I'd agree with most of Frank Shostak's article - the decline in the US savings rate is alarming and has ominous consequences for economic growth in the long term. For now, we're able to keep consuming because of foreign investment, but it's anyone's guess how long foreign banks will keep investing here despite our absurdly low interst rates.
Greenspan has been given too much credit, IMHO. He was widely criticized for not acting quickly enough during the 1990-91 recession. He and the Federal Reserve Board were aware of a stock market bubble as early as 1996, but did nothing to help stop the problem. In fact, Greenspan cut interest rates in 1996, despite the fact that the economy was already at full employment, and injected huge amounts of new money into the economy during the latter half of the decade. While the intention was to forestall potential crises like the Mexican peso devaluation, the Russian debt default, the Long-Term Capital Management implosion, Y2K, etc., that newly created money went straight to the capital markets and fueled the stock market bubble. Once Greenspan realized that inflation was on the rise (18% annualized growth in the money stock tends to do that), he raised rates too quickly and popped the bubble with a vengeance.
The Mises Institute is affiliated with the Austrian School of economics. They're usually regarded as something like pariahs by the mainstream, mostly due to methodological differences and because Austrians are hard-core libertarians, but they were about the only school that foresaw the tech boom and the impending crash. The Austrian journals in the late 1990s were full of warnings about the unsustainable boom (one example
). I think one has to give them credit for that, at least. The Austrian business cycle model fits the boom/bust we've just experienced to a T.
Ask any economist, the business cycle is just that, a cycle, it goes up it goes down, that effects all facets of the economy, banks included.
Actually, many schools do believe the business cycle is caused by government intervention. Monetarists, New Classicists, Austrians, and even New Keynesians (to some degree) would blame the government for creating cycles and/or allowing them to persist.
Keynes is dead and we are living in his long run.