Blame without blame

In a novel approach to the ongoing blame game, in which financial writers, economists, and politicians attempt to assign blame for the current housing and credit market mess, Wolfgang Munchau of the Financial Times takes the unusual approach of blaming central bankers but specifically absolving former Fed chief Alan Greenspan.

Is that a reasonable thing to do?

If, as he says, central bankers got us into this mess (see below) and "this mess" appears to have originated in the U.S. where it now appears to the "messiest", wouldn't it be reasonable to point a finger in the direction of the best-selling author whose name appears a the top of this blog?

Central bankers got us in this mess

Two months after the beginning of the credit crisis, the monetary policy establishment has reached a consensus on its causes: the complexity of some of the instruments, shortcomings in the mathematical models, weakness in risk management and, of course, the role of the ratings agencies. In other words: someone else.

I concede that each one of these factors contributed to this crisis. But to blame ratings agencies is like blaming shopkeepers for inflation. If you look for an underlying cause of this credit bubble, one of the biggest of all time, then surely you are looking at something bigger than a couple of ratings agencies. I believe that the explosive growth in credit derivatives and collateralised debt obligations between 2004 and 2006 was caused by global monetary policy between 2002 and 2004.
...
Let us recall that the US Federal Reserve and the European Central Bank did not actually intend to cause a credit bubble. They pursued a monetary policy to stabilise some chosen measure of inflation.
...
Like the Riksbank, the other central banks will also have to find ways to take account of money, credit and asset prices. By this I do not mean that they should target asset price indices or “prick bubbles” or follow some static money supply rule. What they need to do is to take credit channels into account to a much greater extent than they did in the past and to correct their policy judgment accordingly.
...
There is no point in blaming any individual, least of all Alan Greenspan, the former Fed chairman, just as it is wrong for him to blame the ratings agencies.

Instead it is time to learn the main lesson of this crisis, which is that credit matters for monetary policy, a fact over which many central bankers are still in denial.

Exactly why there is no point in blaming the former Fed chairman is left unstated - if ever there was a central banker who is still in denial regarding the importance of credit and asset prices, it is he.

Blame without blame - a novel concept.

ooo

Also from "across the pond", this week's cartoon from The Economist: