From 1948 until his 1987 Federal Reserve appointment, he served as Richard Nixon's domestic policy coordinator in his 1968 nomination campaign and later as Gerald Ford's Council of Economic Advisers Chairman. He also headed the economic consulting firm, Townsend-Greenspan & Company, from 1955 - 1987. Its forecasting record was so poor it was about to be liquidated when he left to join the Fed. A former competitor, Pierre Renfret, noted: "When Greenspan closed down his economic consulting business to (become Fed Chairman) he did so because he had no clients left and the business was going under (and we found) out he had none (of his employees left)." That made him Reagan's perfect Fed Chairman choice, and Renfret added it was Greenspan's failure in private business that got him into government service in the first place.
He wouldn't disappoint as Wall Street's man from the start. He bailed it out in 1987 after the disastrous October black Monday. It was the same way he did in it later in 1998 following Long Term Capital Management's collapse and again after the dot-com bubble burst. It was by his favorite monetary medicine guaranteed to work when taken as directed - floods of easy money followed by still more until the patient is healed, unmindful that the cure may be worse than the disease. No matter, it's a new Chairman's problem with Greenspan claiming no culpability for his 18 and a half year tenure of misdeeds, subservience to capital, and contempt for the public interest.
His new book claims the opposite. It's a breathtaking example of historical revisionism that's become standard practice for the man Sydney Morning News' Political and International Editor Peter Hartcher calls "Bubble Man" in his new book by that title. In it, he quotes Bob Woodward saying Greenspan "believed he had done all he could" to contain over-exuberance when, in fact, he let it get out of control. He now claims:
-- he didn't support George Bush's regressive tax cuts for the rich (that helped create huge budget deficits). In fact, he did, and in 2001 wholeheartedly endorsed this centerpiece of the administration's economic policy in his testimony before the Senate Budget Committee. At the time, he cited the economic slowdown saying: "Should current economic weakness spread....having a tax cut....may....do noticeable good."
-- he's "saddened (in his book) that it is politically inconvenient to acknowledge what everyone knows: the Iraq war is largely about oil." In his typical obfuscating way to confuse and have things both ways, he tried clarifying his position in a September interview claiming: "I was not saying that that's the administration's motive. I'm just saying that if somebody asked me, are we fortunate in taking out Saddam? I would say it was essential." He failed to say he supported the Bush administration agenda across the board, including the Afghanistan and Iraq wars, with reasons given at the time he's now distancing himself from.
-- no responsibility for the 2000 stock market bubble. He falsely claimed he never saw it coming while providing generous amounts of liquidity to fuel it. After citing the market's "irrational exuberance" in a December, 1996 speech, he failed to curb it and could have by raising interest rates, margin requirements, and jawboning investors to cool an overheated market to restore stability for long-term economic growth. Instead, he did nothing. He failed to take away the punch bowl, created a bubble, and allowed it to burst causing investors (mostly retail ones) to lose trillions.
-- no responsibility for the housing and bond bubbles he created by cutting interest rates aggressively to 1% and flooding the markets with liquidity. As things got out of hand, timely responsible action could have avoided the summer, 2007 credit crisis. Again, he allowed a bad situation to get worse to keep the party going and allow lenders to profit hugely. In the unprecedented run-up in house prices to an $8 trillion wealth bubble, he derided critics claiming anything was wrong. He even encouraged homebuyers to take out adjustable rate mortgages, approved of very risky no down payment purchases, created the subprime mess as a consequence, and isn't around to address buyers faced with $1.2 trillion in mortgage resets later this year and next that will cause many thousands of painful foreclosures.
Affected homeowners won't likely be cheered by his speech-making bunkum that bubble level asset prices proved his monetary policies worked by getting investors to demand lower risk premiums. They also won't be calmed by his arrogant claim that it's "simply not realistic" to expect the Fed to identify and deflate asset bubbles when it's real role is to champion flexible and unregulated markets leaving everyone unprotected on our own.
-- no responsibility for allowing outstanding US debt to more than triple to around $40 trillion on his watch that one analyst calls his "most conspicuous achievement." Those having to pay it off won't thank him.
Greenspan's Role in the Greatest Modern Era Wealth Transfer from the Public to the Rich
Greenspan was a one-man wrecking crew years before he became Fed Chairman, and his earlier role likely sealed the job for him as a man the power elite could trust. He earned his stripes and then some for his role in charge of the National Commission on Social Security Reform (called the Greenspan Commission). He was appointed by Ronald Reagan to chair it in 1981 to study and recommend actions to deal with "the short-term financing crisis that Social Security faced....(with claims the) Old-Age and Survivors Insurance Trust Fund would run out of money....as early as August, 1983."
There was just one problem. It was a hoax, but who'd know as the dominant media stayed silent. They let the Commission do its work that would end up transfering trillions of public dollars to the rich. It represents one of the greatest ever heists in plain sight, still ongoing and greater than ever, with no one crying foul to stop it. The Commission issued its report in January, 1983, and Congress used it as the basis for the 1983 Social Security Amendments to "resolve short-term financing problem(s) and (make) many other significant changes in Social Security law" with the public none the wiser it was a scam harming them.
