Alan Greenspan

Panderer to Power
by Frederick Sheehan
Published 21 Oct 2009

Greenspan’s Forays into Publicity and Publishing Alan Greenspan had been born into the dark side of prosperity. The stock market boom of the 1950s was changing the way Americans behaved, and Greenspan did not approve. The New York Times reported Alan Greenspan’s discourse at an economic conference in December 1959: 23 Sumner Slichter, “Five Trends Shape the Business Future,” Nation’s Business, February 1957, p. 96. 24 Bremner, Chairman of the Fed, p. 128. 25 Albert Jay Nock, Memoirs of a Superfluous Man (New York and London: Harper and Brothers, 1943), p. 256. 26 Bremner, Chairman of the Fed, p. 128. Alan Greenspan, of Townsend, Greenspan & Co., New York financial house, presented the view that a break in stock market trends was not just a harbinger of boom or recession, as is commonly held, but a crucial factor in causing a boom or a recession.

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Yet it was soon after this tirade against welfare statists that Greenspan changed course—he aimed his efforts toward Washington. 40 Ayn Rand, Capitalism: The Unknown Ideal, Signet (paperback) 1967, essay by Alan Greenspan: “Gold and Economic Freedom” pp. 96–101 41 Bremner, Chairman of the Fed, pp. 204, 224. This page intentionally left blank 3 Advising Nixon: “I Could Have a Real Effect” 1967–1973 How Alan Greenspan, a man who believed in the philosophy of little government interference and few rules or regulations, could end up becoming chairman of the greatest regulatory agency in the country is beyond me. —Barbara Walters, 20081 Alan Greenspan entered politics during the 1968 Nixon election campaign. By different accounts, this decision was influenced by at least two old friends.

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To an extent, borrowed funds went into the stock market and other speculative activities. This was the period when Alan Greenspan became a household term (term, since “Alan Greenspan” seemed as much a thing as a person). It was also the period when credit decisions beyond bank lending—such as securitizing subprime assets—further reduced the influence of the Fed (should it wish to restrain the economy). Bailing Out Mexico—With an Eye to Greenspan’s 1996 Reelection The bailout of a foreign country is a political decision made by Congress and the executive branch of the government, which is not a topic for this book. However, Alan Greenspan’s insertion of the Federal Reserve requires an abbreviated peso detour.

The Man Who Knew: The Life and Times of Alan Greenspan
by Sebastian Mallaby
Published 10 Oct 2016

Marian Burros et al., “Inauguration: Establishment Crowd a Day of Citywide Celebrating,” Washington Post, January 20, 1977. 103. Pullen, interview by the author, October 15, 2012. 104. Alan Greenspan to Frank Zarb, memorandum, December 13, 1975, personal files of Alan Greenspan. 105. Alan Greenspan to Nathan Haywood, memorandum, December 24, 1975, personal files of Alan Greenspan. 106. Alan Greenspan to James M. Cannon, memorandum, April 6, 1976, personal files of Alan Greenspan. 107. Fearing systemic fallout from the untested municipal bankruptcy option, state governments rescued cities such as Chicago, Boston, Camden, Harrisburg, and Detroit; in effect, the new bankruptcy option became a threat used by cities to snag the bailouts it was designed to prevent.

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Oval Office, Conversation 640-6, December 22, 1971, White House tapes, Richard Nixon Presidential Library and Museum. 55. Alan Greenspan, presentation, American Finance Association, New Orleans, December 28, 1971. 56. Alan Greenspan to Milton Friedman, letter, October 2, 1972. 57. Milton Friedman to Alan Greenspan, letter, October 10, 1972. 58. Alan Greenspan, “The Mirage of Wage-Price Controls,” Wall Street Journal, April 30, 1973. This op-ed column was a précis of an address to the American Statistical Association. 59. Alan Greenspan, “Do-Nothingism,” New York Times, July 31, 1973. 60. “Business Outlook: Inflation: The Longer View” (New York: Townsend-Greenspan & Company, January 23, 1974), personal files of Kathryn Eickhoff; and “Business Outlook” (New York: Townsend-Greenspan & Company, January 28, 1974), personal files of Kathryn Eickhoff. 61.

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See also Nessen, Making the News, Taking the News: From NBC to the Ford White House, 151–52. 49. Alan Greenspan to William E. Simon, memorandum, January 15, 1975, personal files of Alan Greenspan. 50. Alan Greenspan to Economic Policy Board, memorandum, January 12, 1975, personal files of Alan Greenspan. 51. Murray Seeger, “Has No Faith in Ford or Congress: AFL-CIO to Plan Own Recession War,” Los Angeles Times, January 22, 1975. The quotation is also excerpted in a collection of quotes from Meany in Alan Greenspan’s personal files. 52. The critic was Walter Fackler of the University of Chicago.

Extreme Money: Masters of the Universe and the Cult of Risk
by Satyajit Das
Published 14 Oct 2011

Philip Augar (2009) Chasing Alpha: How Reckless Growth and Unchecked Ambition Ruined the City’s Golden Decade, Bodley Head, London: 47. 4. Alan Greenspan (2008) The Age of Turbulence: Adventures in a New World, Penguin Books, London: 256, 257. 5. Peter S. Goodman “Taking a hard new look: a Greenspan legacy” (8 October 2008) New York Times. 6. “The Turner Review: A regulatory response to the global banking crisis” (March 2009), Financial Services Authority: 49. 7. Alan Greenspan “Banking in the global marketplace” (18 November 1996), Speech to Federation of Bankers Association of Japan, Tokyo. 8. Greenspan, The Age of Turbulence: 360. 9. Alan Greenspan “Do efficient financial markets mitigate financial crises?”

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Companies aggressively reduced their cost of capital by substituting cheaper debt for expensive equity. Alan Greenspan, chairman of the Federal Reserve, supported the rush to debt: “Rising leverage appears to be the result of massive improvements in technology and infrastructure...experience...has made me reluctant to underestimate the ability of most households and companies to manage their financial affairs.”13 Companies used cash flow from operations or new borrowings to repurchase their own shares to boost their stock price. Alan Greenspan put the practice down to a slowdown in innovation and excess capital.14 Stock buybacks left the company with more debt and a weaker financial position.15 In 1987 Standard Oil of Ohio (Sohio), once part of the grand dame of oil companies but now owned by Britain’s BP, advertised in leading financial magazines—“Standard Oil not standard thinking.”16 An arty graphic depicted a drop of oil in which a reflection of an oil well was visible.

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Quoted in Rebecca Solnit (2000) Wanderlust: A History of Walking, Penguin Books, New York: 256. 10. Adam Smith (2007) Wealth of Nations, Cosimo, New York: 113. 11. Alan Greenspan (2007) The Age of Turbulence: Adventures in a New World, Allen Lane, London: 230. 12. Jo Becker, Sheryl Gay Stolberg and Stephen Labaton “The reckoning—White House philosophy stoked mortgage bonfire” (20 December 2008) New York Times. 13. Ben Bernanke “Modern risk management and banking supervision” (12 June 2006), Remarks at the Stonier Graduate School of Banking, Washington. 14. Alan Greenspan “Understanding household debt obligations” (23 February 2004), Address to Credit Union National Association 2004 Governmental Affairs Conference, Washington DC. 15.

13 Bankers: The Wall Street Takeover and the Next Financial Meltdown
by Simon Johnson and James Kwak
Published 29 Mar 2010

Census Bureau, Income, Poverty, and Health Insurance Coverage in the United States: 2008, Table A-1, available at http://www.census.gov/prod/2009pubs/p60–236.pdf. 34. Alan Greenspan, The Age of Turbulence: Adventures in a New World (New York: Penguin, 2007), 51–53, 208. 35. Alan Greenspan (lecture, Annual Conference of the Association of Private Enterprise Education, April 12, 1997), available at http://www.federalreserve.gov/boarddocs/speeches/1997/19970412.htm. 36. Alan Greenspan (lecture, American Enterprise Institute, December 5, 1996), available at http://www.federalreserve.gov/boarddocs/speeches/1996/19961205.htm. 37. Alan Greenspan, Age of Turbulence, supra note 34, at 52. 38. Reported in Edsall, “Alan Greenspan,” supra note 1. See also Goodman, “Taking Hard New Look at a Greenspan Legacy,” supra note 1. 39.

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Tarullo, “Confronting Too Big to Fail” (lecture, Exchequer Club, Washington, D.C., October 21, 2009), available at http://www.federalreserve.gov/newsevents/speech/tarullo20091021a.htm. CHAPTER 4: “GREED IS GOOD” 1. Reported in Thomas B. Edsall, “Alan Greenspan: The Oracle or the Master of Disaster?” The Huffington Post, February 19, 2009, available at http://www.huffingtonpost.com/2009/02/19/alan-greenspan-the-oracle_n_168168.html. A shorter version of the quotation was reported in Peter S. Goodman, “Taking Hard New Look at a Greenspan Legacy,” The New York Times, October 8, 2008, available at http://www.nytimes.com/2008/10/09/business/economy/09greenspan .html. 2.

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We may have the most advanced political system in the world, but we also have its most advanced oligarchy. In 1998, the United States was in the seventh year of an economic boom. Inflation was holding steady between 2 and 3 percent, kept down by the twin forces of technology and globalization. Alan Greenspan, probably the most respected economist in the world, thought the latest technology revolution would allow sustained economic growth with low inflation: “Computer and telecommunication based technologies are truly revolutionizing the way we produce goods and services. This has imparted a substantially increased degree of flexibility into the workplace, which in conjunction with just-in-time inventory strategies and increased availability of products from around the world, has kept costs in check through increased productivity.”8 Prospects for the American economy had rarely seemed better.

How Markets Fail: The Logic of Economic Calamities
by John Cassidy
Published 10 Nov 2009

GREENSPAN SHRUGS 222 “a very small probability event”: Transcript of meeting of the Federal Reserve’s Open Market Committee, June 24, 2003. 226 “In the field of economics . . .”: Interview with the author, October 2008. 226 “brought down numerous . . .”: Alan Greenspan, “Economic Flexibility,” speech before the HM Treasury Enterprise Conference, London, England, January 26, 2004, available at http://federalreserve.gov/boarddocs/speeches/2004/20040126/default.htm. 228 “It turned out that he was . . .”: Quoted in John Cassidy, “The Fountainhead,” New Yorker, April 24, 2000, 172. 228 “She did things in . . .”: Quoted in ibid., 168. 229 “nothing more than . . .”: Alan Greenspan, “Antitrust” and “Gold and Economic Freedom,” in Ayn Rand, Capitalism: The Unknown Ideal (New York: Signet Books, 1967), 100. 229 “As Fed chairman . . .”: Greenspan, Age of Turbulence, 373. 229 “could undermine the competitiveness . . .”: Alan Greenspan, “Need for Financial Modernization,” testimony before the Committee on Banking, Housing, and Urban Affairs, U.S.

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.”: Alan Greenspan, “Antitrust” and “Gold and Economic Freedom,” in Ayn Rand, Capitalism: The Unknown Ideal (New York: Signet Books, 1967), 100. 229 “As Fed chairman . . .”: Greenspan, Age of Turbulence, 373. 229 “could undermine the competitiveness . . .”: Alan Greenspan, “Need for Financial Modernization,” testimony before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate, February 23, 1999, available at http://federalreserve.gov/boarddocs/testimony/1999/19990223.htm. 230 “Risks in financial markets . . .”: Alan Greenspan, “Impact of Derivatives on Financial Markets,” testimony before the Telecommunications and Finance Subcommittee, House Energy and Commerce Committee, May 25, 1994. 230 “a major failure of counterparty . . .”: Greenspan, Age of Turbulence, 371. 231 “Recognizing the dangers . . .”: Rick Schmitt, “Prophet and Loss,” Stanford Magazine, March/April 2009, available at www.stanfordalumni.org/news/magazine/2009/marapr/features/born.html. 231 “Greenspan told Brooksley . . .”: Quoted in Peter S.

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Goodman, “Taking a Hard New Look at a Greenspan Legacy,” New York Times, October 9, 2008. 231 “I certainly am not . . .”: Quoted in Schmitt, “Prophet and Loss.” 232 “to mitigate the fallout . . .”: Alan Greenspan, testimony before the Committee on Banking and Financial Services, U.S. Congress, July 22, 1999, available at http://federalreserve.gov/boarddocs/hh/1999/july/testimony.htm. 232 “There appears to be enough evidence . . .”: Alan Greenspan: “Risk and Uncertainty in Monetary Policy,” remarks to the annual meeting of the American Economic Association, San Diego, January 3, 2004, available at www.federalreserve.gov/boarddocs/speeches/2004/20040103/default.htm#f8. 233 “caused it by deviating . . .”: John B.

Meltdown: How Greed and Corruption Shattered Our Financial System and How We Can Recover
by Katrina Vanden Heuvel and William Greider
Published 9 Jan 2009

For example, Peter Goodman of the New York Times produced a devastating account of how the Federal Reserve and the Clinton administration collaborated to block efforts to regulate the credit derivatives that became a critical factor in inducing the present crisis. Goodman patiently reconstructed how the Commodity Futures Trading Commission’s (CFTC) efforts to impose regulatory oversight on derivatives were stymied by Fed chair Alan Greenspan, Treasury Secretary Robert Rubin and SEC chair Arthur Levitt in 1997. Greenspan, Rubin and Levitt very publicly kneecapped commission chair Brooksley Born and effectively drove her from government. They staged a brutal dressing-down and urged Congress to prevent her from acting. Congress complied with a law blocking CFTC action.

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Today you and I own those 20,000 acres, still inhabited only by coyotes and jack rabbits, and we are spending about a million dollars a year just to keep the land-scaping in shape. As mentioned earlier, Keating was a great family man. At least ten members of his immediate kin were on the payroll of American Continental. The Keating family as a whole reaped at least $34 million in salaries, bonuses and stock sales. Alan Greenspan and the Five Stooges Keating’s biggest troubles with the government began when Gray, in one of his smartest moves, ordered in 1985 a radical reduction in the amount an S&L could invest directly in a proj ect. Lincoln was already $600 million over the maximum set by Gray. Furious and frightened, Keating went to work in his usual style to have Lincoln grandfathered under the new rule.

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Furious and frightened, Keating went to work in his usual style to have Lincoln grandfathered under the new rule. First he tried to get Gray out of the way by offering him a job at $300,000 a year. When that didn’t work, he began calling in political chits. Descending on Washington, Keating went to see Vice President Bush (aides said nothing of importance was discussed). Then Keating hired Alan Greenspan—whose conduct as a sleazy peddler of endorsements in this affair bodes no good for the future of the Federal Reserve Board, which unfortunately he now chairs—to write letters to Congressmen and to the bank board arguing that Keating’s desires should be met because he was a financier of infinitely sound judgment and ethics.

In FED We Trust: Ben Bernanke's War on the Great Panic
by David Wessel
Published 3 Aug 2009

The New York Times editorialist, of course, could not have known about Alan Greenspan. Chapter 3 AGE OF DELUSION In the morning cold of February 6, 2006, President George W. Bush made his way by armored limo to the Federal Reserve’s Beaux Arts building, only the third time on record that any U.S. president had visited the Fed’s headquarters. The official occasion was the public swearing-in of Ben Bernanke as the chairman of the Federal Reserve, but everyone knew Bernanke’s ascension wasn’t the main event. What really was being celebrated was Alan Greenspan’s departure after nearly nineteen years as Fed chairman, the Maestro.

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CHAPTER 6: THE FOUR MUSKETEERS: BERNANKE’S BRAIN TRUST 106 “Since 1945” Frederic Mishkin, “Asymetrical Information and Financial Crises: A Historical Perspective,” National Bureau of Economic Research, Working Papers 3400, July 1990, 29. 107 “always calm and thoughtful” Laurence Meyer, A Term at the Fed: An Insider’s View (New York: HarperBusiness, 2004), 45. 108 “It is just not credible” Alan Greenspan, “Remarks by Chairman Alan Greenspan at the Haas Annual Business Faculty Research Dialogue, University of California,” from the Federal Reserve Board Web site, September 4, 1998. http://www.federalreserve.gov/boarddocs/speeches/1998/ 19980904.htm 108 That’s what he was doing: Interview, Don Kohn. 109 Before Bernanke ascended: “Panel Discussion,” Federal Reserve Bank of St.

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The early verdict Notes Glossary Selected Bibliography Acknowledgments DRAMATIS PERSONAE IN THE GOVERNMENT BEN BERNANKE Chairman, Federal Reserve Board (2006 — ) DONALD KOHN Vice Chairman, Federal Reserve Board (2006 — ) Member, Federal Reserve Board (2002 — 2006) KEVIN WARSH Member, Federal Reserve Board (2006 — ) TIMOTHY GEITHNER Secretary of the Treasury (2009 — ) President, Federal Reserve Bank of New York (2003 — 2009) HENRY PAULSON Secretary of the Treasury (2006 — 2009) ALAN GREENSPAN Chairman, Federal Reserve Board (1987 — 2006) LAWRENCE SUMMERS Director, White House National Economic Council (2009 — ) IN THE PRIVATE SECTOR JAMES DIMON Chief Executive, JPMorgan Chase (2005 — ) RICHARD FULD Chief Executive, Lehman Brothers (1994 — 2008) KENNETH LEWIS Chief Executive, Bank of America (2001 — ) VIKRAM PANDIT, Chief Executive, Citigroup (2007 — ) CHARLES PRINCE Chief Executive, Citigroup (2003 — 2007) ALAN SCHWARTZ Chief Executive, Bear Stearns (2008) President or Copresident (2001 — 2008) Introduction WHATEVER IT TAKES At the beginning of October 2008, after some of the toughest weeks of the Great Panic, the lines in Ben Bernanke’s face and the circles under his eyes offered evidence of more than a year of seven-day weeks and conference calls that stretched past midnight.

Zero-Sum Future: American Power in an Age of Anxiety
by Gideon Rachman
Published 1 Feb 2011

The most important idea of all was the faith in market economics. 11 PROSPERITY ALAN GREENSPAN AND THE END OF ECONOMIC HISTORY When Bill Clinton gave his first speech to a joint session of Congress in February 1993, his staff choreographed the occasion with great care. First lady Hillary Clinton was sitting in the front row of the Senate gallery. Alan Greenspan, the chairman of the Federal Reserve, was placed right next to her. It was a deliberate message of reassurance to the markets and to ordinary Americans. It said, in effect, “Don’t worry. Greenspan is here.” No man better epitomized the economics of the Age of Optimism than Alan Greenspan. Appointed as chairman of the Fed for the first time in 1987 under Ronald Reagan and then reappointed by three successive presidents, Greenspan had his hands on the controls of the most powerful economy in the world throughout the period, leaving office only in 2006, just two years before the global financial crisis.

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Chollet and Goldgeier, America Between the Wars, 277. 15. Francis Fukuyama, America at the Crossroads: Democracy, Power and the Neoconservative Legacy (New Haven, Conn.: Yale University Press, 2006), x and xi. 16. Interview with the author. 17. Ibid. 11. PROSPERITY: ALAN GREENSPAN AND THE END OF ECONOMIC HISTORY 1. Bob Woodward, Maestro (New York: Simon & Schuster, 2000). 2. Alan Greenspan, The Age of Turbulence: Adventures in a New World (London: Penguin, 2007), 97. Greenspan tells this story against himself in his autobiography. 3. Ibid., 40. 4. Ibid., 41. 5. Ibid., 52. 6. Ibid., 15. 7. Ibid., 179. 8.

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Latin America, 1982–91: The Triumph of Democracy and Markets 8. India, 1991: The Second Asian Giant Awakes 9. The Gulf War, 1991: The Unipolar Moment PART TWO: THE AGE OF OPTIMISM, 1991–2008 Introduction 10. Democracy: Francis Fukuyama and the End of History 11. Prosperity: Alan Greenspan and the End of Economic History 12. Progress: Bill Gates and the Triumph of Technology 13. Peace: Bill Clinton and the Win-Win World 14. The Optimistic East: Kishore Mahbubani and the Asian Century 15. Europe: Günter Verheugen and the European Dream 16. The Antiglobalizers: From the Asian Crisis to 9/11 17.

Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism
by Kevin Phillips
Published 31 Mar 2008

For the first time since the 1920s, both public and private debt had become fashionable again—a social and political convenience, no longer a lingering nightmare (except among aging grandparents). Liquidity, debt, and leverage provided the essential structure of the Multi-bubble, and its principal architect, from 1987 to 2006, was Federal Reserve Board Chairman Alan Greenspan. He kept the liquidity flowing and declined to regulate the ultimate excesses, be they rogue derivatives, exotic mortgages, mergermania, margin-loan speculation, or a giddy succession of asset bubbles. Over his nearly two decades at the helm of U.S. monetary policy, total credit market debt in the United States quadrupled from under $11 trillion to a mind-numbing $44 trillion.

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Then over seven years, one of the most extraordinary and perilous transformations in world financial history would lift the 2008 total to $600 trillion. Figure P.2, below, illustrates the rocketing derivatives volume, along with the naive reassurances (and consequent failure to regulate) from Federal Reserve Chairmen Alan Greenspan and Ben Bernanke. FIGURE P.2 Wild About Derivatives Source : InvesTech Research, Oct. 17, 2008 Because the practices and predicaments of securitization are described in chapter 4 of the main text, these pages will focus on derivatives and securitization—both “exotic finance”—as the fourth great nurturer of the financial sector.

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At this point, though, even the mortgages themselves had often taken on unprecedented variations. In 2005, the Washington Post reported that about two hundred different mortgage products were available, and David Duncan, chief economist of the Mortgage Bankers Association, opined that a recent reference to “exotic” loans by Fed Chairman Alan Greenspan probably meant the “option adjustable rate mortgage.” This contract extraordinaire permitted borrowers to themselves decide how much to pay, the length of the loan, and when they chose to convert from a fixed rate to a variable rate or back again.18 Who, you might wonder, could offer such a mortgage?

Griftopia: Bubble Machines, Vampire Squids, and the Long Con That Is Breaking America
by Matt Taibbi
Published 15 Feb 2010

This ability to work both sides of the aisle at the same time would ultimately amaze even Barbara Walters, whom Greenspan somehow managed to make his girlfriend in the seventies. “How Alan Greenspan, a man who believed in the philosophy of little government interference and few rules of regulation, could end up becoming chairman of the greatest regulatory agency in the country is beyond me,” Walters said in 2008. How did it happen? Among other things, Alan Greenspan was one of the first Americans to really understand the nature of celebrity in the mass-media age. Thirty years before Paris Hilton, Greenspan managed to become famous for being famous—and levered that skill into one of the most powerful jobs on earth. ——— Alan Greenspan’s political career was built on a legend—the legend of the ultimate Wall Street genius, the Man with All the Answers.

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The cycle quickly repeats itself, only this time the gambler is in even worse shape than before; now he’s not only lost his own money, he’s lost his money and he owes the house for what he’s borrowed. That’s a simplistic view of what happened to the American economy under Alan Greenspan. The financial services industry inflated one speculative bubble after another, and each time the bubble burst, Greenspan and the Fed swept in to save the day by printing vast sums of money and dumping it back on Wall Street, in effect encouraging people to “drink themselves sober,” as Greenspan biographer William Fleckenstein put it. That’s why Alan Greenspan is the key to understanding this generation’s financial disaster. He repeatedly used the financial might of the state to jet-fuel the insanely regressive pyramid scheme of the bubble economy, which like actual casinos proved to be a highly efficient method for converting the scattered savings of legions of individual schmuck-citizens into the concentrated holdings of a few private individuals.

