Here's some of what he had to say.
On Alan Greenspan:
This is his mess. He created this and he's in some ways trying to rewrite history right now. The Fed could have prevented the housing bubble. They totally blew that.
On the interest rate approach of the Fed versus the European Central Bank (ECB):
They have different sets of problems. In the U.S., the house is on fire, and the Fed has to concentrate on getting the fire out. The ECB inflation focus is legit. Jean-Claude Trichet has to be brave enough to bring the European economy into recession, or the brink of recession, in order to get inflation under control.
On how we'll know the fire is out in the U.S.:
We need three things: stability in the housing market, oil prices down around $100/barrel, and bank write-offs need to be in the late innings. The housing market is still very much in turmoil. I think the probability is strong that oil will come down to that level. But we need the bank write-offs to be in the late innings. We need to be in the bottom of the ninth. Right now, it's maybe the bottom of the seventh.
On trans-Atlantic economic ties:
What this current downturn shows us is that all the talk of 'decoupling' the U.S. and European economies was premature. Personally, I'd like to see policy makers in Europe and the U.S. work toward creating a single capital market on a trans-Atlantic basis. But that's probably too much to ask.
On how it will all play out:
My feeling is, the U.S. led us into this mess and the U.S. will lead us out. California and Florida will be in recession for at least a year more, but nationally we should see some easing of this crisis when the bank write-offs really start being moved out of the system.