Oct 16, 2013
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KGNU's Claudia Cragg talks her with Alan Blinder about his book, whose title refers to an infamous remark made in July 2007 by Charles O. Prince III, then the chief executive of Citigroup. “When the music stops, in terms of liquidity,” he said, “things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing.” His book, he explains, relates, the sorry tale of fiscal irresponsibility and chaos as well as the ways the Bush and Obama administrations grappled with the unspooling crises,
Furthermore, Blinder believes that that the disaster was years in the making. Starting in the late 1990s and continuing through 2007, he says that, Americans had “built a fragile house of financial cards” that was just waiting to be toppled and that the the “intricate but precarious construction was based on asset-price bubbles, exaggerated by irresponsible leverage, encouraged by crazy compensation schemes and excessive complexity, and aided and abetted by embarrassingly bad underwriting standards, dismal performances by the statistical rating agencies and lax financial regulation.”
A Princeton professor, in 2009 Blinder was inducted into the American Academy of Political and Social Science, "for his distinguished scholarship on fiscal policy, monetary policy and the distribution of income, and for consistently bringing that knowledge to bear on the public arena." He is a strong proponent of free trade and Blinder also has been critical of the public discussion of the US national debt, describing it as generally ranging from "ludicrous to horrific"
Blinder served as the Deputy Assistant Director of the Congressional Budget Office (1975), on President Bill Clinton's Council of Economic Advisers (January 1993 - June 1994) and as the Vice Chairman of the Board of Governors of the Federal Reserve System from June 1994 to January 1996. As Vice Chairman, he cautioned against raising interest rates too quickly to slow inflation because of the lags in earlier rises feeding through into the economy. He also warned against ignoring the short term costs in terms of unemployment that inflation-fighting could cause. Many have argued that Blinder's stint at the Fed was cut short because of his tendency to challenge chairman Alan Greenspan