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But if the national economy is a casino and the financial services industry is turning one market after another into a Ponzi scheme, then frantically pumping new money into such a destructive system is madness, no different from lending money to wild-eyed gambling addicts on the Vegas strip—and that’s exactly what Alan Greenspan did, over and over again. Alan Greenspan met with major challenges almost immediately after taking office in August 1987. The first was the stock market correction of October of that year, and the next was the recession of the early 1990s, brought about by the collapse of the S&L industry. Both disasters were caused by phenomena Greenspan had a long track record of misunderstanding.

Age of Greed: The Triumph of Finance and the Decline of America, 1970 to the Present
by Jeff Madrick
Published 11 Jun 2012

Bush and active lobbying by buyout leaders. Rather than tightening financial regulations, Washington loosened them further in the next two decades, even when new crises arose. In Alan Greenspan, nominated by the Republican Reagan, but strongly supported later by Bill Clinton, the vested interests of the financial community were well served in the name of narrow free market ideology. 14 Alan Greenspan IDEOLOGUE In early 1985, Alan Greenspan wrote a long letter to federal regulators in support of Charles Keating of Lincoln Savings & Loan, who had been a client of Michael Milken’s, later imprisoned for securities fraud.

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Ted Turner, Sam Walton, and Steve Ross Size Becomes Strategy 9. Jimmy Carter Capitulation 10. Howard Jarvis and Jack Kemp Tapping the Anger 11. Paul Volcker, Jimmy Carter, and Ronald Reagan Revolution Completed Two THE NEW GUARD 12. Tom Peters and Jack Welch Promises Broken 13. Michael Milken “The Magnificent” 14. Alan Greenspan Ideologue 15. George Soros and John Meriwether Fabulous Wealth and Controversial Power 16. Sandy Weill King of the World 17. Jack Grubman, Frank Quattrone, Ken Lay, and Sandy Weill Decade of Deceit 18. Angelo Mozilo The American Tragedy 19. Jimmy Cayne, Richard Fuld, Stan O’Neal, and Chuck Prince Collapse Epilogue Notes Acknowledgments Index Illustration Credits A Note About the Author Other Books by This Author Introduction This book starts with a relatively unknown man named Lewis Uhler, a Southern Californian, who, like his father before him, hated the New Deal.

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Its stock was now trading as if it were an industrial or services growth company, earning a high price-earnings ratio due to the rapid growth of earnings—if not high enough for Wriston. And Wriston was the best paid banker in the country. He lived in the glamorous United Nations Plaza, home of Johnny Carson and Alan Greenspan, the future Federal Reserve chairman, who was something of a man about town and a prosperous Republican consultant. Wriston had married a lawyer twenty years his junior two years after his wife died in 1965, and was famously driving a red sports car—famous because it seemed out of character for the man.

What Went Wrong: How the 1% Hijacked the American Middle Class . . . And What Other Countries Got Right
by George R. Tyler
Published 15 Jul 2013

In a precursor to the Wall Street bubble and 2007/2008 meltdown, taxpayers ended up on the hook for the equivalent of 2 percent of GDP.51 And it all happened again eighteen years later because President Reagan had appointed Alan Greenspan head of the Federal Reserve Banking system in 1986, making him the nation’s top bank regulator. He replaced Paul Volcker, a sober banker schooled in lessons of the Great Depression, who had just cured stagflation. Volcker believed in balanced budgets and balanced regulations—and so President Reagan replaced him with Alan Greenspan. Reagan’s economic advisors were hard-core ideologues. Milton Friedman himself, for example, believed insider trading should be legal because rules curtailing it would be too intrusive.

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He solved his dilemma by ignoring the facts, arguing that Social Security was in jeopardy. The next step was to address the sudden new funding crisis by creating a Washington committee to frame the Social Security funding issue on his terms, this one headed by his trusted ally, Alan Greenspan. Here is how David Cay Johnston described events: “A commission, chaired by Alan Greenspan …said disaster was looming. If nothing was done, Greenspan said, Social Security would start running in the red, forcing the government to borrow money to pay benefits.”22 The solution this stacked commission proposed was immediately higher payroll taxes to generate considerably more tax revenue than needed to fund Social Security.

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A few efforts to reregulate, such as the Sarbanes-Oxley Act, occurred during the Reagan era. But they were overwhelmed by dozens of deregulatory mistakes with more impact, plus pervasive regulatory paralysis engineered by Alan Greenspan. At least one official at the bank lobby group called the International Swaps and Derivatives Association joked they didn’t need a public relations firm, “because we have Alan Greenspan doing our PR for us.”18 Deregulation was also endorsed by the Clinton administration, including the Commodity Futures Modernization Act of 2000, which minimized regulation of credit derivatives, removing them from bucket shop prohibitions.

Financial Fiasco: How America's Infatuation With Homeownership and Easy Money Created the Economic Crisis
by Johan Norberg
Published 14 Sep 2009

A series of circumstances that individually would not have had to lead to disaster-low- and middle-income countries starting to save money; the head of a central bank's wishing to avoid a crisis; political demands to expand homeownership; new financial instruments; and new banking regulations, credit-rating requirements, and accounting rules intended to prevent cheating-came into existence at the same time and reinforced one another into what Alan Greenspan has called "a once-in-a-century event." Circumstances were perfect for a financial storm so tremendous that few people now alive have seen anything like it. The monster waves are swallowing gigantic banks and long-established industrial companies alike. The wind gusts are tearing apart entire economies.

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One billion dollars is what the stock markets of the world lost every 17 minutes in 2008 and what the federal government was spending on half an hour's worth of crisis fighting as Barack Obama assumed the presidency. Stockholm, Sweden, February 2009 1. Preemptive Keynesianism The law of supply and demand is not to be conned. As the supply of money (of claims) increases relative to the supply of tangible assets in the economy, prices must eventually rise. -Alan Greenspan, "Gold and Economic Freedom" Like so many other stories about our time, this one begins on the morning of September 11, 2001, with 19 terrorists and four passenger planes. Their attack, which cost almost 3,000 people their lives, shook our known universe. All U.S. aircraft were ordered to land immediately, and North American airspace was closed down.

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A former jazz-band saxophone player who used to move in the laissez faire circles around writer Ayn Rand. A man whose dark clothes and reserved demeanor had caused his friends to nickname him "the undertaker." After a career in the financial sector and a few stints as a presidential adviser, however, Alan Greenspan had become a pillar of the U.S. establishment. Even so, few had predicted the next step in the career of this man, who had advocated both in speech and in writing that the Federal Reserve, or "Fed," the U.S. central bank, should be closed down and that the market should instead determine the price of money, which should preferably be backed up by gold.

The Great American Stickup: How Reagan Republicans and Clinton Democrats Enriched Wall Street While Mugging Main Street
by Robert Scheer
Published 14 Apr 2010

As President Clinton’s Treasury secretary, Rubin, the former cochair of Goldman Sachs, led the fight to free the financial markets from regulation and then went on to a $15-million-a-year job with Citigroup, the company that had most energetically lobbied for that deregulation. He should remember the line from the old cartoon strip Pogo: “We have met the enemy and he is us.” For it was this Wall Street and Democratic Party darling, along with his clique of economist super-friends—Alan Greenspan, Lawrence Summers, and a few others—who inflated a giant real estate bubble by purposely not regulating the derivatives market, resulting in oceans of money that was poured into bad loans sold as safe investments. In the process, they not only caused an avalanche of pain and misery when the bubble inevitably burst but also shredded the good reputation of the American banking system nurtured since the Great Depression.

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Not only were those making the millions and billions off the OTC derivatives market ecstatic, so were the politicians, bought off by Wall Street, who were sitting in the driver’s seat while the bubble was inflating. With credit so easy, consumers went on a binge, buying everything in sight, which in turn was a boon to the bricks-and-mortar economy. Blown upward by all this “irrational exuberance,” as then Federal Reserve Bank chair Alan Greenspan noted in one of his more honest moments, the stock market soared, creating the era of e-trade and a middle class that eagerly awaited each quarterly 401(k) report. Later, in the rubble, consumer borrowers would be scapegoated for the crash. This is the same logic as blaming passengers of a discount airline for their deaths if it turned out the plane had been flown by a monkey.

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By and large, those leaders have not been held accountable for their actions and, indeed, most often went on to reap even greater rewards as born-again reformers called upon to set right that which they had wrecked. Far too many have been granted far-reaching powers in President Barack Obama’s administration as foxes told to fix the damage they themselves have done to the henhouse. Of the leaders responsible, five names come prominently to mind: Alan Greenspan, the longtime head of the Federal Reserve; Robert Rubin, who served as Treasury secretary in the Clinton administration; Lawrence Summers, who succeeded him in that capacity; and the two top Republicans in Congress back in the 1990s dealing with finance, Phil Gramm and James Leach. Arrayed most prominently against them, far, far down the DC power ladder, were two female regulators, Born and Sheila Bair (an appointee of Bush I and II and retained as FDIC chair by Obama).

The Economists' Hour: How the False Prophets of Free Markets Fractured Our Society
by Binyamin Appelbaum
Published 4 Sep 2019

John Cassidy, “The Fountainhead,” The New Yorker, April 24, 2000. 57. Interview with Alice Rivlin, September 27, 2018. 58. Interview with Alan Greenspan, March 14, 2008. 59. Soma Golden, “Why Greenspan Said ‘Yes,’ ” New York Times, July 28, 1974. 60. The quote and other details about the speeches are from Sebastian Mallaby, The Man Who Knew: The Life and Times of Alan Greenspan (New York: Penguin Press, 2016), 90. 61. Mallaby, The Man Who Knew, 4. 62. Alan Greenspan, Capitalism: The Unknown Ideal, ed. Ayn Rand (New York: Signet, 1965), 55. He continued, “Whatever damage the antitrust laws may have done to our economy, whatever distortions of the structure of the nation’s capital they may have created, these are less disastrous than the fact that the effective purpose, the hidden intent, and the actual practice of the antitrust laws in the United States have led to the condemnation of the productive and efficient members of our society because they are productive and efficient.” 63.

…

Mallaby, The Man Who Knew, 724. 68. Nathaniel C. Nash, “Treasury Now Favors Creation of Huge Banks,” New York Times, June 7, 1987. 69. Nathaniel C. Nash, “Greenspan’s Lincoln Savings Regret,” New York Times, November 20, 1989. 70. “Hearing on the Nomination of Alan Greenspan,” Senate Banking Committee, July 21, 1987, 48. 71. Alan Greenspan, “Remarks Before the Economic Club of New York,” June 20, 1995. 72. Greenspan offered a particularly remarkable expression of this worldview when he was asked by the Swiss newspaper Tages-Anzeiger in 2007 for his thoughts on the upcoming U.S. presidential election.

…

One night at Friedman’s apartment, they started arguing around 11:00 p.m.; three hours later, Anderson said he was too tired to continue. “All right,” Friedman responded with a big smile. “I win.”49 Anderson also joined the loose circle of libertarians that revolved around the novelist Ayn Rand. The group included a flashy economist named Alan Greenspan who had gone into business rather than academia and therefore had a posh apartment and a blue Cadillac Eldorado convertible. In the spring of 1967, Anderson read a printed version of the arguments Friedman and Oi had made against conscription at the Chicago conference and raised the idea with Nixon’s advisers.

Ayn Rand Cult
by Jeff Walker
Published 30 Dec 1998

It is unlikely however, that the following KIEV incident will make it onto an audiocassette for sale: In February 1998, a liberal organization ran a pro-affirmative-action ad in The New York Times featuring this quotation from Alan Greenspan: “It is good for business. It is good for our society, and it is the right thing to do.” Ever since Greenspan’s favorable comments on The Passion of Ayn Rand, he had been disdained by ARI and its affiliate newsletter, but Peikoff had never personally performed the excommunicatory rites. Now he apparently had a plausible excuse. Within days he announced on KIEV that “it is necessary to set the world straight on Alan Greenspan, once and for all” and in effect “formally excommunicate” him “from any connection with Objectivism.”

…

Now of course Greenspan had been quoted out of context, as anyone bothering to get ahold of the easily-obtainable text of the Greenspan speech from which the quote was uprooted would have discerned. Perhaps fearing that this goof-up might trigger another exodus from ARI, Peikoff bit the bullet and apologized. 7 Alan Greenspan: The Undertaker Takes Over There at the Dawn of Time Born the year Ayn Rand arrived in the U.S., the son of a stockbroker, Alan Greenspan graduated from New York University’s School of Commerce in 1948. He soon took a dull job at the National Industrial Conference Board, a propaganda outlet for big business, and worked on steel inventories. Through a soon-annulled marriage to Joan Mitchell (later Joan Blumenthal)—not until 1997 at age 71 would he take the plunge again—Greenspan met Ayn Rand, herself a veteran of extensive contact with other business propaganda outlets like the National Association of Manufacturers (NAM).

…

Interviewed by Karen Reedstrom. Full Context (March 1991). Paul Lepanto. Return to Reason: An Introduction to Objectivism. New York: Exposition, 1971. Lewin, Tamar. The Quiet Allure of Alan Greenspan. Sunday New York Times (5 June 1983). Lewis, Martin W. Green Delusions: An Environmentalist Critique of Radical Environmentalism. Durham: Duke University Press, 1992. Lewis, Michael. Beyond Economics, Beyond Politics, Beyond Accountability. (On Alan Greenspan.) Worth (May 1995). Lewis, Sinclair. It Can’t Happen Here. New York: New American Library, 1935. Lipset, Seymour Martin. Continental Divide: The Values and Institutions of the United States and Canada.

Who Stole the American Dream?
by Hedrick Smith
Published 10 Sep 2012

Bhattacharya, and William S. Berliner, Mortgage-Backed Securities (Hoboken, NJ: John Wiley & Sons, 2007), preface. 4 Greenspan dismissed the risk Alan Greenspan, remarks, annual convention of Independent Community Bankers of America, Orlando, FL, March 4, 2003. 5 “Greatest global financial crisis ever” Alan Greenspan, citing Federal Reserve data, in “Activism,” International Finance 14, no. 1 (Spring 2011), http://​www.​cfr.​org. 6 “I found a flaw in the model” Alan Greenspan, testimony, House Committee on Oversight and Government Reform, October 23, 2008. 7 Greenspan went on to admit that the crash Greenspan, citing Federal Reserve data, in “Activism.” 8 “A shift in the mortgage product” James Grant, Mr.

…

“When home prices do start down,” he said, “they will fall remarkably far” and cause widespread bankruptcies. But Alan Greenspan dismissed talk of a housing “bubble.” In June 2005, he conceded “signs of froth in some local markets,” but he rejected calls from economists like Shiller for the Fed to raise interest rates more sharply to cool speculative fevers, asserting that “the U.S. economy seems to be on a reasonably firm footing.” A year later, the housing market began its tumble. In hindsight, The Wall Street Journal editorial page, normally among Greenspan’s admirers, judged that “Alan Greenspan’s policies at the Fed contributed to the credit and housing manias that led to the financial meltdown….”

…

Repetti, “Democracy, Taxes, and Wealth,” Research Paper No. 2001–03 (Newton, MA: Boston College Law School, June 14, 2011), 831. 38 Come to a similar conclusion Torsten Persson and Guido Tabellini, “Growth, Distribution, and Politics,” in Political Economy, Growth, and Business Cycles, ed. Alex Cukierman, Zvi Hercowirtz, and Leonardo Leiderman (Cambridge, MA: Massachusetts Institute of Technology Press, 1992). 39 Alan Greenspan was moved to comment Alan Greenspan, remarks, Council on Foreign Relations, March 15, 2011, http://​www.​cfr.​org; Greenspan, citing Federal Reserve data, in “Activism,” International Finance 14, no. 1 (October 2011): 165–82, http://​online​library.​wiley.​com. 40 Not business investment but consumer demand James Livingston, “It’s Consumer Spending, Stupid,” The New York Times, October 25, 2011. 41 Major banks to big pharmaceuticals Nelson D.

A First-Class Catastrophe: The Road to Black Monday, the Worst Day in Wall Street History
by Diana B. Henriques
Published 18 Sep 2017

perhaps because their idea was novel and complex: Kyrillos, Cases in Financial Engineering, p. 804. dubbed the trio “The Committee to Save the World”: The cover was for the February 13, 1999, issue. favored a more laissez-faire approach to market regulation: Testimony of Alan Greenspan, Waxman Hearing 2008, pp. 17–18 in the searchable text file. His confidence that Wall Street could be trusted: Ibid. simply did not give enough weight to raw human nature: Alan Greenspan, The Map and the Territory 2.0: Risk, Human Nature, and the Future of Forecasting (New York: Penguin Books, 2013/2014), pp. 8, 18–34. ACKNOWLEDGMENTS Once again, I find myself thanking my lucky stars for the four guardian angels who have helped me get another book across the finish line.

…

Todd Conover, comptroller of the currency, an independent official within the Treasury Department (1981–85) E. Gerald Corrigan, vice president of the Federal Reserve Bank of New York and special assistant to New York Fed President Paul Volcker (1976–80), president of the Federal Reserve Bank of Minneapolis (1980–84), and president of the Federal Reserve Bank of New York (1985–93) Alan Greenspan, chairman of the Federal Reserve System from August 1987 to January 2006 William M. Isaac, chairman of the Federal Deposit Insurance Corporation (1981–85) Donald T. Regan, secretary of the Treasury (1981–85) and White House chief of staff (1985–87) Paul A. Volcker, president of the Federal Reserve Bank of New York (1975–79) and chairman of the Federal Reserve System (1979–87) STOCK MARKET REGULATORS Richard G.

…

His term as chairman of the Federal Reserve would expire in August 1983; it was the middle of June, and still President Reagan had not indicated whether Volcker would be reappointed. Newspaper articles reported that there were two Republican candidates being considered for the job—Preston Martin, already on the Federal Reserve Board, and Alan Greenspan, who ran an economic consulting firm in New York and had been the chairman of the Council of Economic Advisers in the Ford administration. Wall Street was nervous, and it showed; the Dow gyrated on every rumor, and even Treasury secretary Don Regan conceded that the market favored Volcker “by an overwhelming majority.”

Shaky Ground: The Strange Saga of the U.S. Mortgage Giants
by Bethany McLean
Published 13 Sep 2015

Bush’s who had worked as the deputy commissioner of the Social Security Administration when there was much talk of privatizing Social Security, and who then became the chairman of OFHEO in 2006, later told the FCIC that there was so much focus on cleaning up the accounting and watching interest rate risk (changes in interest rates can cause big losses for those who own mortgages) that “credit risk was not emphasized as much as it should have been.” As for the Federal Reserve, which also has responsibility for the financial system, its powerful chairman from 1987 to 2006, Alan Greenspan, was long opposed to the power in the mortgage market that Fannie and Freddie wielded. Tim Howard, Fannie Mae’s former CFO, would later charge that that was one reason no one tried to rein in the private market. “Following the lead of Fed chairman Alan Greenspan, [the Fed and the Treasury] actively were seeking to substitute free market principles, mechanisms and disciplines for government involvement and regulation wherever they could . . . subprime mortgages were the private market alternatives to loans financed by the GSEs,” Howard wrote in a 2013 book titled The Mortgage Wars: Inside Fannie Mae, Big-Money Politics, and the Collapse of the American Dream.

…

When Fannie executives argued that their enemies just wanted to turn their business over to the big banks, along with their profits, I thought that was just a conspiracy theory. And even if I had believed it, I would have thought, “Well, what’s wrong with that?” I too was a believer in what Franklin Raines, Fannie’s former CEO, calls “marketification”: the idea that the free market fixes all. That was long before the financial crisis, about which even Alan Greenspan, that ardent believer in Ayn Rand’s libertarianism, said in 2008: “Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief.” There were lots of villains in the run-up to the financial crisis, which is why Joe Nocera and I titled our 2010 book All the Devils Are Here.

…

CAST OF CHARACTERS Fannie Mae Jim Johnson CEO, 1991–1998 Franklin Raines CEO, 1999–2004 Daniel Mudd CEO, 2005–2008 Timothy Mayopoulos CEO, 2012–current Timothy Howard CFO, 1990–2004 Thomas Lund Executive Vice President of Single-Family Mortgage Business 2005-2009 Freddie Mac Leland Brendsel CEO, 1987–2003 Richard Syron CEO, 2003–2007 Federal Housing Finance Agency Ed DeMarco Director, 2009–2014 Mel Watt Director, 2014–current Office of Federal Housing Enterprise Oversight Jim Lockhart Director, 2006–2008; Director of the FHFA, 2008–2009 Armando Falcon Director, 1999–2005 White House Henry Paulson Secretary of the Treasury, 2006–2009 Timothy Geithner Secretary of the Treasury, 2009–2013 Lawrence Summers Director of the National Economic Council, 2009–2010 Gene Sperling Director of the National Economic Council, 2011–2014 Austan Goolsbee Chairman of the Council of Economic Advisers, 2010–2011 Federal Reserve Ben Bernanke Chairman, 2006–2014 Alan Greenspan Chairman, 1987–2006 Paul Volcker Chairman, 1979–1987 Marriner Eccles Chairman, 1934–1948 Congress Jeb Hensarling Chairman of the House Financial Services Committee, 2013–current Barney Frank Chairman of the House Financial Services Committee, 2007–2011 Mark Warner Democratic Senator of Virginia Bob Corker Republican Senator of Tennessee Charles Schumer Democratic Senator of New York Courts Robert Pratt Senior District Judge, District Court for the Southern District of Iowa Royce Lamberth Senior Judge, District Court for the District of Columbia Investors Richard Perry Founder of Perry Capital Bruce Berkowitz Founder and Chief Investment Officer of Fairholme Capital Management William Ackman CEO of Pershing Square Capital Management Housing Activists John Taylor President of National Community Reinvestment Coalition Judy Kennedy President and CEO of National Association of Affordable Housing Lenders, 1998–2015 Analysts Peter Wallison Scholar, American Enterprise Institute; Member, Financial Crisis Inquiry Commission Ed Pinto Scholar, American Enterprise Institute Mark Calabria Director of Financial Regulation Studies, Cato Institute Yu Yongding Member, Monetary Policy Committee of the People’s Bank of China, 2004–2006 Laurie Goodman Director, Housing Finance Policy Center Joshua Rosner Managing Director, Graham Fisher & Co.

Trillion Dollar Triage: How Jay Powell and the Fed Battled a President and a Pandemic---And Prevented Economic Disaster
by Nick Timiraos
Published 1 Mar 2022

Sebastian Mallaby, The Man Who Knew: The Life and Times of Alan Greenspan (New York: Penguin Press, 2016), 140; Safire, 496. 53. Safire, 493. 54. Greenspan has denied that he made the call, including in an interview with the author. Greenspan said he told Colson, “Chuck, I understand there is a telephone on the desk of the President and one on the desk of Arthur Burns. I would suggest they might talk to each other.” Alan Greenspan, “Federal Reserve Board Oral History Project,” June 9, 2009. https://www.federalreserve.gov/aboutthefed/files/alan-greenspan-interview-20090331.pdf 55. Mallaby, 142. 56. Ibid., 142. 57.

