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WWD: In August 2007, you wrote that “the country’s economic well-being is held hostage by the ‘modern’ financial system, with its fallible computer models and extreme oscillations between excess and panic. Our dependence started with fi nancial deregulation 25 years ago, but the dangers have grown steadily larger, still unaddressed by the political system.” What so concerned you that caused you to sound the alarm?
William Greider: Well, the housing thing was coming unwound then. In the spring and into the summer, you could see that the bubble had popped. And if you understood the fl aws, the kind of gross dereliction of the Federal Reserve and other regulators, going back some time, you understood that they were creating false prosperities, refl ected not in the real economy of producers with the workers, but in the fi nancial system. And that became this great talisman for prosperity.
WWD: Does it feel good in a way to have been right about something this awful?
W.G.: I’m a little ambivalent about it. On one hand, it makes you sick all over again. On the other, it is good to be confi rmed when so many people thumbed their noses at me for years. Because I felt for a long time like a bag lady standing on a street corner waving my placard. And the way this country runs, most times, especially the last 20 years, the governing elites, including the highfl ying press, gather around a set of ideas and convince themselves that they’re in charge of life and all good things that happen and they very relentlessly exclude dissenting opinions. That’s not just about me, it’s a lot of things. There are always some bag ladies on the street saying, “This is cockeyed” — Iraq being the most dramatic example, but there are a lot of others. And business goes on as if those words were never even said.
WWD: Last summer, you wrote that deregulation supported by Democrats under President Clinton helped lead to the current fi scal situation. If the mess lies with them as much as the Republicans, how on earth do we get out of it?
W.G.: In 1929, after a couple false starts, Congress hired an assistant New York district attorney named Ferdinand Pecora who really knew how to catch crooks, and he pored through those big banks, did the investigations right and had hearings that were sensational. But we may not get a modern-day equivalent of the Pecora hearings because both parties are deeply implicated in creating the preconditions for the meltdown. And if we don’t, our next best hope is a free, vigilant press.
WWD: Have you seen a big difference between Barack Obama and John McCain with regard to their proposed economic policies?
W.G.: Yes. McCain is hopeless. And I say that as someone who liked him a lot 10 years ago. But this year he’s completely lost it. He never really understood economics all that well and, now, he’s given himself over to the right wing agenda. Not just the religious Christians, but the bankers and everybody else. Obama is more cautious and deliberate than I would like, or some others would like, but I have a lot of hope in him to be able to evolve to a much stronger view of things.
WWD: You’ve long been a big critic of Alan Greenspan, whom you called the “one-eyed chairman” in 2002. Obviously, everyone is mad at him now, but why were you so critical when times were good?
W.G.: Greenspan tipped the balance hard in favor of capital and against labor, and he did that by disinfl ating the economy, suppressing labor wages and pumping up rewards for fi nance and capital. And he went too far. He drove the infl ation rate to a point approaching zero by keeping interest rates higher than they needed to be. In the mid-Nineties, he had to turn — that is, take his foot off the brake — because the country was at risk of disastrous defl ation. The problem was that he failed to do something to block infl ation from occurring in the fi nancial markets and Clinton basically just kept his mouth shut and took credit for the boom.