November 20, 2003

Alan Greenspan Does Not Like Bush Trade Policy

Alan Greenspan does not like Bush trade policy. From the Wall Street Journal's Greg Ip:

WSJ.com - Fed Chief Warns on 'Protectionism': ..."It is imperative that creeping protectionism be thwarted and reversed," Mr. Greenspan said. His remarks came two days after the Bush administration announced it would impose restrictions on certain textile and apparel imports from China. The administration also has been weighing whether to retain or scrap steel tariffs that have triggered threats of retaliation from the European Union. In September, global trade talks in Cancun, Mexico, collapsed over differences between rich and developing nations on farm subsidies and other issues. Protectionism is a rising concern inside the central bank, where it is seen as a potential spoiler on a landscape otherwise free of inflationary pressures...

Posted by DeLong at November 20, 2003 09:13 PM | TrackBack

Comments

Observe, that apart from the threat of protectionism, he sees - in disagreement with the mainstream view - no risks for the deficits to throw the dollar out on an uncontrolled decline.

(more comments, link to the full speech below)

Posted by: Mats on November 21, 2003 12:18 AM

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I happen to think he is wrong, but my guess is that Alan Greenspan does not think Howard Dean will be a very good fix for this.

Posted by: theCoach on November 21, 2003 04:17 AM

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Sad that Greenspan helped open the flood gates for tax cuts - an issue on which the public was not eager for what Bush had to offer - but now takes what seems a rather quixotic stand against trade barriers. Bush is taking trade action with an eye to votes, and is having a hard time staying ahead of his Democrat rivals on the issue. Greenspan is being principled now to no good purpose, after having offered perhaps the silliest analysis of his carrier to support tax cuts, when his support for tax cuts may actually have made a difference. I'm not suggesting he should shut up on trade, but rather that he was and is a blighter on tax policy.

Posted by: K Harris on November 21, 2003 04:23 AM

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Bush has a trade policy?

Bush trade policy is best described as inaction and inertia, occasionally punctuated by controversial decisions that pander to special interests of importance to the electoral map.

I think you are too generous calling it a "trade policy".

Posted by: bakho on November 21, 2003 07:27 AM

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I'm just trying to remember my Macro and that other course I took...

Protectionism will cause prices to rise.
If then, interest rates don't rise, the government will be paying people to take money from them.
The alternative, letting interest rates rise, shortens the stable leg of our recent efforts (long term, very low i.r.)

My basic guess is that Greenspan is saying "you are pulling the rug out from a very stable system"

Except, of course, it isn't a very fairness one.

Posted by: Josh Narins on November 21, 2003 08:56 AM

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