…

He turned to Vice Chair Richard Clarida and pressed him for his worst-case scenario. “Don’t tell me what’s plausible,” said Powell. “What’s the real worst case?” “Well, Jay, if we become Italy, and we shut down the entire economy, then this will be a bigger hit than the Great Depression,” Clarida said. The names of Fed chairs are often well known—Paul Volcker, Alan Greenspan, Ben Bernanke, Janet Yellen—but the central bank’s leaders operate mostly in the background, giving bland speeches in drab hotel ballrooms to chambers of commerce and economics clubs, away from the harsh political glare bathing other institutions such as Congress and the Supreme Court. There are certain moments, however, when the Fed sheds those reservations and becomes what is tantamount to a fourth branch of government.

…

That evening, during a Friday-night cruise on the Potomac River aboard the presidential yacht Sequoia, Nixon and a few advisers hatched a plot to manipulate Burns.52 With Burns pushing for wage controls, they leaked a story saying the chair was simultaneously seeking to increase his own $42,500 annual salary by $20,000.53 White House press secretary Ron Ziegler carefully refused to deny the story. In case Burns hadn’t gotten the message, Nixon adviser Charles Colson enlisted Alan Greenspan—a Burns protégé and an economic consultant for the Nixon campaign—to telephone the Fed chair. Colson had helped hatch the pay-raise-smear pressure tactic on the Sequoia, and he would later go to jail for his role in other White House dirty tricks. According to Sebastian Mallaby’s 2016 biography of Greenspan, notes from Colson suggest Greenspan spoke at length to Burns about his policy dilemma and loyalties to Nixon.54 According to those notes, Greenspan reported Burns as being “very disturbed” and “pissed off.”55 H.

Selfie: How We Became So Self-Obsessed and What It's Doing to Us
by Will Storr
Published 14 Jun 2017

Book Five: The Special Self So there was this girl, name of Alyssa Rosenbaum: My telling of the Ayn Rand, Nathaniel Branden and Alan Greenspan story is sourced from the following accounts, except where specifically noted: Ayn Rand and the World She Made, Anne C. Heller (Anchor, 2009); Ayn Rand Nation, Gary Weiss (St Martin’s Griffin, 2012); My Years with Ayn Rand, Nathaniel Branden (Jossey-Bass, 1999); Maestro: Greenspan’s Fed and the American Boom, Bob Woodward (Simon and Schuster, 2000); Alan Shrugged: Alan Greenspan, the World’s Most Powerful Banker, Jerome Tuccille (John Wiley, 2002); Alan Greenspan: The Oracle Behind the Curtain, E. Ray Canterbury (World Scientific, 2006).

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‘There is no such thing as society. There are only individual men and women and families’: Quoted in Neoliberalism: A Brief History, David Harvey (Oxford University Press, 2005), p. 23. made Greenspan ‘the single most powerful figure’: Alan Greenspan: The Oracle Behind the Curtain, E. Ray Canterbury (World Scientific, 2006), p. 1. the ‘Central Banker of Neoliberalism’: ‘The central banker of neoliberalism: Alan Greenspan steps down as Fed Chief’, Joel Geier, http://socialistworker.org/­2006-1/575/575_06_Greenspan.shtml. act as both groundskeeper and referee: Neoliberalism, Manfred B. Steger and Ravi K. Roy (Oxford University Press, 2010), p. 2.

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A lengthy New Woman article in 1991: ‘Self-Esteem: The Hope of the Future’, Wanda Urbanska, New Woman, March 1991. A year later, a Newsweek cover story: ‘Hey, I’m Terrific!’, Jerry Adler et al., Newsweek, 17 February 1992. Alan Greenspan had a problem: My account of Greenspan’s influence over Bill Clinton is largely sourced from Maestro: Greenspan’s Fed and the American Boom, Bob Woodward (Simon and Schuster, 2000) and Alan Greenspan: The Oracle Behind the Curtain, E. Ray Canterbury (World Scientific, 2006). ‘would reach 267 miles’ . . . etc.: Clinton’s Economic Plan: The Speech; Text of the President’s Address to a Joint Session of Congress; available at: http://www.nytimes.com/1993/­02/18/us/clinton-s-economic-plan-speech-text-president-s-address-joint-session-congress.html?

The Making of Global Capitalism
by Leo Panitch and Sam Gindin
Published 8 Oct 2012

,” paper prepared for the symposium sponsored by the Federal Reserve Bank of Kansas City on The Greenspan Era: Lessons for the Future, Jackson Hole, Wyoming, August 25–7, 2005. 20 Alan Greenspan and James Kennedy, “Sources and Uses of Equity Extracted from Homes,” Finance and Economics discussion Series 2007–20, Federal Reserve Board, March 2007, p. 10. 21 Financial Crisis Inquiry Report, pp. 13–14. 22 See ibid., p. 70, Figure 5.2. 23 For both the Nader quote and the data here, see Viral A. Acharya, Guaranteed To Fail: Fannie Mae, Freddie Mac and the Debacle of Mortgage Finance, Princeton: Princeton University Press, 2011, pp. 20–2. 24 Alan Greenspan, “Consumer Finance,” remarks by Chairman Alan Greenspan at the Federal Reserve Fourth Annual Community Affairs Research Conference, Washington, DC, April 8, 2005. 25 Moreover, because US FDI was so large, and the returns on it so much higher than on securities, total receipts to the US on assets abroad were higher than what was paid out on foreign assets in the US.

…

in Walter Mattli and Ngaire Woods, eds., The Politics of Global Regulation, Princeton: Princeton University Press, 2009, p. 267. 2 Alan Greenspan was reappointed by Clinton as Federal Reserve chair in March 1996; Robert Rubin moved from Goldman Sachs to become the first director of Clinton’s new National Economic Council in 1993, before becoming Treasury secretary in 1995; while Lawrence Summers, a Harvard economist who was promoted in 1993 from chief economist at the Word Bank to undersecretary for international affairs at the Treasury, became Rubin’s deputy secretary in 1995, and then secretary of the Treasury in 1999. 3 See Alan Greenspan, The Age of Turbulence, New York: Penguin, 2007, pp. 367–76; Alan Greenspan, “Global Challenges,” speech to the Council on Foreign Relations, New York, July 12, 2000; and Richard W.

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This was accompanied by a broader neoliberal turn in the US, and its subsequent near-universalization as almost all the world’s states, soon including Communist ones, opened themselves up to free trade and the free movement of capital, and promoted the spread and deepening of capitalist social relations. The common tendency to analyze these developments in terms of the key tenets of neoliberal ideology as articulated by Reagan or Thatcher, or for that matter by Milton Freidman or Alan Greenspan, is a classic case of failing to see the wood for the trees. It misses the continuities between their prescriptions for free markets and the long-term goals already articulated by the American state at the time of the relaunching of global capitalism in the postwar era. And it fails to register the growing contradictions within the postwar class compromise, as the realization of near full employment and growing social expenditures took place alongside rapidly increasing commodification and ever-deepening capitalist social relations.

Foolproof: Why Safety Can Be Dangerous and How Danger Makes Us Safe
by Greg Ip
Published 12 Oct 2015

House of Representatives Committee on Energy and Commerce Subcommittee on Oversight and Investigations,” April 1, 2014, accessed at http://docs.house.gov/meetings/IF/IF02/20140401/102033/HHRG-113-IF02-Wstate-FriedmanD-20140401.pdf. 28 When a plane crashed in 1931: Hansen, McAndrews, and Berkeley, History of Aviation Safety, 4. 29 As Alan Greenspan was fond: Alan Greenspan, Remarks on Bank Supervision, Regulation, and Risk, October 5, 1996, available at http://www.federalreserve.gov/boarddocs/speeches/1996/19961005.htm. 30 One morning in 1986: Robert Samek, “Tampa Airport Warned Pilot 4 Times about Fog,” St. Petersburg Times, November 22, 1986. 31 “To emulate the airline”: Larry D’Oench, “Letter to the Editor,” Wall Street Journal, Jan. 6, 2013. 32 general aviation accounts: Comparisons between general and commercial aviation are based on per 100,000 hours flown.

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By the early 1980s, fiscal engineering—attempting to fine-tune the economy with a burst of spending here, a tax cut there—was dead; academic economists had disavowed it, political leaders shunned it, and with budget deficits ballooning, the public couldn’t afford it. But monetary engineering—tweaking interest rates just enough to keep both inflation and recession at bay—not only survived; it was more popular than ever. Paul Volcker, Alan Greenspan, and other central bankers gained folk-hero status. For twenty-five years, unemployment and inflation steadily fell, and recessions became less frequent. This was no small thing. Every year not spent in recession, every percentage point less of unemployment, represented hundreds of billions of dollars of added income and wealth.

…

When other banks could not be persuaded to take over the slowly capsizing bank, the FDIC did, becoming its largest shareholder—an unfamiliar role for an agency whose main job was to regulate and when necessary close banks, not run them. The rescue of Continental prompted a congressman to observe that a new class of banks now existed: “too big to fail.” The crises didn’t end with Volcker. In 1987, a few months after his successor, Alan Greenspan, took office, the stock market crashed. Greenspan slashed interest rates while his colleagues persuaded banks to keep lending to crippled Wall Street dealers. A total meltdown in the markets was narrowly averted; the economy never skipped a beat. The mini-crash of 1989 was also a nonevent, perhaps thanks to the Fed’s assurance of assistance.

Crisis Economics: A Crash Course in the Future of Finance
by Nouriel Roubini and Stephen Mihm
Published 10 May 2010

pid=20601087&refer=home&sid=atEk12XYMerk. 72 as the career of Alan Greenspan amply suggests: Alan Greenspan, The Age of Turbulence: Adventures in a New World (New York: Penguin Press, 2007). 72 “In a crisis environment . . . we shouldn’t . . .”: Greenspan quoted in John M. Berry, “Black Monday for Greenspan: A Race to Forestall a Liquidity Crisis,” Washington Post, October 19, 1997. 73 “take away the punch bowl . . .”: Martin quoted in Kenneth T. Jackson, Karen Markoe, and Arnie Markoe, eds., The Scribner Encyclopedia of American Lives, vol. 5 (New York: Charles Scribner’s Sons, 2002), 73 “irrational exuberance”: Alan Greenspan, “The Challenge of Central Banking in a Democratic Society,” Francis Boyer Lecture of the American Enterprise Institute, December 5, 1996, online at http://www.federalreserve.gov/boarddocs/speeches/1996/19961205.htm. 73 it created a Greenspan put: Miller, Weller, and Zhang, “Moral Hazard and the US Stock Market.” 73 “For us to go in and audit . . .”: Greenspan quoted in Greg Ip, “Did Greenspan Add to Subprime Woes?”

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.”: Aldous Huxley, The Devils of Loudun (London: Chatto and Windus, 1952), 259. 31 greed: See, for example, Ruth Gledhill, “Rowan Williams Says ‘Human Greed’ to Blame for Financial Crisis,” Times (London), October 15, 2008. 33 “we should be quite cautious . . .”: Alan Greenspan, “Consumer Credit and Financial Modernization,” remarks to Economic Development Conference of the Greenlining Institute, San Francisco, Calif., October 11, 1997, online at http://www.federalreserve.gov/boarddocs/speeches/1997/19971011.htm. 33 “lenders are now able . . .”: Alan Greenspan, remarks to the Federal Reserve System’s Fourth Annual Community Affairs Research Conference, Washington, D.C., April 8, 2005, online at http://www.federalreserve.gov/boarddocs/speeches/2005/20050408/default.htm. 33 slashing the rate: Jean Claude Trichet, “Activism and Alertness in Monetary Policy,” lecture to “Central Banks in the 21st Century” conference, Madrid, June 8, 2006, online at http://www.ecb.int/press/key/date/2006/html/sp060608_1.en.html.

…

.”: Keynes, General Theory, 159. 233 Banishing Bubbles: This section relies heavily on information contained in Nouriel Roubini, “Why Central Banks Should Burst Bubbles,” International Finance 9 (2006): 87-107. 234 writings . . . of Alan Greenspan and Ben Bernanke: See, for example, Ben S. Bernanke and Mark Gertler, “Should Central Banks Respond to Movements in Asset Prices?” American Economic Review 91 (2001): 253-57; Alan Greenspan, “Risk and Uncertainty in Monetary Policy,” speech to the annual meeting of the American Economic Association, San Diego, Calif., January 3, 2004, online at http://www.federalreserve.gov/boarddocs/speeches/2004/20040103/default.htm. 236 Regulation T: Peter Fortune, “Margin Requirements, Margin Loans, and Margin Rates: Practice and Principles,” Federal Reserve Bank of Boston New England Economic Review (2000): 19-44. 237 Asset-Based Reserve Requirements: Thomas I.

Goddess of the Market: Ayn Rand and the American Right
by Jennifer Burns
Published 18 Oct 2009

See Passion of Ayn Rand, 173, and Anne Heller, Ayn Rand and the World She Made (New York: Doubleday, 2009), 304–305. 41. ARC, 03–58; Leonard Peikoff, Oral History Interview, ARP; Mike Wallace, Oral History Interview, ARP. 42. Alan Greenspan, The Age of Turbulence: Adventures in a New World (New York, Penguin, 2007), 41. Contrary to Justin Martin in Greenspan: The Man behind the Money (Cambridge, MA: Perseus, 2000) and Jerome Tuccille in Alan Shrugged: Alan Greenspan, the World’s Most Powerful Banker (New York: Wiley, 2002), both of whom portray Nathaniel Branden as playing a major role, Greenspan remembers Rand herself as the most influential in establishing his relationship with Objectivism.

…

Although two biographies of Greenspan credit his involvement with the campaign to Len Garment, both Greenspan and Anderson remember that Anderson was the person who introduced him to Nixon and involved him in the presidential campaign. Author interview with Martin Anderson, January 11, 2008; Alan Greenspan, personal communication to author, February 27, 2009; Justin Martin, Greenspan: The Man behind the Money (Cambridge, MA: Perseus, 2000), 45; Jerome Tuccille, Alan Shrugged: Alan Greenspan, the World’s Most Powerful Banker (New York: Wiley, 2002). Anderson included an excerpt from Rand in Martin Anderson and Barbara Honegger, eds., The Military Draft: Selected Readings on Conscription (Stanford, CA: Hoover Institution Press, 1982).

…

As she grew closer to Nathan and Barbara, Rand became ensconced within a new surrogate family, a tight kinship network consisting primarily of the couple’s relatives and friends. The group included Barbara and Nathan’s cousins, Leonard Peikoff and Allan Blumenthal, Nathan’s sister and her husband, Elayne and Harry Kalberman, Barbara’s childhood friend Joan Mitchell, and Joan’s college roommate, Mary Ann Rukovina. Joan’s boyfriend and briefly her husband, Alan Greenspan, was also a regular. Many were students at New York University, where Barbara and Nathan were now enrolled. These young people were fascinated by Rand, drawn by her strong personality, her bold presentation of ideas, and her literary fame. Rand’s new group of fans dubbed themselves the “Class of ‘43” after The Fountainhead, or tongue-in-cheek, “The Collective.”

Ayn Rand and the World She Made
by Anne C. Heller
Published 27 Oct 2009

Since they had gravitated to Rand because of their admiration for The Fountainhead, she nicknamed them “the Class of ’43,” in honor of the novel’s year of publication. With cheerful irony, the eight or nine most intimate members—Nathaniel and Barbara, Joan Mitchell and Allan Blumenthal, Leonard Peikoff, Alan Greenspan, Mary Ann Sures, and Nathaniel’s sister Elayne and her future husband Harry Kalberman—called themselves “the Collective.” Rand came to like them all, to a greater or lesser degree. At first, she disapproved of Alan Greenspan, whom she found so somber and uncommunicative that she called him “the Undertaker” behind his back. Once, during a philosophical exchange with Branden, Greenspan reportedly declared that he didn’t believe that objective reality, including his own existence, could be proved.

…

The passage surprised me by defending limitless wealth in a way that was logical, original, complex, and, though somewhat overbearing, beautifully written. I learned that Rand had often presented this long passage as a test of intelligence and literary acumen to potential new disciples, including her most famous follower, Alan Greenspan. I went on to devour her novels and, later, to read her speeches, essays, letters, journals, screenplays, and theatrical plays. (A complete list of her published works appears in the Selected Bibliography.) I became a strong admirer, albeit one with many questions and reservations. Although Rand is rarely taught in universities, new readers, most in their teens and twenties, have always found their way to her books.

…

Her defense of radical individualism and of selfishness as a capitalist virtue has won her scores of contemporary public champions, including former SEC chairman Christopher Cox, congressman and 2008 presidential contender Ron Paul, Libertarian Party founder John Hospers, Wall Street Journal editorial writer Stephen Moore, Alan Greenspan, and even Chris Matthews, MSNBC news commentator and former chief aide to liberal congressman Tip O’Neill. Forbes and Fortune regularly mention her as a heroine of young Silicon Valley entrepreneurs, game theorists, and chess masters. Yet she has stood outside the pale of respected American literary practitioners and social critics, and a quarter century after her death most readers of her novels know little about her.

After the New Economy: The Binge . . . And the Hangover That Won't Go Away
by Doug Henwood
Published 9 May 2005

And now we're forgetting about it, our amnesia encouraged by the frequent reminders that we're in a state of permanent war. There was something aberrational about the late 1990s, for sure, but the New Economy moment was a manic set of variations on ancient themes, all promoted from the highest places. Presidents and treasury secretaries restructured economies, encouraged by Wall Street analysts and Alan Greenspan.Techno-utopianism is an old theme in American culture. Bill Gates's fantasies of the frictionless economy—spun out, it's said, with the assistance of thirteen ghostwriters—^were the latest incarnation of an old elite desire to put workers and the ugly things that sometimes come with them out of sight.

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This, Uke the recent one, was jacked up with New Century fever; similar enthusiasms erupted in the late 1920s and late 1960s. The latest episode struck sometime in the mid-1990s; Shiller (2000, p. 97) cites several pioneering newspaper and magazine articles from 1996 and 1997.The mythmaking got quite a shot in the arm when it was endorsed by Alan Greenspan as he retreated from his December 1996 "irrational exuberance" speech. What a difference from 30 years earher. Then-Fed chair WiUiam McChesney Martin pubHcly expressed anxiety that speculation was getting out of control in the mid-1960s, in a way reminiscent of the 1920s, and he cited as evidence "the spreading conviction among the pubHc that 'a new economic era' had begun" (quoted in Shiller 2000, p. 224).

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It would be nice if the business class suddenly realized that the source of all wealth really is human workers, and rewarded them as such, but that's not likely to happen. Saying that it v^ makes for good cover copy, though. Another reason to take Gilder seriously is that his line on matter's overthrow has also long been celebrated by Federal Reserve chair Alan Greenspan. As far back as 1988, writing on the Wall Street Journal editorial page, Greenspan noted a near-universal trend towards tininess. Chips have replaced vacuum tubes; Thinsulate, fur; terabytes, paper securities; and intangible, knowledge-dependent services, bulky old-fashioned goods. "In fact, if all the tons of grain, cotton, ore, coal, steel, cement and the like that Americans produce were combined, their aggregate volume would not be much greater on a per capita basis than it was 50 or 75 years ago," he argued with the air of someone revealing an important truth.

End the Fed
by Ron Paul
Published 5 Feb 2011

Being in Congress in the late 1970s and early 1980s and serving on the House Banking Committee, I met and got to question several Federal Reserve Board chairmen: Arthur Burns, William G. Miller, and Paul Volcker. Of the three, I had the most interaction with Volcker. He was more personable and smarter than the others, including the more recent board chairmen Alan Greenspan and Ben Bernanke. In my second tour of congressional duty starting in 1997, I had the opportunity to quiz them. In 1980, a major piece of banking legislation, the Monetary Control Act, was passed; many considered it a prelude to the savings and loan crisis in that decade. I expressed my concern to Chairman Volcker at a hearing that reserve requirements could be lowered to zero and the Federal Reserve could buy any asset, including foreign debt.

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Murray Rothbard argued in his testimony before the commission that it was not the gold standard that caused the Depression of the 1930s; rather, it was the misuse of the gold standard that led up to it. In the closing part of his statement, he urged that if gold were ever to return as a standard, it must be a gold coin standard where citizens have the right to have their paper currency redeemed in gold coins. Alan Greenspan also testified, and it was a rather decent statement; although he did not call for a gold standard, he advocated issuing treasury bonds that were backed by gold as an interim step in moving in that direction. In 1981, he was not as strong for the gold standard as he was in the 1960s, but not as hostile as he became later on.

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My bet is the government will not permit the use of new gold and silver bullion coins, that is, until the End the Fed revolution comes to fruition. CHAPTER 6 CONVERSATIONS WITH GREENSPAN Over the years I’ve had many interesting interchanges with Federal Reserve chairmen. The most occurred with Alan Greenspan. He fascinated me the most because of my early exposure to his support for the gold standard and disdain for the Federal Reserve and paper money. I was a subscriber to Ayn Rand’s objectivist newspaper of the 1960s and studied closely Greenspan’s 1966 article “Gold and Economic Freedom” in that publication. 1 I told him that he had made a favorable impression on me—once.

War and Gold: A Five-Hundred-Year History of Empires, Adventures, and Debt
by Kwasi Kwarteng
Published 12 May 2014

It was only in the summer of 1982 that Volcker reduced the discount rate.28 Volcker himself saw his role as that of a surgeon. Austere and frugal in his private life, he would often complain about high prices in ‘swanky’ Washington hotels.29 He was intense, secretive and lacked the polish of more sophisticated financial types. By the standards of the United States financial elite, he was not wealthy. His successor, Alan Greenspan, who had set up his own economic consultancy in the 1950s, remembered that since Volcker had been a ‘civil servant most of his career, he didn’t have much money. He kept his family at their house in suburban New York for the entire time he was Fed chairman. All he had in Washington was a tiny apartment – he invited me over once in the early 1980s.’

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Thatcher herself reportedly used the phrase ‘one of us’ to denote people who shared her deeply held convictions. She had always said that she had only gone into politics ‘to do things’, and she did indeed accomplish many ‘things’ whose legacy is still fiercely disputed.52 In the United States, another committed free-market disciple, Alan Greenspan, was appointed Chairman of the Federal Reserve to replace Paul Volcker in 1987. While Volcker had been a technocrat and career civil servant, Greenspan combined an entrepreneur’s experience of running his own economic consultancy since his late twenties with a firm ideological belief in individualism and markets.

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Benjamin Cardin, a Democrat Congressman from Maryland, contemptuously dismissed the Chinese policy announcement as ‘inadequate’. Phil English, a Republican Congressman, said, ‘If this is a last best offer, it is unacceptable.’ US politicians continued to threaten retaliatory measures, in the form of tariffs and added protection for their domestic manufactures. But other economists, notably Alan Greenspan, were more reluctant to blame China alone for the United States’ chronic trade deficit with the rest of the world. Greenspan argued that ‘America’s bloated trade deficits probably wouldn’t be helped by China revamping its currency as the Bush administration has been pressing Beijing to do.’ The Federal Reserve Chairman observed that US companies would be likely to turn to other countries ‘such as Thailand or Malaysia’ for goods they were buying from China.

