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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: tejek who wrote (367245)	1/17/2008 4:15:57 PM
From: bentway	Read Replies (1) \| Respond to of 1573696

Volcker chides Fed for "bubbles" - Death of the "Monetarist Cure" . Wed Jan 16, 2008 reuters.com Former Federal Reserve Chairman Paul Volcker thinks the U.S. central bank is to blame for allowing bubbles to inflate asset markets, and says that current Fed chief Ben Bernanke is in a tough spot. "I think Bernanke is in a very difficult situation," Volcker told the New York Times Magazine for a story it will run on Sunday. The Times made the text available to the media in advance of publication. "Too many bubbles have been going on for too long ... The Fed is not really in control of the situation," the Times quoted Volcker as saying, in clear criticism of both Bernanke and his predecessor Alan Greenspan. Volcker chaired the Fed between 1979 until 1987, when he handed over the reins to Greenspan. A slumping U.S. housing market following years of rampant price rises has sparked a global credit crunch and could tip the economy into a recession. Critics blame the ultra-low interest rate policies of the final Greenspan years -- when the U.S. central bank steered overnight federal funds rates to 1 percent and held them there for a prolonged period of time -- for fueling the housing bubble. Bernanke, who was also a Fed board governor between 2002 and 2005, inherited the problem to an extent. Greenspan has long been criticized for being very aggressive in cutting interest rates when growth was threatened, but slower to raise them when it picked up and the risks flipped toward higher inflation. Volcker, a towering man known widely as 'Tall Paul', is credited with breaking the back of rampant 1970s inflation by aggressively tightening monetary policy, for which he was greatly criticized in some quarters at the time. "It's no fun raising interest rates," Volcker said .