More from the Chairman's Congressional testimony, as reported in the Wall Street Journal. On the low long-term interest rate conundrum:
"Something unusual is clearly at play here," Mr. Greenspan said, with the caveat that "we have concluded it is not a U.S. phenomenon."
And on the possibility that the central bank has fed a housing-price bubble (the topic of a related Wall Street Journal article today, on page A1 of the print edition):
He did acknowledged that the central bank's policy in recent years of holding interest rates low has, in part, helped inflate some local bubbles. "We couldn't draw that conclusion at that point we were implementing the policy," he said when asked whether the Fed knew the tactic would set off the housing market. "Given the same conditions, we would have implemented the same policy."...
Mr. Greenspan defended the Fed's decision to cut interest rates to four-decade lows in the wake of the 2001 economic downturn, saying the cuts did the economy more good than harm.
"We knew that in the process of what we were doing -- that is, addressing the consequences of a very severe deflation of a bubble -- carried with it potential side effects," Mr. Greenspan said. Still, he said, "as best as we can judge, things have turned out reasonably as we had expected -- both positively and negatively, but in our judgment the positive effects of the policy far exceeded the negative ones."...
Mr. Greenspan said: "While it's too soon to judge the final conclusions of how all of this comes out, I think that given the same facts under the same conditions we would implement the same policy."
UPDATE: More at The Prudent Investor. Mark Thoma has video!