Servant Economy: Where America's Elite Is Sending the Middle Class
by Jeff Faux
Published 16 May 2012

Roger Altman, “Recent Financial Market Disruptions: Implications for the Economy and American Families,” Brookings Institution, September 26, 2007, www.brookings.edu/projects/hamiltonprojectevents. 20. Alan Greenspan, testimony before the Senate Committee on Banking, Housing and Urban Affairs, Washington, DC, July 16, 2002, http://www.federalreserve.gov/boarddocs. 21. Dean Baker, Plunder and Blunder: The Rise and Fall of the Bubble Economy (San Francisco: Berrett-Kochler, 2009), 75. 22. Robert Shiller. Irrational Exuberance (New York: Crown, 2006), xiii. 23. Edmund L. Andrews, “Greenspan Concedes Error on Regulation,” New York Times, October 23, 2008. 24. Alan Greenspan, Age of Turbulence: Adventures in a New World (New York: Penguin Press, 2002), 508. 25. Alan Greenspan, “The Challenge of Central Banking in a Democratic Society,” speech to American Enterprise Institute, December 5, 1996. 26.

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Sounding an alarm that the government would have to raise taxes or cut spending in the future to pay for the bulge in retirements represented by the baby boomers beginning in 2011, Republicans demanded that the system be “reformed” to be put on an actuarially sound basis. The problem was vastly overstated and could have been resolved with modest changes. Instead, a bipartisan commission headed by Reagan’s Federal Reserve chairman, Alan Greenspan, persuaded Congress to raise the full retirement age and to increase the payroll tax. Democrats on the commission went along. The public was told that the money would be “saved” for future retirees. But there was no safe-deposit box in which the new revenue was stored away for the future. Instead, the new revenue was used to pay for the deficits resulting from Reagan’s tax cuts and military spending spree.

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Clinton had come to the White House having promised his constituency that he would expand government spending on the social safety net, particularly health care. But his chief adviser on economic questions was Robert Rubin, a cochairman of Goldman Sachs who had been a major fundraiser for the Democrats in the 1980s and was appointed secretary of the treasury in Clinton’s second term. And Rubin’s chief adviser was Alan Greenspan. Together they convinced Clinton that the financial markets would cause a flight from the dollar unless Clinton cut the fiscal deficit left to him by Reagan and George H. W. Bush. Clinton, whose success taught him the value of close Wall Street connections, agreed. He spent much of his presidency shortchanging the Democratic Party’s constituency so he could pay off the debts run up by his two Republican predecessors’ spending on their constituency.

Fool's Gold: How the Bold Dream of a Small Tribe at J.P. Morgan Was Corrupted by Wall Street Greed and Unleashed a Catastrophe
by Gillian Tett
Published 11 May 2009

Another factor that fueled the trend, though, was falling interest rates. After Paul Volcker jacked up rates in 1979, inflation had tumbled. By 1983 it was running at 3.2 percent, down from 13.5 percent in 1981. The Fed was then able to trim short-term interest rates, which stimulates economic growth. In 1987, Alan Greenspan replaced Volcker as Fed chairman, and from 1989 onwards, he steadily reduced rates to fight a mild recession. That was good news for borrowers, and it also boosted bank profits, because when rates are low, banks can borrow money cheaply and lend it out to customers at higher rates, making easy returns.

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Some federal agencies, such as Sallie Mae, the student loan provider, also began offering investment products that included derivatives. Most of these products produced high returns by employing two key features. They involved bets on the level to which interest rates would fall in the future, and with rates falling so dependably on Alan Greenspan’s watch, those bets produced easy money with what seemed like very little risk. Most of these deals also involved a concept that is central to the financial world, known as “leverage.” This essentially refers to the process of using investment techniques to dramatically magnify the force or direction of a market trend (just as a lever will increase the force of a machine).

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“If the market players continue forward in the spirit of the G30 study, then regulators will have much less to do,” observed J. Carter Beese, a Securities and Exchange commissioner, in November 1993. Hancock, Brickell, and the rest of the swaps market heaved a sigh of relief. Then disaster struck. By early 1994, Fed chair Alan Greenspan was starting to fear that the US economy was overheating after several years of loose monetary policy. On February 4, 1994, he suddenly raised the federal funds rates by 25 basis points from 3 to 3.25 percent. The move, which came amid other unexpected economic data, stunned the markets, triggering a sharp fall in bond prices.

The Myth of the Rational Market: A History of Risk, Reward, and Delusion on Wall Street
by Justin Fox
Published 29 May 2009

Charles Himmelberg, Christopher Mayer, and Todd Sinai, “Assessing High House Prices: Bubbles, Fundamentals and Misperceptions,” Journal of Economic Perspectives (Fall 2005): 67–92. 12. Justin Lahart, “In Time of Tumult, Obscure Economist Gains Currency,” Wall Street Journal, Aug. 18, 2007, 1. 13. Alan Greenspan, “Reflections on Central Banking,” speech given at the annual Jackson Hole symposium of the Federal Reserve Bank of Kansas City, Aug. 26, 2005. 14. Alan Greenspan, “Mortgage Banking,” speech to the American Bankers Association Annual Convention, Palm Desert, California (via satellite), Sept. 26, 2005. 15. Alan Greenspan and James Kennedy, “Estimates of Home Mortgage Originations, Repayments and Debt on One-to-Four Family Residences,” Finance and Economics Discussion Series, Divisions of Research and Statistics and Monetary Affairs, Federal Reserve Board, 2005–41; Greenspan and Kennedy, “Sources and Uses of Equity Extracted from Homes,” Finance and Economics Discussion Series, Divisions of Research and Statistics and Monetary Affairs, Federal Reserve Board, 2007–20. 16.

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House of Representatives Committee on Oversight and Government Reform, The Financial Crisis and the Role of Federal Regulators, 110th Cong., 2d sess., preliminary transcript, 37. Downloaded at http://oversight.house.gov/story.asp?ID=2256. 2. International Swaps and Derivatives Association Market Survey results, available at www.isda.org. 3. Alan Greenspan, “Financial Derivatives,” speech to the Futures Industry Association, Boca Raton, Florida, March 19, 1999. 4. Alan Greenspan, testimony to House of Representatives Committee on Government Oversight and Reform, Oct. 23, 2008, available at http://oversight.house.gov/story.asp?ID=2256. 5. Economist Bob Shiller cites this as the earliest clear statement of the efficient market hypothesis that he has been able to find.

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Bob Shiller Points Out the Most Remarkable Error Some troublemaking young economists demonstrate that convincing evidence for financial market rationality is sadly lacking. 12. Beating the Market With Warren Buffett and Ed Thorp Just because professional investors as a group can’t reliably outperform the market doesn’t mean that some professional investors can’t. 13. Alan Greenspan Stops a Random Plunge Down Wall Street The crash of 1987 exposes big flaws in the rational finance view of risk. But a rescue by the Federal Reserve averts a full reexamination. The Fall 14. Andrei Shleifer Moves Beyond Rabbi Economics The efficient market’s critics triumph by showing why irrational market forces can sometimes be just as pervasive as the rational ones. 15.

All the Devils Are Here
by Bethany McLean
Published 19 Oct 2010

Federal Reserve Ben Bernanke Chairman of the Federal Reserve starting in 2006. Timothy Geithner President of the New York Federal Reserve from 2003 to 2009. Edward “Ned” Gramlich Federal Reserve governor from 1997 to 2005. Longtime head of the Fed’s committee on consumer and community affairs under Alan Greenspan. Alan Greenspan Chairman of the Federal Reserve from 1987 to 2006. Securities and Exchange Commission Christopher Cox Chairman from 2005 to 2009. Arthur Levitt Chairman from 1993 to 2001. THE SKEPTICS Michael Burry California hedge fund manager who began shorting mortgage-backed securities in 2005.

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Robert Rubin Treasury secretary from 1995 to 1999. Previously co-chairman of Goldman Sachs. Bob Steel Undersecretary for domestic finance in 2006. Former Goldman vice chairman brought to Treasury by Paulson. Larry Summers Treasury secretary from 1999 to 2001. Rubin’s deputy before that. Along with Rubin and Alan Greenspan, the third member of “the Committee to Save the World.” Federal Deposit Insurance Corporation Sheila Bair Current chair of the FDIC. Assistant Treasury secretary for financial institutions from 2001 to 2002. Donna Tanoue Chair of the FDIC from 1998 to 2001. Federal Reserve Ben Bernanke Chairman of the Federal Reserve starting in 2006.

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The core idea behind the portfolio reflected, once again, the advantages of being a GSE. Fannie and Freddie would issue some of that low-cost debt their implied government backing made possible, use that money to buy higher-yielding mortgages, and pocket the difference. “The big, fat gap,” Federal Reserve chairman Alan Greenspan used to call it disparagingly, a phrase that perfectly captures the almost moronic simplicity of the strategy. By the end of 1998, Fannie had a $415 billion portfolio of mortgages, up from just $156 billion in 1992. In its 1996 report to Congress, the Congressional Budget Office estimated that the profit margin on this business was four to five times higher than the guarantee business.

Capitalism: Money, Morals and Markets
by John Plender
Published 27 Jul 2015

Cecchetti and Enisse Kharroubi, July 2012. 72 Epistle to Allen Lord Bathurst, Poetical Works, Oxford University Press, 1978. 73 Richard Bentley, London, 1841. 74 Joint Economic Committee, ‘Monetary Policy and the Economic Outlook’, 17 June 1999. 75 For an account of Alan Greenspan’s frequent changes of position on the bubble, see Frederick J. Sheehan’s Panderer to Power: The Untold Story of How Alan Greenspan Enriched Wall Street and Left a Legacy of Recession, McGraw-Hill, 2010. 76 http://blogs.hbr.org/2014/01/what-alan-greenspan-has-learned-since-2008 77 ‘Famous First Bubbles’, Journal of Economic Perspectives, Vol. 4, No. 2, Spring 1990. 78 The First Crash: Lessons from the South Sea Bubble, Princeton University Press, 2004. 79 Ibid. 80 Reformation of Manners: A Satyr, http://books.google.co.uk/books?

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Either way, pricking involves the central banker in substantial career risk because the logic of incurring a modest recession today to avoid a deeper one tomorrow is lost on politicians. They will simply note the current loss of output and jobs and call for the central banker’s head. That, no doubt, was why Alan Greenspan was so terrified of blowing the US economy out of the water with a pre-emptive strike against the technology bubble. The central banker’s dilemma was summed up with characteristic shrewdness by J. K. Galbraith, whose politics and economics were as far removed from Alan Greenspan’s as it was possible to be, in his book The Great Crash 1929: Action to break up a boom must always be weighed against the chance that it will cause unemployment at a politically inopportune moment.

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Reagan lauded ‘the magic of the market’. Like Margaret Thatcher in Britain, he ushered in an era of liberalisation and neo-conservatism, policies favoured by economists at the University of Chicago. Other intellectual champions of this ethos included Ayn Rand, mentor of the subsequent chairman of the Federal Reserve Alan Greenspan. Rand, a true inheritor of Mandeville’s shock-and-awe approach to philosophical issues, trumpeted free markets, argued the merits of selfishness in all things, including sexual relations, and called for a radical reduction in the role of the state. In her novel Atlas Shrugged, she did her best to turn the entrepreneur into the ultimate heroic figure and to offer a polemical glorification of moneymaking and unbridled capitalism.

The Smartest Investment Book You'll Ever Read: The Simple, Stress-Free Way to Reach Your Investment Goals
by Daniel R. Solin
Published 7 Nov 2006

And if you had listened to him you would have missed out on a three-year stock-market boom where the S&P 500 doubled in value. So much for Mr. Greenspan's ability to time the market. Do you think your hyperactive broker or advisor has more reliable information than Alan Greenspan? The reason neither Alan Greenspan nor your hyperactive broker or advisor can accurately predict the financial markets in Canada or the United States is that neither of them has the power to change the psychology of these markets. Alan Greenspan's comment about "irrational exuberance" was his attempt to use his position of influence to "talk the market down" from the dizzying heights it had begun to attain even early in what we know now in hindsight was a bubble.

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But a study of more than 15,000 predictions made by 237 U.S. markettim ing newsletters between June 1980 and December 1992 demonstrated that 94.5% of the newsletters had gone out of business, with an average length of operation of about four years. What if you r broker was AJan Greenspan, the venerable former chairperson of the Federal Reserve Board? How lucky you are! Who in the world knows more about the direction of Nobody Can Time the Market 49 the markets than Alan Greenspan? After all, the Federal Reserve Bank sets monetary policy and is responsible for the stability of the financial system in the United States. Alan calls you. He says he is worried that the market is overheated. He refers to the investor enthusiasm for stocks as "irrational exuberance." He is concerned about a meltdown similar to the one experienced in Japan in the early 1990s.

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Any prediction that a financial market will go up or that it will go down is, at some point, going to prove right. The issue is when that time will be. Those who adhere to market timing almost always miss the absolute top or the absolute bottom. They are either too early, like those who bailed out when Alan Greenspan first spoke of 50 Your Broker or Advisor Is Keeping You rrom Being a Smart Investor irrational exuberance. Or they are toO late, like those who hung on through 200 I and 2002 after the stock market crashed and burned, because other stock market "experts" told them to use "di ps in the market as buying opportunities. " But creating the illusion of their ability to time the market is critical to the business of hyperactive brokers and advisors.

Fault Lines: How Hidden Fractures Still Threaten the World Economy
by Raghuram Rajan
Published 24 May 2010

Vishny, “The Limits of Arbitrage,” Journal of Finance 52, no. 1 (1997): 35–55, for a theory as to why arbitrageurs may find it difficult to bring asset prices back in line even without short-sales constraints. 15 See Claudio Borio and Philip Lowe, “Asset Prices, Financial and Monetary Stability: Exploring the Nexus,” BIS Working Paper 114, Bank for International Settlements, Basel, July 2002. 16 See, for example, Bernanke, “Asset Price Bubbles and Monetary Policy.” 17 Alan Greenspan, speech at the American Enterprise Institute, December, 5, 1996. 18 Alan Greenspan, The Age of Turbulence: Adventures in a New World (New York: Penguin Press, 2007), 176–78 19 Alan Greenspan, “Opening Remarks,” Federal Reserve Bank of Kansas City symposium, Jackson Hole, WY, August 2002. 20 Ben Bernanke, “Monetary Policy and the Housing Bubble,” speech delivered at the annual meeting of the American Economic Association, January 3, 2010. 21 Marek Jarocinski and Frank Smets, “House Prices and the Stance of Monetary Policy,” Federal Reserve Bank of St.

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Not only did the Fed reduce the profitability of taking precautions, but it implicitly encouraged bankers to borrow short-term while making long-term loans, confident the Fed would be there if funding dried up. Leverage built up throughout the system. For a long time, central banks justified not focusing on asset prices by arguing that if Alan Greenspan had acted on his intuition in 1996, he would have snuffed out a boom that, despite the slump in 2000, took the stock market and U.S. household wealth to unprecedented heights. On March 2, 2009, though, the S&P 500 closed at 700, below its level of 744.38 on the day in 1996 when Alan Greenspan made his fateful speech. Of course, to date it has regained substantial ground, but perhaps Greenspan could have averted thirteen years of lost returns if indeed he had backed his words with action on interest rates.

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Following each day’s presentations, participants go on long hikes in the beautiful Grand Teton National Park, where, amid the stunning mountain scenery, they talk central-banker shop: intense arguments about the Wicksellian rate of interest mingle with the sounds of rushing streams. The 2005 Jackson Hole Conference was to be the last for the Federal Reserve Board chairman, Alan Greenspan, and the theme, therefore, was the legacy of the Greenspan era. I was the chief economist of the International Monetary Fund (IMF) at that time, on leave from the University of Chicago, where I have taught banking and finance for the best part of two decades. I was asked to present a paper on how the financial sector had evolved during Greenspan’s term.

The End of Wall Street
by Roger Lowenstein
Published 15 Jan 2010

Such was the bitter fruit of Wall Street’s folly. 20 THE END OF WALL STREET Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief. —ALAN GREENSPAN, TESTIMONY BEFORE THE HOUSE COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM, OCTOBER 23, 2008 THE CRASH PUT PAID to the intellectual model that inspired, and to a large degree facilitated, the bubble. It spelled the end of the immodest faith in Wall Street’s ability to forecast. No better testimony exists than the extraordinary recanting of Alan Greenspan, the public official most associated with the thesis that markets are ever to be trusted. Ten days after the first round of TARP investments, Greenspan appeared in the House of Representatives to, effectively, repeal the credo by which he had managed the nation’s economy for seventeen years:In recent decades, a vast risk management and pricing system has evolved, combining the best insights of mathematicians and finance experts supported by major advances in computer and communications technology.

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BAIR, chairwoman of Federal Deposit Insurance Corporation, jousted with Paulson and Bernanke and pushed for help for homeowners THOMAS C. BAXTER JR., New York Fed general counsel, directed Lehman to file for bankruptcy RICHARD BEATTIE, storied chairman of Simpson Thacher & Bartlett, counseled Willumstad of AIG that bankruptcy was an option BEN BERNANKE, succeeded Alan Greenspan as chairman of Federal Reserve on February 1, 2006; previously was a distinguished scholar who disputed that bubbles should be “pricked”; after the meltdown worked furiously to supply liquidity DONALD BERNSTEIN, partner at Davis Polk & Wardwell, tackled the daunting task of separating “bad” Lehman assets from “good” STEVEN BLACK, cohead of the investment bank of JPMorgan Chase and Jamie Dimon’s right-hand man LLOYD C.

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(JAMIE) GAMBLE, Simpson Thacher partner representing AIG, asked the government to better its terms TIMOTHY GEITHNER, president of the Federal Reserve Bank of New York, more open to bank bailouts than, initially, was Paulson; succeeded Paulson as Treasury secretary in 2009 MICHAEL GELBAND, Lehman banker who warned Fuld to lower the company’s risk level; later he feared that bankruptcy would unleash “the forces of evil” JOSEPH GREGORY, Lehman president, shielded Fuld but was slow to react to the firm’s growing risk MAURICE R. (HANK) GREENBERG, longtime CEO of AIG, forced out by New York State attorney general Eliot Spitzer in 2005 as a result of an accounting scandal, when AIG’s risk was escalating ALAN GREENSPAN, chairman of Federal Reserve from 1987 through 2006, greatly eased monetary conditions and disputed that instruments such as derivatives needed government regulation EDWARD D. HERLIHY, partner at the law firm Wachtell, Lipton, Rosen & Katz, close adviser to Paulson, Ken Lewis, John Mack, and others JOHN HOGAN, risk officer at JPMorgan investment bank; after Lehman ignored his advice, he restricted Morgan’s trading with the firm DAN JESTER, one of numerous Goldman bankers tapped by Paulson for the Treasury, became the government’s point person on AIG JAMES A.

The Lords of Easy Money: How the Federal Reserve Broke the American Economy
by Christopher Leonard
Published 11 Jan 2022

The Fed’s actions affected every aspect of economic life—albeit with long, variable lags—and its policies could spell the difference between prosperity and calamity. But if any citizen was eager to find meaning in Alan Greenspan’s statements, he made a fine art of frustrating their efforts. He intentionally spoke in a way that was not just inscrutable, but incomprehensible. This type of speech earned a nickname on Capitol Hill: “Fedspeak.” It was a language so studded with jargon and with so many concepts nested within one another that a person needed an economics PhD (or many years’ worth of experience trading on Wall Street) to make sense of it. When Alan Greenspan started to talk, everybody’s brains immediately downshifted into a low gear to do heavy uphill climbing as they struggled to figure out exactly what he was saying.

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On the opposite side were rows of chairs where staffers assembled and sat during the meeting, offering presentations when called upon. Tom Hoenig took his seat as the FOMC members made small talk and found their places. Hoenig first joined this table, as a voting member of the FOMC, when the legendary Alan Greenspan presided as chairman of the Fed. But Hoenig’s experience at the central bank went back even further than that. He had worked at the Fed under the leadership of five chairmen, starting with Arthur Burns back in the 1970s, and including the legendary tenure of Paul Volcker, who raised interest rates into the double digits in the early 1980s to beat inflation (causing a brutal recession in the bargain).

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Guffey had seen up close how Hoenig handled the Penn Square crisis, and thought he was right for the job. Hoenig won approval from the Kansas City Fed’s board and then he flew to Washington to sit for interviews with each Fed governor. Finally, Hoenig was ushered into the office of the new Fed chairman, Alan Greenspan. A soft-spoken economist with many decades of political experience in Washington, Greenspan had worked on Wall Street and in the White House under Presidents Nixon and Ford. Greenspan became chairman shortly before the stock market crash of 1987, and he won nearly universal praise for his deft handling of the crisis.

Fed Up: An Insider's Take on Why the Federal Reserve Is Bad for America
by Danielle Dimartino Booth
Published 14 Feb 2017

The Fed, Fisher argued: Ben Bernanke, The Courage to Act (New York: W. W. Norton & Company, 2015), 162. But the chairman: Ibid. Throughout the FOMC transcripts: Annie Lowry, “Inside the Fed’s 2007 Deliberations,” New York Times, January 18, 2013. CHAPTER 9: “LUDDITE!” Not only have individual: FRB: Alan Greenspan, “Remarks by Chairman Alan Greenspan” (speech, American Bankers Association Annual Convention, New York, New York, October 5, 2004), www.federalreserve.gov/BOARDDOCS/Speeches/2004/20041005/default.htm. They knew Chairman Volcker: Associated Press, “Central Bankers Can Thank Paul Volcker’s Love for Fly Fishing for the Jackson Hole Symposium,” BusinessIn sider.com, August 31, 2012.

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Only the quiet, unheralded loss of some fundamental freedoms: the freedom to save for our retirements risk free, the freedom to sleep in peace knowing our pensions are safe, and the freedom for U.S. companies to invest in our nation’s future. The FOMC’s vote during its final meeting of 2008 didn’t come from nowhere. It was part of a long tradition of economic interference by well-meaning bureaucrats, going back to the 1930s and accelerating with Federal Reserve Chairman Alan Greenspan in the 1980s. Greenspan championed the era of financial deregulation that drove Wall Street to levels of greed that surprised even the most hardened investment banking veterans. His pragmatic response to every crisis on Wall Street? Lower interest rates, which Greenspan did again and again and again.

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FED STATEMENT WORD COUNT: 252 EFFECTIVE FED FUNDS RATE: 5.98% 10-YR TREASURY RATE: 5.16% FED BANKS TOTAL ASSETS: $596.1B DATE: 1/1/2001 How do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade? —ALAN GREENSPAN, DECEMBER 5, 1996 As I and one hundred other members of the sales force found seats in the conference room at Credit Suisse’s office a few days into January 2001, we grumbled and groused among ourselves. No Wall Street veteran liked being summoned to these dog and pony shows. That could mean only one thing: we were going to be told to sell something.

