wrote the 531-page book as he did his speeches at the Fed — in longhand and mainly while sitting in the bathtub, which he does every day since starting the practice after a back injury in the 1960s. He says the invention of a pen that can write in water has made it easier for his assistants to make out the sometimes soggy papers.

The book is in two parts. The first is autobiographical, starting on Sept. 11, 2001, and then winding back to his childhood and eventually going into detail about his time at the Fed.

He includes details of his relationship with wife Andrea Mitchell. After their first date, he invited her back to his apartment to read an economics paper he had written. They've been together ever since.

"I'm not threatened by a powerful woman; in fact, I'm now married to one," Greenspan says, when discussing TV newswoman Barbara Walters, whom he dated after meeting in 1975. "The most boring activity I could imagine was going out with a vacuous date — something I learned the hard way over my years as a bachelor."

But the book mainly focuses on Greenspan and his career. In the second half, Greenspan covers a number of his pet topics, many of them familiar to those who have been following the former chairman's speeches and testimony. He argues U.S. primary and secondary education is slipping and must be reformed quickly to reduce income disparities between the skilled and unskilled, says trade protectionism can only hurt the economy and advocates looser immigration policies to provide more skilled workers.

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