Alan Greenspan was celebrated as a master of monetary policy during his long chairmanship of the Federal Reserve, from 1987 to 2006. But policies put in place during Greenspan's tenure have been blamed by some for the financial crisis that began shortly after he left, and the so-called Great Recession.
Greenspan, 87, now president of Greenspan Associates LLC, a consulting firm, talks with Morning Edition host Renee Montagne about his new book, The Map and the Territory: Risk, Human Nature, and the Future of Forecasting, and discusses why he says it is so difficult for even experts to predict economic calamity.
On why top government economists didn't foresee the economic collapse, despite years of warnings from some business journalists who pointed to predatory lending and other signs
It's not that we didn't see it. I, for example, was saying in 2001, 2002, that the big surge in housing financed by mortgage debt, can't continue. But it went on for four more years. One of the things I try to designate in the book is why it is so difficult to catch these actual crisis periods. I probably could have caught a number of different crises. I came very close in the dotcom boom. I did not come close at all on the housing boom. You're talking in terms of the roof was falling, and after a while you stop saying so, because the roof never fell.
On lessons from the 2008 collapse of Lehman Brothers, one of the nation's largest investment banks
You'd need government regulation to set up the capital standards because most banks, as I've seen, will fight endlessly trying to get as little capital requirements as possible. If you're thinking in terms of the period when we all thought that people acted in their long-term self-interest, you can demonstrate in that hypothetical case that you need no regulations at all. It will be automatic. But that's not the way the world works. The premises that I believed prior to 2008 I had to discard because the evidence definitely said I was wrong.
On why he believes that lifting some new financial regulations and returning to a mode of "creative destruction" could help the economy
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