The Shifts and the Shocks: What We've Learned--And Have Still to Learn--From the Financial Crisis
by Martin Wolf
Published 24 Nov 2015

Gordon Brown MP, at the Mansion House, London’, 21 June 2006, http://www.ft.com/cms/s/0/00a235ba-015d-11db-af16-0000779e2340.html. 2. http://www.telegraph.co.uk/news/uknews/theroyalfamily/3386353/The-Queen-asks-why-no-one-saw-the-credit-crunch-coming.html. 3. Alan Greenspan, ‘Testimony of Dr Alan Greenspan to the House of Representatives Committee of Government Oversight and Reform’, 23 October 2008, http://www.clipsandcomment.com/2008/10/23/text-alan-greenspan-testimony-congress-october-23. 4. Walter Bagehot, Lombard Street: A Description of the Money Market (London: Henry S. King and Co., 1873), p. 11. 5. Letter to Her Majesty the Queen, 22 July 2009, http://media.ft.com/cms/3e3b6ca8-7a08-11de-b86f-00144feabdco.pdf. 6.

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Peter Sands, ‘In Banking too much Simplicity can be Dangerous’, Financial Times, 26 August 2013, http://www.ft.com/cms/s/0/15ba8044-f46a-11e2-a62e-00144feabdc0.html. 46. Haldane and Madouros, ‘The Dog and the Frisbee’, p. 22. 47. Alan Greenspan has reached a similar conclusion on the need for more capital. See The Map and the Territory: Risk, Human Nature, and the Future of Forecasting (London: Allen Lane, 2013). 48. Ben Bernanke made just this argument in 2002. See ‘Asset Price “Bubbles” and Monetary Policy’, 15 October 20012, http://www.federalreserve.gov/boarddocs/speeches/2002/20021015. Alan Greenspan had the same view. 49. On macroprudential policy, see, among many other writings, Stijn Claessens, Swati Gosh and Roxana Mihet, ‘Macro-Prudential Policies to Mitigate Financial System Vulnerabilities’, 12 November 2012, http://macrofinance.nipfp.org.in/PDF/JIMFPr_Claessens_NIPFP-DEA-JIMF_Conference_December_2012.pdf; Enrico Perotti, ‘A Blueprint for Macroprudential Policy in the Banking Union’, 16 December 2012, http://www.voxeu.org/article/blueprint-macroprudential-policy-banking-union; Otaviano Canuto and Matheus Cavallari, ‘Integrating Monetary Policy and Macroprudential Regulation’, 21 May 2013, http://www.voxeu.org/article/integrating-monetary-policy-and-macroprudential-regulation; and ‘Macro-Prudential and Micro-Prudential Regulation’, ch. 2, The Warwick Commission on International Financial Reform, In Praise of Unlevel Playing Fields, Report of the Second Warwick Commission, University of Warwick, 2009, http://www2.warwick.ac.uk/research/warwickcommission/financialreform/report/chapter_2.pdf. 8.

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‘German Corporate Governance Code (as amended 18 June 2009)’, 2009. http://www.corporate–governance–code.de/eng/kodex/1.html. Gov.uk. ‘Help to Buy: Home Ownership Schemes’, 2013. https://www.gov.uk/affordable-home-ownership-schemes/help-to-buy-equity-loans. Greenspan, Alan. ‘Testimony of Dr Alan Greenspan to the House of Representatives Committee of Government Oversight and Reform’, 23 October 2008. http://www.clipsandcomment.com/2008/10/23/text-alan-greenspan-testimony-congress-october-23. Greenspan, Alan. ‘Regulators must Risk More, and Intervene Less’, 26 July 2011. ft.com. http://blogs.ft.com/the-a-list/2011/07/26/buffers-against-risk-carry-a-cost-to-society. Greenspan, Alan.

I.O.U.: Why Everyone Owes Everyone and No One Can Pay
by John Lanchester
Published 14 Dec 2009

As a result of the dot-com crash and the Enron implosion, the early years of the new millennium were a time when the money which chases the new idea, the go-go idea, had turned its attention away from the stock market. The traditional bond market, also, was not a place to seek the next new thing. The reason was simple: interest rates were, by historic standards, unusually low. Alan Greenspan, the head honcho of U.S. monetary policy during the Clinton years, had presided over a period of economic growth during which the U.S. economy seemed to have achieved a highly desirable “Goldilocks point” of being neither too hot nor too cold, so that it kept growing without causing inflation.

…

I’ve said that this would normally be a self-correcting phenomenon. Because bonds were giving low yields, buyers would drift away from them; because buyers were drifting away, bonds would have to increase their yields to attract them back. Here, though, a new factor entered the equation. Economists are arguing about this phenomenon and how important it was—Alan Greenspan himself has attributed the entire bubble and crash to it—but the broad outline is apparent and can be summed up in a single word: China. The Chinese economy had boomed, and China had effectively become the factory for the developed world, making pretty much everything. (A brief check on my immediate surroundings: my underpants, socks, trousers, and T-shirt, and the shiny Apple laptop on which I’m typing these very words, were all made in China.)

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Our hardwired difficulties with probability and risk go very deep.2 Kahneman and his colleagues have created a hugely important body of work with a single big takeaway for the nonexpert reader: they have proved that we humans, even expert humans, are chronically prone to make certain sorts of cognitive mistakes. We have a particular propensity to errors in relation to risk. Given that, it was perhaps not surprising that it was a mistake involving risk that lay behind the credit crunch. It was that which Alan Greenspan was talking about when he appeared before the U.S. Congress’s House Committee on Oversight and Government Reform on October 23, 2008, and spoke about “a once-in-a-century credit tsunami” based on a “whole intellectual edifice” which had now collapsed. That’s an amazing admission for Greenspan to have made, given that he more than anyone else was in charge of the monetary policies behind both the long boom and the abrupt bust.

Global Financial Crisis
by Noah Berlatsky
Published 19 Feb 2010

Yet they want freedom from regulation and freedom to persue high risk investments. But the British taxpayer should not be responsible for financial risks taken outside the nation’s borders. 42 5. Low Interest Rates Caused the Crisis Tito Boeri and Luigi Guiso 53 The housing crisis was fueled by the actions of the chairman of the Federal Reserve, Alan Greenspan, who kept interest rates low. These circumstances encouraged people to borrow too much to pay for homes they could not afford. 6. Abandoning the Gold Standard Caused the Crisis Dominic Lawson 59 If currency is not backed by gold, politicians and bankers will simply print money, resulting in inflation and a cycle of boom and bust.

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Regulators and experts also tend to be caught up in the enthusiasm, creating a speculative bubble that can have complicated and disastrous effects. As you read, consider the following questions: 1. Between 1997 and 2005, how much did homeownership rates in the United States increase, according to the U.S. Census? 2. According to Robert J. Shiller, with whom did Alan Greenspan have an overly strong ideological alignment? 3. What was the federal funds rate between mid-2003 and mid-2004? This text has been suppressed due to author restrictions. 32 Causes of the Global Financial Crisis This text has been suppressed due to author restrictions. 33 The Global Financial Crisis This text has been suppressed due to author restrictions. 34 Causes of the Global Financial Crisis This text has been suppressed due to author restrictions. 35 The Global Financial Crisis This text has been suppressed due to author restrictions. 36 Causes of the Global Financial Crisis U.S.

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The opportunity for reform and renewal is passing us by and, if it does, financial crises will return with even greater ferocity in years to come. 52 5 Viewpoint Low Interest Rates Caused the Crisis Tito Boeri and Luigi Guiso Tito Boeri is a professor of economics at Bocconi University in Milan, Italy. Luigi Guiso is a professor of economics at the European University Institute in Florence, Italy. In the following viewpoint, the authors argue that Alan Greenspan, former chairman of the Federal Reserve, made the wrong decision in drastically lowering interest rates in response to the recession of 2001. As a result, institutions and individuals were encouraged to take on excess risk and excess debt, resulting in the global financial crisis. The authors argue that in order to preserve financial stability, it is important not to cut interest rates too quickly in the current crisis.

The Oil Kings: How the U.S., Iran, and Saudi Arabia Changed the Balance of Power in the Middle East
by Andrew Scott Cooper
Published 8 Aug 2011

,” Newsweek, September 30, 1974, 32. 204 collapsed a staggering 86 percent: “Seeking Relief from a Massive Migraine,” Time, September 9, 1974, 35. 204 79 percent: Ibid. 204 “Investors have seemed frightened”: Ibid. 204 Housing starts fell 38 percent: Ibid., 39. 204 taxpayer-funded bailout of $10 million a month: Ibid. 204 Massachusetts General Hospital stopped changing bed linen every day: Ibid. 205 rose by 5.6 percent: Memorandum for the Vice President, July 3, 1975, U.S. Council of Economic Advisers, “Alan Greenspan—1975 (2),” Box 19, Gerald R. Ford Library. 205 children living in poverty: “Draft Copy of Report on Poverty in the United States,” July 2, 1975, U.S. Department of Commerce, U.S. Council of Economic Advisers, “Alan Greenspan—1975 (2),” Box 19, Gerald R. Ford Library. 205 real income declined 4 percent: Memorandum for the Vice President, July 3, 1975, U.S. Council of Economic Advisers, “Alan Greenspan—1975 (2),” Box 19, Gerald R. Ford Library. 205 46 percent of Americans told Gallup: “Seeking Relief from a Massive Migraine,” Time, September 9, 1974, 36. 205 “the soaring cost of oil and fertilizer”: “Economic Ills: Any Prescription?

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The decisions they made were based on the lessons of history from that earlier frightening period. This mind-set—that catastrophe was just around the corner—culminated in what I like to think of as the story of the greatest financial crisis never told, when in 1976 Treasury Secretary Bill Simon, Chairman of the Council of Economic Advisers Alan Greenspan, and Chairman of the Federal Reserve Arthur Burns warned President Ford that banks on Wall Street were at risk of collapse if OPEC raised the price of oil. The U.S. economy teetered on the edge of a double-dip recession as governments in Europe slid toward insolvency. It is a scenario that may sound familiar today.

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As we enter the second decade of the twenty-first century, more and more it is a march that is beginning to feel forced. The United States now imports almost two thirds of its oil from overseas and has gone to war twice in less than fifteen years to secure its Persian Gulf oil lifeline. “I am saddened that it is politically inconvenient to acknowledge what everyone knows: the war in Iraq is about oil,” Alan Greenspan wrote with admirable frankness in his memoir. He continued: Thus, projections of world oil supply and demand that do not note the highly precarious environment of the Middle East are avoiding the eight-hundred-pound gorilla that could bring world economic growth to a halt. I do not pretend to know how or whether the turmoil in the Middle East will be resolved.

The Accidental Theorist: And Other Dispatches From the Dismal Science
by Paul Krugman
Published 18 Feb 2010

You might think that raising wages would reduce the demand for labor; but some early Keynesians argued that redistributing income from profits to wages would raise consumption demand, because workers save less than capitalists (actually they don’t, but that’s another story), and therefore increase output and employment. Such paradoxes are still fun to contemplate; they still appear in some freshman economics textbooks. Nonetheless, few economists take them seriously these days. There are a number of reasons, but the most important can be stated in two words: Alan Greenspan. After all, the simple Keynesian story is one in which interest rates are independent of the level of employment and output. But in reality the Federal Reserve Board actively manages interest rates, pushing them down when it thinks employment is too low and raising them when it thinks the economy is overheating.

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Faced with the reality of a Dow near 8,000, the lowest unemployment rate in a generation, and the smallest deficit since, well, Ronald Reagan’s first budget, some people would have tried to change the subject. Roberts, however, is made of sterner stuff. But then, what choice did he have? The standard (and true) riposte to Clintonian triumphalism is that Clinton presides over a prosperity he did not create, that the credit for the good news belongs partly to Alan Greenspan but mainly to the resilience and flexibility of America’s private sector. This escape route is not, however, available to supply-siders. If they concede that six years and counting of noninflationary growth in the nineties have had little if anything to do with the policies of Bill Clinton, they can hardly avoid the implication that seven years of expansion during the eighties may have had equally little to do with the policies of Ronald Reagan.

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when they should be getting back to the basics (teach every child to read). The slightly depressing truth is that technology has been letting us down lately. Let’s face up to that truth, and get on with our lives. Four Percent Follies Recently a lot of influential people have been berating Alan Greenspan and his colleagues at the Federal Reserve for not allowing the economy to grow faster. The most prominent of these critics has probably been Felix Rohatyn, who was proposed though never formally nominated to become the vice-chairman of the Fed. It’s important to note that Rohatyn is not arguing for a modest change in policy, a view that many economists share.

Capitalism 4.0: The Birth of a New Economy in the Aftermath of Crisis
by Anatole Kaletsky
Published 22 Jun 2010

Freer markets and smaller government can no longer be presented as a credible answer to every challenge facing the capitalist system. The symbolic confirmation that, for serious policymakers, the love affair with market fundamentalism was over came in August 2009, in the famous Congressional testimony of Alan Greenspan, a proud disciple of the quintessential free-market ideologue, Ayn Rand. Asked whether his free-market beliefs had proved dangerously flawed, Greenspan replied: “Yes, I have found a flaw. I don’t know how significant or permanent it is, but I’ve been very distressed by that fact . . . Yes, I found a flaw.

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If we consider democratic capitalism as a successful problem-solving machine, the implications of this view are very relevant to the 2007-09 economic crisis, but diametrically opposed to the conventional wisdom that prevailed in its aftermath. Governments all over the world were ridiculed for trying to resolve a crisis caused by too much borrowing by borrowing even more. Alan Greenspan was accused of trying to delay an inevitable “day of reckoning” by creating ever-bigger financial bubbles. Regulators were attacked for letting half-dead, “zombie” banks stagger on instead of putting them to death. But these charges missed the point of what the democratic capitalist system is designed to achieve.

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By the late 1980s, however, governments in the main advanced economies had become surprisingly responsible with their newfound monetary freedom—inspiring a degree of faith in pure paper money that no one would have imagined possible when the gold link was abandoned in 1971. In the United States, the arrival of Ronald Reagan at the White House and Paul Volcker at the Federal Reserve reduced inflation to moderate levels by 1982, and the skillful handling of the 1987 stock market crash by Volcker’s successor, Alan Greenspan, inspired tremendous confidence in the Fed’s monetary management. An even clearer symbol of the burgeoning belief in paper money was the upsurge of confidence in the German mark and the Japanese yen, which culminated in two of the most extraordinary events in economic history, both occurring in 1989.

Pivotal Decade: How the United States Traded Factories for Finance in the Seventies
by Judith Stein
Published 30 Apr 2010

True, an anti-Jamaica campaign unquestionably existed among right wing journalists in the U.S.118 But there is no evidence that the CIA or any other government agency was attempting to dislodge the Manley government.119 Kissinger advised the U.S. ambassador in Kingston to “discreetly” discourage any visit with Edward Seaga, Manley’s opponent in the elections, even though the more conservative Seaga was preferred to Manley.120 Kissinger himself urged Ford to resume the PL-480 food program to Jamaica, which had been ended because the program was being reserved for the poorest of the poor countries, and Jamaica no longer qualified.121 The economic heavyweights in the administration, Alan Greenspan and William Seidman, both recommended ending it for Jamaica. But their objections were based upon their opposition to the program and had nothing to do with Cuba. Kissinger was no economic radical, but he was no ideologue either. He supported aid to Jamaica for strategic reasons. The secretary of state told Ford that Castro was cultivating Jamaica, and Manley was suspicious of American motives.

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I think we have our backs to the wall.”12 Whether capitalism was on the run or not, most people thought that government had to fix things. Even those who generally preferred the market embraced the state. Nixon’s chief economist, Herbert Stein, said, “Maybe we need an economic planning agency like the Japanese or French.”13 Even Alan Greenspan, Stein’s replacement under President Ford, thought the country might require a new Reconstruction Finance Corporation, the depression agency that lent to banks and corporations.14 Americans alone did not confront what some called “the crisis of the west.” European and Japanese economies sputtered, and class conflicts escalated everywhere.

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Nixon’s advisers Herbert Stein and William Simon had already concluded that inflation was the major issue and accepted the unpublicized corollary that lowering the rate would require “some pain and sacrifice.”38 Shortly before Nixon resigned, Stein left the government to teach at the University of Virginia, and Alan Greenspan, who had joined the CEA only in July, became the new chair. Greenspan kept his post under Ford. A former jazz musician, he had earned an M.A. degree in economics at New York University.39 Like his early mentor Ayn Rand, Greenspan championed capitalism, opposing not only socialism and communism, but also the mixed economy, the bible of practices used by all Western governments after World War II.

The Great Divide: Unequal Societies and What We Can Do About Them
by Joseph E. Stiglitz
Published 15 Mar 2015

. _________ THE ESSAYS IN this book are grouped into eight parts, each preceded by a short introductory essay, which attempts to explain the context in which the articles were written or touch upon a few of the topics that I was unable to address in the short confines of the articles reprinted here. I begin with “Prelude: Showing Cracks.” In the years before the crisis our economic leaders, including the Federal Reserve chairman Alan Greenspan, could boast of a new economy in which economic fluctuations that had been the scourge of the past would be put behind us; the so-called great moderation was bringing a new era of low inflation and seemingly high growth. But those who looked even a little bit more closely saw all of this as merely a thin veneer, masking economic mismanagement and political corruption on a massive scale (some of which had come to light in the Enron scandal); even worse, the growth that was occurring was not being shared by most Americans.

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They illustrate a second theme to which I will return later in the book, and which has now been taken up by the International Monetary Fund (IMF), an organization not known for taking “radical” positions: inequality is associated with instability.10 The making of the 2008 crisis exemplifies how this happens: central banks create bubbles in response to a weakened economy born of growing inequality. The bubble eventually breaks and wreaks havoc on the economy. (Of course, the Fed should have been aware of this risk. But its leadership evinced an almost blind faith in markets and, like Bush, who had reappointed the Fed chair Alan Greenspan and later appointed the Fed chair Ben Bernanke—he had been his chief economic adviser—the institution appeared to pay little attention to the inequality that was growing day by day in the country.) At the same time, this illustrates a third theme: the role of politics. It is policies and politics that matter.

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During the Roaring 90s, many had believed that the Internet would transform everything. Productivity gains, which had averaged about 1.5 percent a year from the early 1970s through the early 90s, now approached 3 percent. During Bill Clinton’s second term, gains in manufacturing productivity sometimes even surpassed 6 percent. The Federal Reserve chairman, Alan Greenspan, spoke of a New Economy marked by continued productivity gains as the Internet buried the old ways of doing business. Others went so far as to predict an end to the business cycle. Greenspan worried aloud about how he’d ever be able to manage monetary policy once the nation’s debt was fully paid off.

The Revolt of the Public and the Crisis of Authority in the New Millennium
by Martin Gurri
Published 13 Nov 2018

Six years later, in early 2014, the afflicted economies had yet to recover from the wreckage of 2008 – and trust in economic experts had vanished, probably forever. My story, of course, concerns this shipwreck of the expert class rather than the crisis itself. A fitting place to start is with the life and times of Alan Greenspan, the man who transformed the economic expert into a glamorous, almost mythical figure. In 1987, President Ronald Reagan appointed Greenspan chairman of the Board of Governors of the Federal Reserve System – a portentous name for the central bank of the United States, usually called, without affection, “the Fed.”

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Bob Woodward’s 2000 biography of the Fed chairman was titled Maestro, evoking the image of a genius conductor, leading the economy to a flawless performance with a wave of his baton. When, at the age of 79, Greenspan retired from the Fed in January 2006, an article in The Economist alluded to his “near god-like status” and observed that he was often called “the second most powerful person in the country.” “Alan Greenspan has dominated American economic policy for two decades,” the article reflected. “Who can fill his shoes and what will happen to the Federal Reserve once he is gone?”[124] Greenspan’s most significant achievement had been to persuade the elites and the public that the pursuit of material happiness required supervision by a brilliant specialist.

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Given a measure of political power, transformed into an expert-bureaucrat, he would predict the economy’s trajectory and achieve outcomes beneficial to all – higher employment rates, say, or a more equitable distribution of income. That was the immanent faith manifested in the Fed’s mission. Those were the claims seemingly validated by the triumphant career of Alan Greenspan. And so we circle back to 2008. The blithe unawareness of the expert class as it drove the financial system over the brink, and the obvious confusion, often amounting to panic, with which it confronted the disaster, falsified in pain and loss its claims to competence. Every institution in the system failed catastrophically, beginning with Greenspan’s Fed, which encouraged a casino atmosphere by flooding the markets with easy money.

GDP: A Brief but Affectionate History
by Diane Coyle
Published 23 Feb 2014

The new technologies were shaping up to outdo the Golden Age of the immediate postwar years if this continued. Suddenly, everyone was talking about the New Economy or the New Paradigm. The new technologies seemed to have made possible a lasting increase in the productivity of the economy. Prominent among the enthusiasts was Alan Greenspan, then the long-serving chairman of the Federal Reserve Board. His judgment about the economy’s potential growth rate was crucial because it was his job to use interest rates and monetary policy to choke off growth in demand that would prove inflationary. But there was no need to worry about inflation if the economy now had more potential to grow faster thanks to the new technologies, and therefore could easily satisfy the additional demand.

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Consumer Price Index had been overstating the rate of inflation by 1.3 percentage points a year, and correspondingly understating real GDP growth by compensating for phantom price increases. What appeared to be rising prices (or less rapidly declining prices) in fact reflected massive improvements in quality and in the benefits consumers derived from these goods. The findings of the Boskin Commission gave Alan Greenspan and the Federal Reserve more confidence about the economy’s potential growth than they might otherwise have had. The other consequence of the commission’s report was that statistical agencies in the United States and elsewhere increasingly turned to the use of what is known as “hedonic” price indexes in calculating the general price index to turn dollar GDP figures into a real-terms measure.

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Still, the continuing expansion of GDP in the developed world during the mid-2000s, as well as astoundingly rapid growth in the BRIC economies (Brazil, Russia, India, and China) and, to a lesser extent, in other emerging markets, fed the arrogance of the financial markets. There was said to be a “New Paradigm” of economic growth thanks to technology-driven increases in productivity. This was the era of books with titles like Dow 36,000 and what Alan Greenspan famously described as “irrational exuberance.”1 Some economists warned early that the bubble would end disastrously.2 Many more found it easier to assume that the buoyancy of financial markets would be sustained than to stick their necks out and predict economic cataclysm—it takes courage to stand out from the pack and make an extreme and unwelcome pronouncement.

The Alchemists: Three Central Bankers and a World on Fire
by Neil Irwin
Published 4 Apr 2013

It was sheer luck that the Federal Reserve had a chairman so well prepared for the moment. Bernanke’s academic training as a monetary economist, particularly as a scholar of the Depression, hadn’t come up in his interview with President George W. Bush in the summer of 2005, when the native of tiny Dillon, South Carolina, was being considered to replace legendary Fed chair Alan Greenspan. But that background would influence his every action from that August Thursday on. Bernanke seemed almost haunted by the fear that he would make the same mistakes central bankers did in the 1920s and ’30s, which left mass human misery in their wake. Whatever their perceptions or prejudices, central bankers all have an awesome power: the ability to create and destroy money.