The Commission recommended:
-- Social Security remain government funded and not become a voluntary program (that would have killed it);
-- $150 - 200 billion in either additional income or decreased outgo be provided the Old Age, Survivors, and Disability Insurance (OASDI) Trust Funds in calendar years 1983 - 89;
-- the actuarial imbalance for the 75 year Trust Funds valuation period of an average 1.80% of taxable payroll be resolved;
I am a 72 year old, retired, progressive small businessman concerned about all the major national and world issues, committed to speak out and write about them.
Greenspan is the kingpin purveyor of federalism that worked for the Clinton administration in being the voice of a factual testimony to its accumulating assets that brought the country out of years of accumulated deficits; gaining surpluses never seen before since after WWII. That is until the change in guard to the Bush administration that totally reversed the good times toward the bad with the highest in accumulated debt in US history.
One could argue that 911 and the war in Iraq were beyond the control of economic forecasters, but anyone with a gene of common sense is keen to point out that Personalities do make a difference when it comes to leadership and the direction of a country. Could we say President Bush was just unlucky? The truth of the matter is no.
His father was involved in the first military action in Kuwait, with George Jr. having ties to the binLadin family, making them intimate players on the scene in concern to national security if Bush was elected.
We know binLadin was instrumental in military campaigns in Afghanistan, making the relationship to the Bush United States a duopoly to the Military Industrial Complex. Once you start recognizing the over-bearance of MIC in any administration it spells doomsday market pressures.
One could argue the stolen election was the cause to 911, because the dire poor in middle class societies outside of the US would suffer more under a Bush administration causing the disenfranchisement, but the story is not so clear really, when evidence shows clearly 911 was more than hijackers attacking the USA.
Specifically it was a plan to control Oil resources in a region that is quite volatile because there is no nuclear balance in the Middle East. Israel is the only country to have nuclear weapons and this is the threat to Arabs who have none, and can not have control over their own resources.
Yes Alan Greenspan should be ashamed of himself; but in reality the turn of events do prove and show the American people the contrasting realities. In fact Greenspan will come out of this when he admits this, and influences people toward the Democratic principles that led and kept the country out of debt and out of war, which has been their trademark ever since their success in ending the Vietnam War.
Even though a Republican ended the war in Vietnam his resignation proved the hard realities and forces vying on Nixon to uphold the MIC convictions, or support the greater ideology, The Parvenu Paroxysm Ambit.
Republicanism is a party for the minority who are rich supplanting the backbone of America who is really the middleclass. They are never concerned about the country or people, only themselves and how much more control they can have.
But the Democrats who managed to wipe out debt and gain surpluses never seen before; is a living testimony to the fact that working middle class are the folks who are responsible, can manage, have creditability, and are competent in concern to national financial systems. They go the extra mile to prevent the calamity of war. In hindsight it is an admirable characteristic.
I think Greenspan doesn't need the Bernake job to shift markets. His word is gold and wisdom when the time comes for him to compare the Clinton vs. Bush legacies. Anything that indicates helping the middleclass in the markets are winners and movers becoming the driving forces out of the Bush or Republican conundrum.
Greenspan although complicit in supporting the Bush administration after his Democratic term was stolen, his only choice was to try and hold on to slow the impending avalanche or immediately buckle into the pressures leaving an instantly failed Wall street at a time of launching the War. I am sure we remember the words you are either with us or against us. His book certainly tells another tale. But upcoming markets will prove the war was wrong, and is the reason to the downward slide.
Huge markets are developing for secure renewable energy resources, especially environmentally conscious groups. Oil is becoming more of a protected resource due to declining supplies, and Air Pollutional Global Warming Factors. Iraq oil will become conservative reserves, in an attempt to provide long term social stability. They have no other resources, except sand.
It will be worth Associating with Alan Greenspan because his name represents not only financial wisdom but an expansion toward environmental integrity. That is I hope. djermano@yahoo.com
by
Dom Jermano (20 articles, 0 quicklinks, 40 diaries, 934 comments)
on Monday, October 1, 2007 at 9:58:11 AM
everybody's blaming Greenspan. He's merely an economist. He knows about markets and some "rugged individual" called homo economicus but, like most economists, nothing about society, which is what you elect politicians for. Unless, of course, you elect someone like Reagan, who couldn't even spell the word society, and then turn him into a saint.
Face it, folks, you all fell for that Reaganesque BS about government (i.e., "we the people") being the problem, not the solution. Now, you're scapegoating Greenspan.
by
delia (0 articles, 1 quicklinks, 0 diaries, 111 comments)
on Monday, October 1, 2007 at 12:55:31 PM
The root problem is the private ownership of the "Federal" Reserve - the biggest, most expensive, scam in history. Their debt-based money and bond house privateers guarantee our ruin.
Kent Welton,
PublicCentralBank.com
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Kent Welton (49 articles, 0 quicklinks, 0 diaries, 37 comments)
on Monday, October 1, 2007 at 2:21:25 PM
Indeed it is and I wrote about in under the above title. The privatized money creation and control was the bankers' dream and Woodrow Wilson and Congress obliged allow them to pull off the greatest financial heist in history. SS scam the 2nd greatest.
by
Stephen Lendman (227 articles, 0 quicklinks, 0 diaries, 76 comments)
on Monday, October 1, 2007 at 2:48:24 PM