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Benjamin Strong, the president of the New York Fed, led a secret meeting with Schacht, Norman, and Moreau’s deputy on a Long Island estate in 1927—but he pointedly didn’t invite anyone from the Board of Governors. He believed that managing international economic relationships was his sole concern. The position of chairman of the Board of Governors, later to be held by the likes of Alan Greenspan and Ben Bernanke, was viewed as so weak that Roy Young left the job in 1930 to become president of the Boston Fed. Strong died in 1928 and was replaced by George L. Harrison, a young, patrician lawyer. Harrison engineered a series of interventions during the October 1929 stock market crash, only to be overruled by his colleagues in Washington.

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Lenders could be more comfortable about extending loans, confident that the money they were paid back would be worth something. And the Fed had gained credibility as a fighter of inflation, breaking the cycle in which it had become a self-fulfilling prophecy. Volcker’s achievement even made it easier for Alan Greenspan to maintain low and steady inflation; once people trusted that the Fed would do whatever it took to keep prices from spiraling out of control, it often took only a small interest rate move—or even mere words from the chairman—to rein in rising prices. The central bankers, having seen what can happen when they create too little money or too much, had seemed to learn their lessons, and a Goldilocks economy took hold in much of the world, a period of sustained prosperity and low inflation.

The Road to Ruin: The Global Elites' Secret Plan for the Next Financial Crisis
by James Rickards
Published 15 Nov 2016

Aftermath Complexity theory is not understood by regulators today, so perhaps LTCM partners can be forgiven for not understanding complexity in 1998. Yet once that collapse occurred, it might be expected that thought leaders in finance, like Alan Greenspan, Bob Rubin, and Larry Summers, would have learned lessons and tried to avoid a similar collapse in the future. They did just the opposite. In August 1998, as the LTCM debacle unfolded, Alan Greenspan was Federal Reserve chairman, Bob Rubin was treasury secretary, and Larry Summers was Rubin’s deputy, soon to be treasury secretary himself. In February 1999, just months after the LTCM catastrophe, Time magazine featured Greenspan, Rubin, and Summers on its cover with the headline “THE COMMITTEE TO SAVE THE WORLD.”

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The task was left to the Federal Reserve Bank of New York, which supervised the banks that stood to fail if LTCM defaulted. In an intense six-day period, September 23–28, 1998, Wall Street, under the watchful eye of the Fed, cobbled together a $4 billion bailout to stabilize the fund. Once the bailout was closed, Fed chair Alan Greenspan assisted the banks with an interest rate cut at a scheduled Federal Open Market Committee (FOMC) meeting on September 29, 1998. Still, markets did not stabilize. The newly recapitalized LTCM lost another half-billion dollars in a matter of days. Wall Street bailed out a hedge fund; now who would bail out Wall Street?

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Money was not anchored to gold; money was not even anchored to other money. Money had no anchor; in economists’ minds it did not need one. After 1974, money was what central banks said it was. A de facto dollar standard emerged from 1980 to 2010 at the direction of two Fed chairmen, Paul Volcker and Alan Greenspan, and two treasury secretaries, James Baker and Robert Rubin. U.S. growth in the 1980s and 1990s during Presidents Reagan, Bush 41, and Clinton was robust under this strong dollar standard. By 2010, with the weight of Bush 43 war spending and Obama deficits, the dollar standard dissolved into currency wars that have been raging ever since.

Rogue States
by Noam Chomsky
Published 9 Jul 2015

Louis Uchitelle, “America’s Treadmill Economy: Going Nowhere Fast,” NYT, Money and Business section, March 8, 1998. 10. Alan Greenspan, testimony before the Senate Banking Committee, Feb. 1997: the “sustainable economic expansion” was thanks to “atypical restraint on compensation increases [which] appears to be mainly the consequence of greater worker insecurity.” 11. “Economic Report of the President,” Feb. 1997. Both this and the foregoing Greenspan quotation are cited in “Editorial,” Multinational Monitor, March 1997. 12. “Remarks by Alan Greenspan, Chairman, Board of Governors of the Federal Reserve System, at the Annual Convention of the American Society of Newspaper Editors, Washington, DC,” April 2, 1998. 13.

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King was surely smiling down on the gathering” at the annual King memorial, recognizing how Clinton had benefited “my little comer of southern Manhattan.”16 Other little comers fared somewhat differently. The fairy tale was attributed in part to “greater worker insecurity” by Federal Reserve Chair Alan Greenspan, citing a near-doubling of the proportion of workers fearing layoffs in large industries from 1991 to 1996. Other studies reveal that 90 percent of workers are concerned about job security. In a 1994 survey of working people, 79 percent of respondents said efforts to seek union representation are likely to lead to firing, and 41 percent of non-union workers said they think they might lose their own jobs if they tried to organize.

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More narrowly, the US Labor Department estimates that weakening of unions accounts for a large part of the stagnation or decline in real wages under the Reaganites, “a welcome development of transcendent importance,” as the Wall Street Journal described the fall in labor costs from the 1985 high to the lowest in the industrial world (UK aside).55 Testifying before the Senate Banking Committee in February 1997, Federal Reserve Board Chair Alan Greenspan was highly optimistic about “sustainable economic expansion” thanks to “atypical restraint on compensation increases [which] appears to be mainly the consequence of greater worker insecurity,” plainly a desideratum for a good society and yet another reason for Western relativists to reject Article 25 of the UD, with its “right to security.”

The Quants
by Scott Patterson
Published 2 Feb 2010

The stock market was in the midst of one of the longest bull runs in history. The housing market was booming. Economists were full of talk of a Goldilocks economy—not too hot, not too cold—in which steady growth would continue as far as the eye could see. A brilliant Princeton economist, Ben Bernanke, had just taken over the helm of the Federal Reserve from Alan Greenspan. In February 2004, Bernanke had given a speech in Washington, D.C., that captured the buoyant mood of the times. Called “The Great Moderation,” the speech told of a bold new economic era in which volatility—the jarring jolts and spasms that wreaked havoc on people’s lives and their pocketbooks—was permanently eradicated.

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By early October, cracks were forming in the market that would turn into a full-blown earthquake. At the heart of the disaster: the quants and the Black-Scholes option-pricing formula. Sometime around midnight, October 19, 1987, Leo Melamed reached out a sweaty-palmed hand, picked up the phone in his nineteenth-floor office at the Chicago Mercantile Exchange, and dialed Alan Greenspan. The newly appointed chairman of the Federal Reserve, Greenspan was staying at the upscale Adolphus Hotel in Dallas to address the American Bankers Association’s annual convention the next day. It was to be his first major speech as chairman of the central bank. The speech would never happen.

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“Wilma, I am certain your customer is good for it,” Melamed pleaded. “You’re not going to let a stinking couple of hundred million dollars cause the Merc to go down the tubes, are you?” “Leo, my hands are tied.” “Please listen, Wilma. You have to take it upon yourself to guarantee the balance, because if you don’t, I’ve got to call Alan Greenspan, and we’re going to cause the next depression.” After a few moments of tense silence, Smelcer said, “Hold it a minute, Leo. Tom Theobald just walked in.” Theobald was chairman of Continental. After a few minutes, Smelcer was back. “Leo, we’re okay. Tom said go ahead. You’ve got your money.” It was 7:17 A.M., three minutes before the opening of the Merc’s currency markets.

Transaction Man: The Rise of the Deal and the Decline of the American Dream
by Nicholas Lemann
Published 9 Sep 2019

Back in 1984, a former aide to Ronald Reagan named Edwin Gray, who was the head of the federal agency that regulated savings and loans, had begun warning publicly that deregulation had gone too far and was introducing too much risk into the system. This got him treated as an unreliable, misguided, disloyal eccentric, especially by members of his own party. Alan Greenspan, then a paid consultant to one of the most aggressive savings and loans, who was soon appointed chairman of the Federal Reserve Board, the most powerful job in financial regulation, wrote Gray a long, admonishing letter, pointing out that many savings and loans were posting record profits. (Of the seventeen savings and loans Greenspan mentioned by name in his letter, fifteen were out of business four years later.)

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He did this substantially by persuading voters that he understood the economic troubles of the middle class and knew how to fix them—in contrast to the Republicans, who were capable only of cheering the onward rush of the markets. He promised to cut taxes for the middle class and to pass an immediate economic stimulus program. When he accepted the Democratic nomination, he said he was doing so “in the name of the hardworking Americans who make up our forgotten middle class.” A few weeks after the election, Alan Greenspan, by now in his second term as chairman of the Federal Reserve, came to see Clinton at the Arkansas governor’s mansion. Greenspan gave Clinton a detailed argument for a quite different economic program than the one Clinton had run on: instead of a middle-class tax cut and a stimulus program, Clinton should focus on reducing the federal deficit that Reagan’s large tax cuts had created.

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They wanted to use markets to help people rather than to create countervailing institutional power to markets. As Bob Woodward put it, “Two or three decades ago, a great ideological chasm in economics had divided Republicans from Democrats, but now on many issues a consensus was emerging. No longer could Alan Greenspan be so easily distinguished from Bill Clinton.” Clinton himself was far less personally involved in economic policy during his second term than he had been at the outset of his presidency. Presidents necessarily ignore most of what goes on in their administrations, focusing on crises and disagreements that only they can settle.

The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer
by Dean Baker
Published 15 Jul 2006

The Federal Reserve Board is one of the key nanny state tools for maintaining this imbalance. For this reason, it could have been included as a section in the last chapter. But the Fed, with its celebrity former chairman, the Maestro Alan Greenspan, is so important in this story that it deserves its own chapter. The Federal Reserve Board: What it Does and Who Does It Alan Greenspan had risen to rock star status by the end of his long reign as Federal Reserve Board chairman, but it is unlikely that most people had any clear idea of what he did. That is how the nanny state conservatives wanted it. While they are no doubt pleased that the public celebrate Mr.

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Until the late 1990s, the conventional wisdom among economists was that if the unemployment rate fell below a certain level (most economists put the level in a range between 5.8 percent and 6.4 percent unemployment), the inflation rate would begin to increase. Furthermore, they believed that the inflation would continue to increase as long as the unemployment rate remained below this safe range.7 Alan Greenspan acted under this belief in 1994 when he raised the federal funds rate by a full 3 percentage points in just over a year, from 3 percent in February of 1994 to 6 percent by March of 1995. At the time he began raising interest rates, there was very little evidence in the data of any problems with inflation.

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The implicit assumption is that there is roughly 1 percent counted as not being in the workforce who comes out of the woodworks to find a job for every person who goes from being unemployed to being employed. 10 In fact, at the time Greenspan had to overcome the opposition of Janet Yellen and Lawrence Meyers, the two most prominent economists on the Fed’s Board of Governors, in getting the Fed to keep interest rates low and allow unemployment to fall. 34 The Fed: Who Calls the Shots? While it can be hard to follow the mechanism through which the Fed affects the economy, it can be even harder to figure out who actually controls the policy at the Federal Reserve Board. The Federal Reserve Board chairman – currently Ben Bernanke, but Alan Greenspan for most of the last 18 years – has enormous power over the Fed’s policy decisions, but this is only part of the story. For the last quarter century, the Federal Reserve Board has been dominated by chairmen who came to be highly regarded in political circles and who were almost always able to get their way in determining the direction of Fed policy.

Capitalism in America: A History
by Adrian Wooldridge and Alan Greenspan
Published 15 Oct 2018

Jerome Karabel, The Chosen: The Hidden History of Admission and Exclusion at Harvard, Yale and Princeton (New York: Houghton Mifflin, 2005), 444. 14. Alan Greenspan, The Age of Turbulence: Adventures in a New World (London: Allen Lane, 2007), 169. Eleven. The Great Recession 1. Sebastian Mallaby, The Man Who Knew: The Life and Times of Alan Greenspan (New York: Penguin Press, 2016), 594. 2. Douglas A. Irwin, Clashing over Commerce: A History of U.S. Trade Policy (Chicago: University of Chicago Press, 2017), 666–67. 3. Alan Greenspan, The Map and the Territory 2.0: Risk, Human Nature, and the Future of Forecasting (New York: Penguin Press, 2013), 38. 4.

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ALSO BY ALAN GREENSPAN The Map and the Territory The Age of Turbulence ALSO BY ADRIAN WOOLDRIDGE The Great Disruption Masters of Management Measuring the Mind (WITH JOHN MICKLETHWAIT) The Fourth Revolution God Is Back The Right Nation The Company A Future Perfect The Witch Doctors PENGUIN PRESS An imprint of Penguin Random House LLC 375 Hudson Street New York, New York 10014 penguinrandomhouse.com Copyright © 2018 by Alan Greenspan Penguin supports copyright. Copyright fuels creativity, encourages diverse voices, promotes free speech, and creates a vibrant culture.

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Kennedy, Freedom from Fear: The American People in Depression and War, 1929–1945 (New York: Oxford University Press, 1999), 35. 4. Ibid., 41. 5. Ibid., 40. 6. Ron Chernow, The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance (New York: Touchstone, 1990), 302. 7. Ibid., 346. 8. Alan Greenspan, The Map and the Territory 2.0: Risk, Human Nature, and the Future of Forecasting (New York: Penguin Press, 2013), 73–87. 9. Alan Greenspan, “The Crisis,” Brookings Papers on Economic Activity, Spring 2010. 10. Adam Cohen, Nothing to Fear: FDR’s Inner Circle and the Hundred Days That Created Modern America (New York: Penguin Press, 2009), 1. 11. Harold Cole and Lee Ohanian, “New Deal Policies and the Persistence of the Great Depression: A General Equilibrium Analysis,” Journal of Political Economy 112, no. 4 (August 2004): 779–816. 12.

Third World America: How Our Politicians Are Abandoning the Middle Class and Betraying the American Dream
by Arianna Huffington
Published 7 Sep 2010

Tocqueville’s “welfare of the greatest possible number” was replaced by the notion that the invisible hand of the free market could best determine society’s winners and losers—until, that is, the winners got into trouble in 2008 and the government rushed to the rescue in the name of preventing Armageddon. In books such as The Virtue of Selfishness and Atlas Shrugged, Ayn Rand, the high priestess of free-marketeers such as Alan Greenspan, championed the notion that by doing what is best for yourself, you end up doing what is best for everyone. But, as put into practice by corporate America over the past thirty years, that equation has been flipped upside down. It turns out that an unregulated free market is sooner or later corrupted by fraud and excess.

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William Seidman, the longtime GOP economic adviser who oversaw the savings and loan bailout in 1991, cuts to the chase: “[The Bush] administration made decisions that allowed the free market to operate as a barroom brawl instead of a prize fight.18 To make the market work well, you have to have a lot of rules.” Even Alan Greenspan, whose owl-eyed visage could adorn a Mount Rushmore of free-market capitalists, finally saw the light, telling a House committee in October 2008 that he “made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such that they were best capable of protecting their own shareholders and their equity in the firms.”19 Many, including Bush 43, lay the blame on a few rotten apples: “Wall Street got drunk,” he said.20 Maybe so, but who made the Bush years a nonstop happy hour and kept serving up the drinks?

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Regulations are “very difficult to comply with,” and “so many of the laws” are “nonsensical,” in the words of Don Blankenship, the chief executive officer of Massey Energy, the company that owns the Upper Big Branch mine, which just happens to have a shocking history of safety violations.32 The Wall Street Journal cites the arguments of oil industry executives and regulators who claim “that offshore operations have become so complicated that regulators ultimately must rely on the oil companies and drilling contractors to proceed safely.”33 “There has been a very good record in deep water [drilling],” said Lars Herbst, head of the MMS’s Gulf of Mexico region, “up until the point of [the Deepwater Horizon] accident.”34 Other than that, Mrs. Lincoln, how did you enjoy the play? Similarly, the reason the financial industry can’t be regulated adequately is because, as Alan Greenspan put it during his 2010 testimony before the Financial Crisis Inquiry Commission, “the complexity is awesome,” and regulators “are reaching far beyond [their] capacities.”35 That is, of course, exactly the way Wall Street designed it. To the financial world, “awesome complexity” is a feature, not a bug.

Milton Friedman: A Biography
by Lanny Ebenstein
Published 23 Jan 2007

Many others who knew, were influenced by, or were students of Friedman participated in the Reagan administration as well as elsewhere in government, academia, and business. Friedman, Alan Greenspan, Shultz, Arthur Burns, Paul McCracken, Herb Stein, William Simon, Martin Anderson, and others served on the President’s Economic Policy Advisory Board during Reagan’s White House years. This group of outside economists met with the president regularly, particularly during his first term—as many as half a dozen times a year or so. Anderson provides these observations of Friedman and his influence in the context of discussing Reagan’s economic advisers: Perhaps those with the most influence were Milton Friedman, Alan Greenspan, and William Simon.... Reagan was especially taken with Milton Friedman.

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Among others at the lunch with President Bush and Milton and Rose were Vice President Richard Cheney and Federal Reserve Board chairman Alan Greenspan. At the dinner that night, Friedman, a few weeks short of his ninetieth birthday, appeared with Rose on the stage. As he rose to speak, the crowd of almost 2,000 political, business, and intellectual leaders stood to applaud him for his lifetime of contributions to the causes of human freedom and economic, political, and civil liberty. He celebrated his birthday at the University of Chicago a few weeks later, where the Department of Economics hosted him. Gary Becker writes that “no less an authority than...Alan Greenspan has indicated that Friedman’s emphasis on a stable monetary framework was instrumental in guiding central banks in Europe and the U.S. toward low inflation during the past two decades,” and that Friedman is “increasingly recognized as the most influential economist”19 of the twentieth century.

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To accomplish this goal, he recommends a fixed annual increase in the money supply, variously estimated (in part based on the money aggregates used) at 2 to 5 percent, about equal to long-term growth in the economy. He opposes discretionary manipulation of the money supply—a view that, in his call for inflation targeting, the new Federal Reserve chairman Ben Bernanke endorses more than his predecessor, Alan Greenspan, did. Friedman emphasizes the long-range benefits of a consistent monetary policy and stable aggregate prices. The quantity theory of money is, in Friedman’s view, a theory of the demand for money. If demand for money as an asset and for transactions were not relatively constant, then changes in the quantity of money would not have the effect on prices that they do have.

The Ascent of Money: A Financial History of the World
by Niall Ferguson
Published 13 Nov 2007

Rather to his surprise, bond prices had risen in the wake of the previous November’s election, a movement that had actually preceded a speech by the president in which he pledged to reduce the federal deficit. ‘That investment market, they’re a tough crowd,’ observed Treasury Secretary Lloyd Bentsen. ‘Is this a credible effort [by the president]? Is the administration going to hang in there pushing it? They have so judged it.’ If bond prices continued to rally, said Federal Reserve Chairman Alan Greenspan, it would be ‘by far the most potent [economic] stimulus that I can imagine.’1 What could make public officials talk with such reverence, even awe, about a mere market for the buying and selling of government IOUs? After the creation of credit by banks, the birth of the bond was the second great revolution in the ascent of money.

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Yet, far from punishing this profligacy, the bond market has positively rewarded it. Between December 2000 and June 2003, the yield on ten-year Treasury bonds declined from 5.24 per cent to 3.33 per cent, and remains just above 4 per cent at the time of writing. It is, however, impossible to make sense of this ‘conundrum’ - as Alan Greenspan called this failure of bond yields to respond to short-term interest rate rises73 - by studying the bond market in isolation. We therefore turn now from the market for government debt to its younger and in many ways more dynamic sibling: the market for shares in corporate equity, known colloquially as the stock market. 3 Blowing Bubbles The Andes stretch for more than four thousand miles like a jagged, crooked spine down the western side of the South American continent.

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If we were all calculating machines we would simultaneously process all the available information and come to the same conclusion. But we are human beings, and as such are prone to myopia and to mood swings. When stock market prices surge upwards in sync, as they often do, it is as if investors are gripped by a kind of collective euphoria: what the former chairman of the Federal Reserve Alan Greenspan memorably called irrational exuberance.2 Conversely, when investors’ ‘animal spirits’ flip from greed to fear, the bubble of their earlier euphoria can burst with amazing suddenness. Zoological imagery is of course an integral part of stock market culture. Optimistic buyers of stocks are bulls, pessimistic sellers are bears.

The Crisis of Crowding: Quant Copycats, Ugly Models, and the New Crash Normal
by Ludwig B. Chincarini
Published 29 Jul 2012

Michael Gelband: Managing Director and global head of fixed income who was asked to leave in 2007. Alberto Giovannini: Senior strategist at LTCM. Currently CEO and founder of Unifortune SGR. Ace Greenberg: Chairman of the Executive Committee of Bear Stearns during the financial crisis of 2008. CEO of Bear Stearns from 1978 to 1993. Alan Greenspan: Chairman of the Federal Reserve from 1987 to 2006. Joseph Gregory: President and Chief Operating Officer of Lehman Brothers up to the collapse. John Gutfreund: CEO of Salomon Brothers until 1991. Victor Haghani: Principal at LTCM and JWMP. Headed LTCM's London office and also very influential trader.

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The partners rejected the offer and proposed that all of LTCM’s bank creditors contribute capital to LTCM so it could continue to manage and liquidate the fund in an orderly fashion. This would be a better deal for banks, investors, the financial markets, and even LTCM’s partners. The Consortium Bailout This agreement was not a government bailout, in that Federal Reserve funds were neither provided nor ever even suggested. —Alan Greenspan, October 1, 1998 Testimony to the House The consortium bailout was among the most controversial aspects of LTCM’s collapse, but it was probably the wisest solution. Ten years later the market saw Lehman Brothers fail without a coordinated bailout. LTCM’s collapse perturbed the markets a bit, but they recovered quickly after the coordinated rescue.

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CHAPTER 9 The Bear Stearns Collapse Those of us who have looked to the self-interest of lending institutions to protect shareholders' equity, myself included, are in a state of shocked disbelief…Yes, I’ve found a flaw [in my ideology of free markets]. I don’t know how significant or permanent it is. But I’ve been very distressed by that fact. —Alan Greenspan, former Chairman of Federal Reserve, Congressional Testimony, October 28, 2008 A Brief History of the Bear Bear Stearns is widely considered one of the great small Wall Street firms (despite its location at 383 Madison Avenue in New York). The company was originally formed in 1923 by Joseph Bear, Robert Stearns, and Harold Mayer as an equity trading house.

Inflated: How Money and Debt Built the American Dream
by R. Christopher Whalen
Published 7 Dec 2010

Competition from Japan and Europe put the U.S. into an unaccustomed position of being a trade debtor. This caused many Americans to question whether the country was headed in the right direction. The added factor of runaway inflation, which had only been a problem in wartime, complicated the political equation in a new and unfamiliar way. President Nixon appointed Alan Greenspan as head of the Council of Economic Advisers in the summer of 1974, one of Nixon’s last significant official acts prior to his resignation. Greenspan made it clear to the Nixon staff that any resort to further price controls would trigger his departure as well. “He stayed on after Nixon resigned in 1974 and Gerald Ford assumed the presidency,” Bob Woodward wrote of Nixon during this period.

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Laxalt called me that Monday and thanked me for taking the initiative on this. And I thought is this the way these things always happen?33 Roger Kubarych noted that the group of Reagan conservatives who were in control of the administration by 1987, intended to get the Democrat Volcker next time. “And then we had 17 years of the good and the bad Alan Greenspan, Kubarych observed.” Volcker moved to protect his bureaucratic flank in 1984 when he nominated Gerald Corrigan as a replacement for Anthony Solomon as president at the New York Fed, an event that required almost as much lobbying as was later needed to block the appointment of Lee Hoskins to head the St.

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Real economic growth averaged 3.2 percent during the Reagan years versus 2.8 percent during the Ford–Carter years and 2.1 percent during the Bush–Clinton years, but this assumes that the inflation figures used to adjust the government’s nominal economic growth statistics are accurate. The major development during the 1990s under Fed Chairman Alan Greenspan would be the rise of private sector debt to levels not seen since the Great Depression. While the use of consumer debt had returned and grown in the 1950s, the use of debt by consumers and private businesses had been very restrained through the late 1970s. From 1947 through 1974, for example, total loans to consumers by all U.S. banks tracked by the Federal Reserve Board grew from $4 billion to just under $100 billion.

Capitalism: the unknown ideal
by Ayn Rand
Published 15 Aug 1966

Neale, The Antitrust Laws of the United States of America: A Study of Competition Enforced by Law, Cambridge, England: Cambridge University Press, 1960. 13 Ibid., p. 13. 14 Ten Thousand Commandments: A Story of the Antitrust Laws, New York: Prentice-Hall, 1951. 15 Ibid., pp. 16-17. 16 Ibid., p. 22. 17 Neale, p. 23. 18 Ibid., pp. 422-423. 19 Ibid., pp. 70-71. 20 Ibid., p. 410. 21 Ibid., p. 114. 22 Ibid. 23 I am indebted to Ayn Rand for her identification of this principle. See her “Notes on the History of American Free Enterprise” (chapter 7). 24 Alan Greenspan, “Stock Prices and Capital Evaluation.” Paper delivered before a joint session of the American Statistical Association and the American Finance Association on December 27, 1959. 25 For a detailed analysis of this correlation, see Alan Greenspan, “Business Investment Decisions and Full Employment Models,” American Statistical Association, 1961 Proceedings of the Business and Economic Statistics Section. 26 See chapter 4. 27 See, in this connection, Carl Snyder, Capitalism the Creator, New York: The Macmillan Company, 1940. 28 See Benjamin M.

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Ltd., 24 Sturdee Avenue, Rosebank, Johannesburg 2196, South Africa Penguin Books Ltd., Registered Offices: 80 Strand, London WC2R 0RL, England Published by Signet, an imprint of New American Library, a division of Penguin Group (USA) Inc. Previously published in a New American Library edition. First Signet Printing, November Copyright © Ayn Rand, 1946, 1962, 1964, 1966 Copyright © The Objectivist Newsletter, Inc., 1962, 1963, 1964, 1965 Copyright © The Objectivist, Inc., 1966, 1967 Copyright © Alan Greenspan, 1962 All rights reserved Permission requests for college or textbook use should be addressed to the Estate of Ayn Rand, PO Box 51808, Irving, California 92619-9930. Information about other books by Ayn Rand and her philosophy, Objectivism, may be obtained by writing to OBJECTIVISM, PO Box 51808, Irvine, California 92619-9930.

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Those who are interested in studying political economy will find, in the appendix, a recommended bibliography on that subject. Now a word about the contributors to this book. Robert Hessen is presently completing his doctorate in history at Columbia University, and is teaching in Columbia’s Graduate School of Business. Alan Greenspan is president of Townsend-Greenspan & Co., Inc., economic consultants. —AYN RAND New York, July 1966 P.S. Nathaniel Branden is no longer associated with me, with my philosophy or with The Objectivist. A.R. New York, November 1970 Theory and History 1. WHAT IS CAPITALISM? by Ayn Rand The disintegration of philosophy in the nineteenth century and its collapse in the twentieth have led to a similar, though much slower and less obvious, process in the course of modern science.

Arguing With Zombies: Economics, Politics, and the Fight for a Better Future
by Paul Krugman
Published 28 Jan 2020

When people issue ominous warnings about the cost of Medicare after 2077, my question is, Why should fiscal decisions today reflect the possible cost of providing generations not yet born with medical treatments not yet invented? The biggest risk now facing Social Security is political. Will those who hate the system use scare tactics and fuzzy math to bring it down? After Alan Greenspan’s call for cuts in Social Security benefits, Republican members of Congress declared that the answer is to create private retirement accounts. It’s amazing that they are still peddling this snake oil; it’s even more amazing that journalists continue to let them get away with it. Yesterday in The Wall Street Journal, a writer judiciously declared that “personal accounts alone won’t cure Social Security’s ills.”

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There’s nothing strange or mysterious about how Social Security works: it’s just a government program supported by a dedicated tax on payroll earnings, just as highway maintenance is supported by a dedicated tax on gasoline. Right now the revenues from the payroll tax exceed the amount paid out in benefits. This is deliberate, the result of a payroll tax increase—recommended by none other than Alan Greenspan—two decades ago. His justification at the time for raising a tax that falls mainly on lower- and middle-income families, even though Ronald Reagan had just cut the taxes that fall mainly on the very well-off, was that the extra revenue was needed to build up a trust fund. This could be drawn on to pay benefits once the baby boomers began to retire.

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Robert Shiller, who argued against such rationalizations and correctly called the stock bubble in his book Irrational Exuberance, has added an ominous analysis of the housing market to the new edition, and says the housing bubble “may be the biggest bubble in U.S. history.” In parts of the country there’s a speculative fever among people who shouldn’t be speculators that seems all too familiar from past bubbles—the shoeshine boys with stock tips in the 1920s, the beer-and-pizza joints showing CNBC, not ESPN, on their TV sets in the 1990s. Even Alan Greenspan now admits that we have “characteristics of bubbles” in the housing market, but only “in certain areas.” And it’s true that the craziest scenes are concentrated in a few regions, like coastal Florida and California. But these aren’t tiny regions; they’re big and wealthy, so that the national housing market as a whole looks pretty bubbly.

The Dollar Meltdown: Surviving the Coming Currency Crisis With Gold, Oil, and Other Unconventional Investments
by Charles Goyette
Published 29 Oct 2009

Regulating the nation’s supply of money and credit, the Fed was the primary engine of the mortgage debacle. It was full steam ahead as it cut interest rates an astonishing thirteen consecutive times between January 2001 and May 2003, pushing the Fed funds rate all the way down from 6.5 percent to 1 percent, where it was left for a year! Of course Bernanke voted with then-Fed chairman Alan Greenspan on the cuts. In fact, in the 11-1 vote of the Fed’s Open Market Committee to drop rates to 1 percent, the lone dissenter actually wanted a bigger cut. At 1 percent interest, the real rate of interest, that is, the nominal rate minus inflation, was below zero. The effects of the contrived low rates were several.

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Like a nagging home economics teacher, the prime minister instructed British subjects to take more care storing fruit and vegetables to reduce waste. But thirty-four years earlier President Ford had taken his campaign to the limit of credulity, urging Americans to be sure to send for their WIN (“Whip Inflation Now”) buttons! Years later, in his autobiography, Alan Greenspan, eventually to become Federal Reserve chairman, but at the time the chairman of Ford’s Council of Economic Advisers, described thinking how “unbelievably stupid” the WIN program was. Nice of him to speak out a generation too late. The next president, Jimmy Carter, thought to appoint a “chief inflation fighter.”

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It is a powerful device for steering a country along any chosen course and as such is incompatible with the very idea of self-government and a free people. 3. From its shadowy beginnings until today, the Federal Reserve has been cloaked in secrecy. This secrecy conceals its hidden beneficiaries, and obscures the costs paid by the people. Foreshadowing the mortgage meltdown fifteen years later, Fed chairman Alan Greenspan drove interest rates down sharply in the early 1990s, with an eye to providing cheap liquidity to the banking sector. It was good for the likes of Merrill Lynch, JPMorgan, and Chase Manhattan, which saw their depressed stock prices take off, but it had a costly impact on Americans. Driving rates to 3 percent by the time he was finished, Greenspan fundamentally altered the investment outlook and risk-taking proclivities of retired people and baby boomers alike, as they sought to make up in the stock market for the certificate of deposit and fixed income returns that had disappeared.

The Age of Turbulence: Adventures in a New World (Hardback) - Common
by Alan Greenspan
Published 14 Jun 2007

The Fed, of course, had been lowering rates for over a year, but the White House wanted more, faster cuts. 120 More ebooks visit: http://www.ccebook.cn ccebook-orginal english ebooks This file was collected by ccebook.cn form the internet, the author keeps the copyright. PHOTOGRAPHIC INSERT 1 Age five, Washington Heights, New York City, 1931. The collection of Alan Greenspan More ebooks visit: http://www.ccebook.cn ccebook-orginal english ebooks This file was collected by ccebook.cn form the internet, the author keeps the copyright. W i t h three cousins on the Greenspan side, circa 1934 (I'm on the left). The collection of Alan Greenspan Sixteen years old, Lake Hiawatha, New Jersey. The collection of Alan Greenspan My father, who sold stocks on Wall Street, left my mother when I was two. When I was nine, he gave me a copy of his book, Recovery Ahead!

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Penguin Books (South Africa) (Pty) Ltd, 24 Sturdee Avenue, Rosebank, Johannesburg 2196, South Africa Penguin Books Ltd, Registered Offices: 80 Strand, London WC2R 0RL, England First published in 2007 by The Penguin Press, a member of Penguin Group (USA) Inc. Copyright © Alan Greenspan, 2007 All rights reserved Library of Congress Cataloging-in-Publication Data Greenspan, Alan, 1926The age of turbulence : adventures in a new world / by Alan Greenspan. p. cm. Includes bibliographical references and index. ISBN: 1-4295-4652-2 1. Greenspan, Alan, 1926- 2. Government economists—United States—Biography. 3. United States—Economic conditions—1945- I.Title HB119.G74A3 2007 332.1'1092—dc22 [B] 2007013169 Designed by Amanda Dewey Without limiting the rights under copyright reserved above, no part of this publication may be reproduced, stored in or introduced into a retrieval system, or transmitted, in any form or by any means (electronic, mechanical, photocopying, recording, or otherwise), without the prior written permission of both the copyright owner and the above publisher of this book.

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After a year at the Juilliard School, I toured the country as a sideman with the Henry Jerome dance band, playing saxophone and clarinet (I'm sitting at far left). I also did tax returns for the band members. Courtesy of Henry Jerome Music With my mother, Rose Goldsmith, a brave and lively woman who gave me my love of music. The collection of Alan Greenspan By 1950,1 was earning enough as an economist to think about leaving New York City for the suburbs, which I did just over a year later. The collection of Alan Greenspan More ebooks visit: http://www.ccebook.cn ccebook-orginal english ebooks This file was collected by ccebook.cn form the internet, the author keeps the copyright. Of all my teachers, Arthur Burns and Ayn Rand had the greatest impact on my life.

Paper Promises
by Philip Coggan
Published 1 Dec 2011

On 19 October 1987, the Dow fell by almost 23 per cent in one day (Black Monday as it became known). Share prices round the world followed suit, from London to Hong Kong. No economic or political event seemed to be to blame. At the time, it seemed eerily reminiscent of the crash of 1929, the event popularly assumed to have ushered in the Great Depression. Central banks, led by Alan Greenspan, the chairman of the US Federal Reserve, resolved to head off this calamity. They vowed to lend money to any bank or broker who had been caught out by this sudden plunge in prices. And they cut interest rates in order to encourage spending, discourage saving and make owning shares look more attractive than holding cash.

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‘I used to think if there was reincarnation, I wanted to come back as the president or the pope or a .400 baseball hitter,’ he said. ‘But now I want to come back as the bond market. You can intimidate everybody.’16 That was in the 1990s. By the following decade, the vigilantes seem to have fallen asleep. Alan Greenspan even talked of a bond-market ‘conundrum’: as the Fed pushed up the cost of borrowing over the short term, bond yields (effectively the cost of borrowing long term) actually fell. The explanation for this conundrum seems to be that the nature of bond-market investors had changed. No longer was the tone set by professional fund managers, scouring the world for the best combination of risk and return.

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It is like a cancer that is growing to infinite size until it takes over the entire body.’18 EFFICIENT-MARKET THEORY The reluctance of central banks to intervene in asset bubbles owed something to the feeling of euphoria induced by higher asset prices. Central bankers did not wish to lose their much-cherished independence by alienating the public. However, the main motivation was ideology. Alan Greenspan, the head of the US Federal Reserve, was a disciple of Ayn Rand, a philosopher and cult novelist whose ‘objectivism’ glorified the elite at the expense of the dull masses and interfering bureaucrats. Howard Roark, the hero of her novel The Fountainhead, is an architect whose ambition to create modernist buildings is frustrated by lesser beings.

Unfinished Business
by Tamim Bayoumi

Gorton and Ordoñez (2013): Gary Gorton and Guillermo Ordoñez, “The Supply and Demand for Safe Assets”, NBER Working Paper No. 18732, January 2013. Greene (2005): Brian Greene, The Fabric of the Cosmos: Space, Time, and the Texture of Reality, Vintage Books, New York, 2005. Greenspan (1996): Alan Greenspan, “Bank Supervision in a World Economy”, speech given at the International Conference of Banking Supervisors, Stockholm, June 13, 1996, available from the Federal Reserve website. Greenspan (2008): Alan Greenspan, The Age of Turbulence: Adventures in a New World, Penguin Books, London, 2008. Haldane (2009): Andrew Haldane, “Banking on the State”, BIS Economic Review No. 139, 2009. Hale and Obstfeld (2016): Galina Hale and Maurice Obstfeld, “The Euro and the Geography of International Debt Flows”, Journal of the European Economic Association, Vol. 14, No. 1 (February 2016), pp. 115–44.

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The important question is why the Basel Committee decided to farm out the calculation of capital buffers to large banks. Here, a crucial role was played by the growing belief that market discipline would constrain risk-taking. This was largely driven by views coming from the United States. The major US banks had been at the forefront of developing value-at-risk models. In addition, Alan Greenspan, Chair of the Federal Reserve, and the Fed staff in charge of bank regulation were strong believers in the power of market discipline in controlling the risks taken by investment banks. This is made clear in Greenspan’s memoirs, sent to the printers just before the North Atlantic crisis and titled (with unintended irony) The Age of Turbulence, where he wrote about his experience at the Fed that: Since I was an outlier in my libertarian opposition to most [financial] regulation, I planned to be largely passive in such matters and allow the Federal Reserve governors to take the lead .  . . . 

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They saw private monitoring of risk by investors and government monitoring through regulation as alternatives rather than complements. In particular, they were concerned that stronger government oversight of investment banks could be potentially counterproductive as it might reduce the incentives of investors to monitor risk-taking. As Alan Greenspan stated in a speech in 1996: On the other hand, if central banks or governments effectively insulate private institutions from the largest potential losses, however incurred, increased laxity could be costly to society as well. Leverage could escalate to the outer edge of prudence, if not beyond.

The Age of Stagnation: Why Perpetual Growth Is Unattainable and the Global Economy Is in Peril
by Satyajit Das
Published 9 Feb 2016

Apologists for the new economic model argued that the experience of Japan confirmed the superiority of the more flexible, competitive, and dynamic market models of the US, and others like them, for delivering growth. The Great Moderation was really a Goldilocks economy, reliant on a massive expansion in debt and financial speculation, underwritten by the Greenspan Put. This referred to a practice originated by US Fed chairman Alan Greenspan, and adopted widely, whereby in a financial crisis central banks lowered interest rates sharply and flooded the system with money, to prevent asset prices from falling and to avert potential deterioration in economic activity. The severing of the link between money and gold allowed central banks greater flexibility to adjust the supply of money.

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Under certain assumptions, they found that the loss could be higher—US$25 trillion. We may never know the full cost. The GFC and its aftermath, known as the Great Recession, was the most serious financial crisis since the Great Depression of the 1930s. On September 18, 2008, at the height of the crisis, Ben Bernanke, Alan Greenspan's successor at the Fed, made the case for a massive bank bailout to skeptical legislators: “If we don't do this, we may not have an economy on Monday.”7 Three years earlier, during an interview on financial news channel CNBC, Bernanke had stated: “We've never had a decline in house prices on a nationwide basis….

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In the age of capital, there was no longer a society, just the economy and the mirages of personal wealth—the value of your home, and the stock market, which affected your savings and investments. Presiding over it all were economic officials and central bankers. The influence of economic policymakers was directly related to postwar prosperity, which they claimed was the result of their prudent stewardship. Alan Greenspan, a master of politics and public relations, succeeded in making the US Fed chairman the second most powerful person on the planet, after PotUS (President of the United States). Feted as rock stars at the annual Davos World Economic Forum, their every gnomic utterance was reported reverently in the media and meticulously parsed by analysts.

Hubris: Why Economists Failed to Predict the Crisis and How to Avoid the Next One
by Meghnad Desai
Published 15 Feb 2015

Keynes, The General Theory of Employment, Interest and Money (1936), in The Collected Writings of John Maynard Keynes, vol. 7 (Macmillan, London, 1978), pp. 158–9. 5.Many books describe and analyze the crisis in detail. See Andrew Ross Sorkin, Too Big to Fail (Viking, New York, 2009); Raghuram Rajan, Fault Lines: How Hidden Fractures Still Threaten the World Economy (Princeton University Press, Princeton, NJ, 2010). 6.Alan Greenspan’s testimony to the Senate Committee on Oversight and Government Reform, US House of Representatives, October 23, 2008. See also Alan Greenspan, The Age of Turbulence, with a new epilogue (Penguin, New York, 2008). 7.Financial Services Authority, The Turner Review: A Regulatory Response to the Global Banking Crisis (Financial Services Authority, London, 2009), p. 39. 8.The case for the Keynesians is argued by Robert Skidelsky, Keynes: The Return of the Master (Penguin, London, 2009). 9.Milton Friedman and Anna Schwartz, A Monetary History of the United States 1867–1960 (Princeton University Press, Princeton, NJ, 1963). 10.For the background to the euro, see David Marsh, The Euro: The Battle for the New Global Currency (Yale University Press, New Haven, CT, 2009). 7 The Search for an Answer 1.Thomas Piketty, Capital in the Twenty-First Century (Belknap Press, Cambridge, MA, 2014), see figure 6.1, p. 200; figure 6.2, p. 201; figure 8.5, p. 291. 2.Meghnad Desai, “An Econometric Model of the Share of Wages in National Income: UK 1855–1965” (1984), republished in The Selected Essays of Meghnad Desai, vol. 1: Macroeconomics and Monetary Theory (Edward Elgar, Cheltenham, 1995). 3.Andrew Glyn and Robert Sutcliffe, “The Collapse of UK Profits,” New Left Review, 66 (Mar.

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An Economic Crisis or a Crisis of Economics? Economics as a profession had been riding high in the eyes of the world. Economists were said to have the answers to all sorts of problems. Before the crisis, economic bestsellers such as Freakonomics (2005) showcased the power of economics to solve many social as well as economic problems. Alan Greenspan, former Chairman of the Federal Reserve, in his memoirs The Age of Turbulence drew a picture of a superman figure dominating the economy to whose charge he was appointed. Indeed many people in public life and most citizens believed economists had the tools to prevent events such as the Great Depression of the 1930s from reoccurring.

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Most developed countries had some regulatory institutions for financial and commodity markets. But the pace of innovation in the financial markets was fast. There was also the ideological pressure to leave markets alone as they were held to be working perfectly based on the efficient market hypothesis and rational expectations. Regulators themselves believed in these truths, as Alan Greenspan later testified when the crisis had hit. Thus regulatory systems failed en masse to either foresee or give effective forewarning about the coming crisis. There was also the growth of consumer credit as a result of companies issuing debit and credit cards. Credit cards were first introduced to provide financial security to individuals traveling for business purposes.

Toward Rational Exuberance: The Evolution of the Modern Stock Market
by B. Mark Smith
Published 1 Jan 2001

These included the consistent growth of corporate earnings, a 25% tax rate for long-term capital gains (considerably below the tax rate applied to bond interest income), and built-in stabilizers in government, such as Social Security and unemployment insurance, which, combined with contracyclical monetary and fiscal policies, had presumably made severe economic downturns less likely (and stocks less risky). Fortune did present cautionary opinions. A young economic consultant named Alan Greenspan of Townsend-Greenspan Financial Advisors, Inc., warned that the booming stock market itself could ultimately be the cause of economic dislocations. He said that the Fed’s ability to pursue contracyclical monetary policies to restrain speculative excess in the market was limited by the fact that the tight money required would have the side effect of paralyzing legitimate business.

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The long-term secular trend toward higher market valuations that had characterized the years since 1920 (interrupted by the Depression) continued, and accelerated, in the 1980s. By mid-1987, stock price valuations (adjusted for interest rates) were the highest they had ever been. Dow Jones Industrial Average, 1980–1989 © Dow Jones & Company Inc. 15 AN ACCIDENT WAITING TO HAPPEN WHEN RONALD REAGAN appointed Alan Greenspan chairman of the Federal Reserve Board in 1987, critics openly questioned whether Greenspan was up to the job. The retiring chairman, Paul Volker, had attained near-legendary status by successfully vanquishing inflation. Greenspan lacked stature in comparison to Volker; some critics also questioned whether he was too close to Reagan to be truly independent.

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Almost without exception, the banks, scared by the day’s events, refused to lend more money, even though they had long-standing relationships with the firms in question. Suddenly the specialists, and many dealers, were confronted with the shocking possibility that they might be forced to default, bringing the entire New York Stock Exchange market-making mechanism down with them. During the market’s late-afternoon collapse, Alan Greenspan was on an airplane en route to a speaking engagement in Dallas. At the time he departed from Washington, the Dow Industrials had been down 200 points but appeared to be stabilizing. Immediately after disembarking in Dallas, Greenspan inquired as to how the market had finally closed. When told the Dow had ended down “five-oh-eight,” he at first breathed a sigh of relief, assuming the response meant 5.08 points.

The New Depression: The Breakdown of the Paper Money Economy
by Richard Duncan
Published 2 Apr 2012

Financial Account Balance, 1970 to 2007 Source: IMF From 1971 to 2007, total foreign exchange reserves increased by $6.7 trillion. Over the same period, the surplus on the U.S. financial account amounted to $6.3 trillion. The former funded the latter. Such a large surplus on the U.S. financial account could not have occurred had central banks outside the United States not created so much fiat money. Alan Greenspan and Ben Bernanke have frequently attempted to explain the massive surplus on the U.S. financial account by blaming a global savings glut and by citing the overwhelming attractiveness of the U.S. financial markets relative to those elsewhere. The true explanation is that a dozen or so central banks have printed nearly $7 trillion worth of fiat money between 1971 and 2007 (and $3 trillion more subsequently) in order to manipulate the value of their currencies so as to achieve strong export-led growth.

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Personal consumption expenditure makes up approximately 70 percent of U.S. GDP. The business sector sells to the household sector; and the financial sector lends to it. Therefore, the financial health of the household sector determines the health of the entire economy. Will this sector take on more debt in the years immediately ahead? Former Fed Chairman Alan Greenspan wrote about household sector debt in his autobiography, which went to print in June 2007. He began by quoting from an article published in Fortune magazine in 1956: “Consumer short-term debt . . . is approaching a historical turning point . . . It must soon adjust itself to the nation’s capacity for going in hock, which is not limitless,” declared Fortune in March 1956.

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EXHIBIT 6.3 Ratio of Household Debt to Disposable Personal Income Source: Federal Reserve, Flow of Funds Accounts of the United States, second quarter 2011, Table B.100 Notice that this ratio had hit 53 percent and was rising rapidly at the time Fortune expressed concern about mortgage debt in 1956. Then, from the mid-1960s to the mid-1980s it flattened out around 70 percent. Alan Greenspan became Fed chairman in August 1987. Soon thereafter, household debt relative to disposable income began to rise sharply. That ratio peaked at nearly 140 percent in 2007, just as Greenspan was expounding on the role of rising debt and the facts of life. Unfortunately, American households were incapable of repaying so much debt.

Chaos Kings: How Wall Street Traders Make Billions in the New Age of Crisis
by Scott Patterson
Published 5 Jun 2023

Financial and economic collapses can lead to surprising outcomes in the political and social spheres—the election of Barack Obama, the rise of the ultra-conservative Tea Party in 2010, and the 2016 election of Donald Trump are arguably traceable to the Global Financial Crisis of 2008, which itself was (arguably) caused by unprecedented monetary stimulus from Alan Greenspan’s Federal Reserve in response to the September 11, 2001, terrorist attack in America. British historian and economist Adam Tooze coined a term for the converging, expanding risks the world faces—the polycrisis. It’s a world in which pandemics, inflation, recession, the climate crisis, nuclear escalation, and other risks combine to magnify harm via a series of vicious feedback loops.

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Derivatives had another trait that made the quants giddy: Their growth was theoretically infinite. A company could only issue so many bonds, but a bank could sell a limitless number of derivative contracts linked to a single basket of bonds or commodity. As the economy gained strength, Federal Reserve chairman Alan Greenspan began to fret about inflation. Slowly at first, he started cranking up short-term rates to stifle growth, dealing incremental pain to bond investors (as interest rates rise, the value of bonds declines). By August, the Fed had boosted rates nearly two percentage points. Then, in November, Greenspan swung for the fences: a staggering three-quarters of a percentage point increase, bringing the federal funds rate to 5 ½ percent.

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A cousin called and said the police were outside his building at 72nd Street and First Avenue. Someone had jumped to their death from their upper-floor apartment. “It hit close to home,” Taleb said later. While other traders had suffered enormous pain that day, Taleb’s portfolio had fared relatively well. But it wasn’t career-making. That changed the following day, when Alan Greenspan at the Federal Reserve injected vast amounts of cash into the financial system. Taleb’s positions in Eurodollars shot to the moon. Contracts he’d bought for $2 or $3 were selling for $300, $400, $500. At the desk, he felt he was losing his mind as he watched his positions rip higher. He knew what was happening should not be happening.

Never Let a Serious Crisis Go to Waste: How Neoliberalism Survived the Financial Meltdown
by Philip Mirowski
Published 24 Jun 2013

In an op-ed article in the Financial Times, Rajan defended the upside of financial speculation, blaming the harmful fallout on the Congress and the Fed for distorting market incentives. Elsewhere, the Stanford economist Gregory Rosston was quoted as saying, “I don’t think (recent events are) necessarily a repudiation of the Chicago School of economics as personified by Alan Greenspan, but it definitely shows there is some role for regulation in society.” Actually, all that was revealed was the unabashed ignorance of history on the part of Rosston, since Alan Greenspan was never a member in good standing of the Chicago School, but rather an acolyte of the Ayn Rand cult, who had been awarded a belated PhD by NYU in 1977 after serving as chairman of the Council of Economic Advisors under Gerald Ford, and who subsequently parlayed numerous right-wing political connections into elevation to his position as chairman of the Federal Reserve from 1987 to 2006.

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Perusing the papers from the New York conference, however, one finds instead mostly predictable platitudes and tired retreads about the wicked government causing the crisis.10 Deepak Lal raised an interesting question in his keynote address: why did the crisis occur when so many “Friends of the MPS” like Alan Greenspan and Jean-Claude Trichet were in charge of the world financial system, and hinted they may not have leaned sufficiently in favor of “Sound Money.” Niall Ferguson rallied the troops with the catechism that it must have been regulation that caused the crisis, and not some failure of the market economy, while also exploring his personal theme that somehow China might be to blame.

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Lusting for scapegoats, journalists initially scoured the landscape for miscreants like Bernie Madoff, Dick Fuld, and Joseph Cassano; and then instinctively turned to find their counterparts inside the economics profession. There was even an online ballot for receipt of the Ignoble (or “Dynamite”) Prize, to be awarded to three economists deemed to have contributed the most to the global financial collapse. (The winners were Alan Greenspan, Milton Friedman, and Larry Summers.) Of course, there existed no equivalent of the Justice Department or the Securities and Exchange Commission to actually police the economists, just as there was no phalanx of gumshoes and DAs to do the hard investigative work; and thus it dawned upon some that (unlike medicine, and even sociology) there was not even a professional code of ethics to which bona fide economists were enjoined to subscribe.

Propaganda and the Public Mind
by Noam Chomsky and David Barsamian
Published 31 Mar 2015

For this one, the headline was, “America Is Prosperous and Smug.”14 As I went to England on May 3, the front-page story in the Week in Review in the Times was something about “America is fat and happy.”15 It’s all about the fairy-tale boom, how Americans are so confident and prosperous and everything is so wonderful. We can ask the same question: Who are they talking about? Is it the roughly two-thirds of Americans whose wages and incomes have either stagnated or declined in the last twenty-five years? Are they the ones who are smug and prosperous and confident or the ones who Alan Greenspan, the chairman of the Federal Reserve Board, is talking about when he attributes the fairy-tale economic boom to what he calls “worker insecurity,” since workers are so intimidated that they won’t ask for a raise, which is a great thing for the health of the economy because you can drive down wages and make profits high?

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If they had opened up markets in the 1980s, superior Japanese products would have flooded the automotive industry, steel, and semiconductors. The main industrial base of the U.S. would have been wiped out. So the Reagan administration just barred imports. What’s more, it poured public funds into industry. So, despite all the rhetoric about free markets,” you see regular state intervention in the U.S. economy. Alan Greenspan just gave a speech in which he talked about the enormous achievements of market capitalism and consumer choice. He gave a list of examples.23 The Internet was the main one. It was developed by the Pentagon. It was developed for thirty years at public expense, with most of the ideas, initiatives and creativity, the hardware, and the technology.

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But it’s drowned in a chorus of deceit. And unless something is done about it, this very effective program will be destroyed. There’s plenty wrong with Social Security, like the fact that it’s regressively funded, which should be changed. But the problems are not the ones that are being discussed. Alan Greenspan was critical of Clinton’s plan to invest in the stock market. He said he was fearful that the assets might be used for political ends.30 Greenspan wants the program to be even worse. I think Clinton’s plan is a bad one. For one thing, it’s based on faulty assumptions. But at least it has the property that risk is spread in some way.

Other People's Money: Masters of the Universe or Servants of the People?
by John Kay
Published 2 Sep 2015

John Ruskin, Unto this Last, 1860 The key insight of Adam Smith’s Wealth of Nations is misleadingly simple: if an exchange between two parties is voluntary, it will not take place unless both believe they will benefit from it. Milton Friedman, Free to Choose, 1980 In 2005 the Federal Reserve Bank of Kansas City held a symposium at the agreeable Wyoming resort of Jackson Hole. The purpose was to honour Alan Greenspan, who would soon retire from his position as chairman of the Federal Reserve Board. Raghuram Rajan, then chief economist at the IMF, queried the value of recent innovation in financial markets and warned of troubles ahead.1 Rajan’s paper was not well received. The principal discussant was the vice-chairman of the Federal Reserve Board, Don Kohn.

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When the economy is booming, house prices are rising and credit is easy, then mortgage defaults are rare. The usual cause of arrears is some catastrophic event, such as severe illness or family break-up. As Tolstoy famously observed, all unhappy families are different, and these events will be independent of each other. Alan Greenspan explained in his 2008 congressional testimony how the data the rating agencies used to assess mortgage-backed securities were drawn from this benign overall economic environment. But when house prices stalled and credit tightened, these factors affected the ability of all home-buyers to meet their mortgage obligation.

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Counsel’s opinion does not have the legal status of a court ruling, but neither regulatory nor fiscal authorities sought to challenge Mr Potts’s view. Most CDS contracts were subsequently made under English law, providing a profitable activity for London lawyers. Some doubt remained as to the legality of such transactions by US residents, but this was settled by the Commodity Futures Modernization Act of 2000, promoted by Fed chairman Alan Greenspan and by (now Treasury secretary) Larry Summers.11 Mr Potts’s benign opinion, and the enthusiasm of US policy-makers, set the scene for the explosive growth of the markets in credit securities – credit default swaps and collateralised debt obligations – which were at the centre of the financial crisis.

Being Wrong: Adventures in the Margin of Error
by Kathryn Schulz
Published 7 Jun 2010

—ALEXANDER POPE, “AN ESSAY ON CRITICISM” On October 23, 2008, Alan Greenspan, the former chair of the Federal Reserve, appeared before a committee of the U.S. House of Representatives to testify about the financial crisis that had lately engulfed more or less the entire planet. Not surprisingly, the atmosphere was somber, and Henry Waxman, the California Democrat who chaired the committee, was not in the mood to pull his punches. “The Federal Reserve had the authority to stop the irresponsible lending practices” that had fueled the crisis, Waxman reminded those in attendance. But, he continued, “its long-time chairman, Alan Greenspan, rejected pleas that he intervene.”

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These stories involve, among other things, illusions, magicians, comedians, drug trips, love affairs, misadventures on the high seas, bizarre neurological phenomena, medical catastrophes, legal fiascos, some possible consequences of marrying a prostitute, the lamentable failure of the world to end, and Alan Greenspan. But before we can plunge into the experience of being wrong, we must pause to make an important if somewhat perverse point: there is no experience of being wrong. There is an experience of realizing that we are wrong, of course. In fact, there is a stunning diversity of such experiences. As we’ll see in the pages to come, recognizing our mistakes can be shocking, confusing, funny, embarrassing, traumatic, pleasurable, illuminating, and life-altering, sometimes for ill and sometimes for good.

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When we talk about beliefs in casual conversation, we usually mean our overt convictions about important matters: about religion or morality or propriety, politics or economics, ourselves or other people. These beliefs are explicit, in the sense that we are aware of having them, and can articulate and defend them if called upon to do so. Put differently, there is an experience associated with holding them. It felt like something for Alan Greenspan to believe in market self-regulation, just as it feels like something for you to believe in God, or in universal healthcare, or that your father-in-law dislikes you. By contrast, when philosophers talk about belief (which they do often; it is an occupational hazard), they mean something markedly different.

The Rise and Fall of the Neoliberal Order: America and the World in the Free Market Era
by Gary Gerstle
Published 14 Oct 2022

For insight into Greenspan, see Binyamin Appelbaum, The Economists’ Hour: How the False Prophets of Free Markets Fractured Our Society (New York: Little, Brown, 2019), 298–308. 59.American homeowners, Adam Tooze has noted, “were the greatest source of demand for the world economy.” Tooze, Crashed, 43. 60.Sebastian Mallaby, The Man Who Knew: The Life and Times of Alan Greenspan (New York: Penguin Press, 2016); Robert D. Auerbach, Deception and Abuse at the Fed: Henry B. Gonzalez Battles Alan Greenspan’s Bank (Austin: University of Texas Press, 2008). 61.Gerstle, “Minorities, Multiculturalism, and the Presidency of George W. Bush”; Weisberg, The Bush Tragedy; Draper, Dead Certain; Ron Suskind, The Price of Loyalty: George W. Bush, the White House, and the Education of Paul O’Neil (New York: Simon and Schuster, 2004). 62.Jo Becker, Sheryl Gay Stolberg, and Stephen Labaton, “Bush Drive for Home Ownership Fueled Housing Bubble,” New York Times, December 21, 2008, https://www.nytimes.com/2008/12/21/business/worldbusiness/21iht-admin.4.18853088.htm, accessed September 2, 2021. 63.Kevin M.

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If elected, he boasted, he would reduce the number of federal agencies from 1,900 to 200.38 A shrinkage on that scale was fantastical. Nevertheless, the steps Carter took to “deregulate” the economy may have been the most significant domestic accomplishment of his presidency. Unlike Reagan, Carter had not spent his spare time reading Friedrich Hayek. Unlike economist Alan Greenspan, who began a long public career as chairman of the Council of Economic Advisers under Gerald Ford, he did not grow up entranced by the novels of Ayn Rand. But Carter did have a muse of his own who filled his ears with thoughts about the need to rethink the relationship between government and the economy.

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Only after such exposure and reform would “the people” be restored to their sovereign perch. Consumers were at the center of Nader’s vision of popular democracy; they, not workers, were the ones whom he wanted to empower. Neither Nader nor Carter worshipped the private sector in the manner of neoliberals such as Milton Friedman or Alan Greenspan. However, their determination to strengthen consumers meant that they, too, began to give priority to improving markets. This meant attacking corporate oligopoly, on the one hand, and excessive and counterproductive government regulation, on the other. Their shared goal was to make consumers sovereign in the marketplace.

The Devil's Derivatives: The Untold Story of the Slick Traders and Hapless Regulators Who Almost Blew Up Wall Street . . . And Are Ready to Do It Again
by Nicholas Dunbar
Published 11 Jul 2011

Unlike with surety bonds or letters of credit, it was hard to argue with the ISDA’s definitions of the events that triggered credit default swaps.16 You couldn’t argue, as Chase’s surety bond counterparties did, that fraud somehow voided the contracts. Even insurance companies on the other side of default swap contracts had to pay up. Federal Reserve chairman Alan Greenspan spoke warmly about how default swaps made banking safer as a result. With this apparent certainty that providers of credit protection would have to pay up, traditional loan-based banking was now a love-to-win game. The only remaining obstacle was price. If the price of credit derivative protection was higher than what borrowers expected to pay on a loan, the big dealers resolved to find some other way to get that protection at a lower price.

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The Wall Street spin on the LTCM disaster: derivatives and risk technology was not dangerous; LTCM had been the threat because it was an offshore hedge fund that had poor risk management and grew too big. The banks that lent money to hedge funds solemnly promised the Fed and other regulators that they would not make this mistake again.10 Yes, Wall Street proclaimed, derivatives markets had seized up temporarily in September 1998, and Alan Greenspan had been forced to cut the federal funds rate by an emergency three-quarters of a percentage point to get them started again. But the positive, information-transmitting qualities of new derivatives markets had not gone away. In the same way that implied volatility from option prices became a useful fear gauge for the market, transparency and consensus about more complex derivatives pricing would bring in new radar signals, as well as an assurance that the markets were safe.

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Periodically, perhaps daily, the derivative would be priced at market value (as laid down in the contract), and collateral (typically cash or a very safe asset like Treasury bonds) would flow through the pipes, depending on who owed money to whom. The idea was that if one party defaulted, the other could keep the collateral. Combined with netting, that reduced the net exposure even further. Regulators were thrilled that the banks had seemingly done their work for them. Fed head Alan Greenspan repeatedly praised netting and collateralization for making the system safer. That was not yet proved to be true, but what was undoubtedly true was that netting and collateralization made derivatives trading more expensive to run, with banks now devoting whole floors or even entire buildings to housing their large trade operations staffs, checking hundreds of thousands of valuations and payments daily.

A Failure of Capitalism: The Crisis of '08 and the Descent Into Depression
by Richard A. Posner
Published 30 Apr 2009

A choice under profound uncertainty is not adding a column of numbers but firing a shot in the dark, and so we should consider the character traits (not character flaws) that make some people willing to act on such a basis. They will be people who have a below-average aversion to uncertainty and, since we are speaking of business, an above-average love of making money. They were bound to swarm into financial intermediation in the era created by Alan Greenspan's monetary policy that offered prospects of great wealth to smart people willing to take large risks. Such people are not irrational, but their clustering in financial intermediation when the wraps are taken off risky lending enhances the inherent instability of that business. Similarly, it is not irrational, though often thought to be, to allow oneself to be influenced by what other people are doing.

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And not just Republican officials and the economists who advise them. I have elsewhere described President Clinton as the consolidator of the Reagan revolution. His economic policies were shaped by establishment Wall Street figures now in disrepute, such as Robert Rubin, along with economists like Alan Greenspan, a conservative, and Lawrence Summers, a moderate. The many positive experiences with deregulation and privatization, and the many economic success stories that followed the collapse of communism, along with the main failure stories of countries that curtail economic freedom, supported this belief system and made it bipartisan.

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Securitization of mortgages and other debts was taken at face value as protecting us against the kind of housing-credit bubbles that had ravished East Asian countries in the 1990s. In May 2006, Federal Reserve chairman Bernanke said that the housing market was "cooling," but that this cooling was "orderly and moderate" and that the market appeared to be "headed for a safe landing." His predecessor, Alan Greenspan, who in July 2005 had expressed mild concern about housing prices, said in October 2006 that the "worst may well be over." Public officials cannot be expected to be completely candid at all times. But the statements by Greenspan and Bernanke that I have quoted in this book were misleading; they made things worse.

The System: Who Rigged It, How We Fix It
by Robert B. Reich
Published 24 Mar 2020

By the mid-1980s, as the stock market took off courtesy of Carl Icahn and the other raiders, people like Weill and Dimon noted that huge money could be made by taking down that wall. In early 1985, three of the Street’s biggest banks—JPMorgan, Citicorp, and Bankers Trust—asked the Federal Reserve Board to remove a few bricks. As a member of JPMorgan’s board at the time, Alan Greenspan endorsed the company’s application. After President Reagan named Greenspan to chair the Fed, the White House called for Congress to further reduce banking restrictions in order “to help American banks compete with foreign rivals.” It was not the first nor would it be the last use of this specious argument.

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” * * * — Shortly after Brooksley Born became head of the Commodity Futures Trading Corporation, a government agency charged with regulating markets in futures and options, in August 1996 she became curious about credit derivatives—bets on whether loans would be repaid. She didn’t understand why the derivative market had to be hidden and why the industry was so opposed to record-keeping or reporting. In early 1998, after her staff began to prepare a tentative first step toward transparency, Born was summoned to a meeting with Rubin, Alan Greenspan, and Arthur Levitt, chair of the SEC, who told her to drop the issue. She did not. After the Clinton administration asked Congress to suspend her rule-writing authority, Congress barred the government from regulating large portions of the market in derivatives. Years later, Rubin said he favored making derivatives “subject to comprehensive and higher margin limits” but did not support doing it in the way Born wanted, which he called “strident.”

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Some people gain it only when others lose it. The connection between the economy and power is critical. As power has concentrated in the hands of a few, those few have grabbed nearly all the economic gains for themselves. The oligarchy has triumphed not because Carl Icahn, Jack Welch, Warren Buffett, Sandy Weill, Alan Greenspan, Robert Rubin, Jamie Dimon, or anyone else conspired to make it happen. I doubt any of them thought about the system as a whole. They triumphed because no one paid attention to the system as a whole—to the consequences of the shifts from stakeholder to shareholder capitalism, from large unions to giant corporations, and from regulated to unfettered finance.

Trade Wars Are Class Wars: How Rising Inequality Distorts the Global Economy and Threatens International Peace
by Matthew C. Klein
Published 18 May 2020

Atif Mian and Amir Sufi, House of Debt: How They (and You) Caused the Great Recession and How We Can Prevent It from Happening Again (Chicago: University of Chicago Press, 2014); John Geanakoplos, “What’s Missing from Macroeconomics: Endogenous Leverage and Default,” Cowles Foundation Paper No. 1332, 2011; Alan Greenspan and James Kennedy, “Estimates of Home Mortgage Originations, Repayments, and Debt on One-to-Four-Family Residences,” FEDS Working Paper No. 2005-41; Alan Greenspan and James Kennedy, “Sources and Uses of Equity Extracted from Homes,” FEDS Working Paper No. 2007-20; updated estimates of mortgage equity withdrawal provided by James Kennedy via Bill McBride, “Equity Extraction Data,” March 24, 2009, https://www.calculatedriskblog.com/2009/03/equity-extraction-data.html; “Mortgage Equity Withdrawal Positive,” December 13, 2016, CalculatedRISK (blog), https://www.calculatedriskblog.com/2016/12/mortgage-equity-withdrawal-positive-in.html; FRB, “Financial Accounts of the United States, table B.101,” https://www.federalreserve.gov/apps/fof/DisplayTable.aspx?

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He has been fortunate to have had many excellent mentors and editors over the years, including Ryan Avent, Clive Crook, Cardiff Garcia, James Greiff, Brian Hershberg, Greg Ip, Izabella Kaminska, Zanny Minton-Beddoes, and Robert Sabat. Matt would particularly like to thank Sebastian Mallaby, who, almost a decade ago, hired Matt as a research assistant to work on a biography of Alan Greenspan. Sebastian encouraged Matt’s ambitions at a time when becoming a writer seemed like the worst possible way to earn a living. He has always been a valuable source of advice on career decisions—especially the decision to write this book. Preparing the proposal and finding the right publisher were not easy.

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Manufacturing capacity for durable goods—industrial machinery, motor vehicles, airplanes, and computers—expanded at an annual average rate of 10 percent between the start of 1995 and the end of 2000. From 1967 through 1994, the average yearly growth rate was just 3 percent. Companies and their investors eventually paid the price for this “irrational exuberance,” as Federal Reserve chairman Alan Greenspan memorably described it in 1996, with a wave of corporate bankruptcies and a roughly 40 percent decline in U.S. share prices. Net business investment fell by more than half between 2000 and 2003. Over the same period, the American business sector’s current account balance swung from −5 percent of U.S. output to a surplus worth more than 1 percent of GDP.

The Only Game in Town: Central Banks, Instability, and Avoiding the Next Collapse
by Mohamed A. El-Erian
Published 26 Jan 2016

Until the latter part of the 2000s, their leadership willingly opted for limited transparency as a means of protecting the institutions from the excessive interference of politicians (which interference many central bankers rightly feared, as it tended to be driven by short-term political objectives rather than longer-term societal ones). For decades, “Fedspeak”—as the peculiar wording of Federal Reserve remarks got to be known—was regarded as a “turgid dialect of English,” involving “the use of numerous and complicated words to convey little if any meaning.” It was, as Alan Greenspan, the long-serving head of the Federal Reserve (1987–2006), observed, a “language of purposeful obfuscation.”3 And it is one that Fed officials learned to “mumble with great incoherence.”4 Chairman Greenspan’s predecessors had taken a similar approach, and done so in their own particular manner.

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They also believed that the financial sector was dominated by sophisticated private sector participants who were armed with better risk mitigation instruments and therefore it was enabled to do more good than before in its two key areas of societal responsibilities: allocating resources to productive uses in a cost-effective manner, and the good management of risks associated with this. From former Fed chair Alan Greenspan to Tim Geithner, who served both as Treasury secretary and as president of the New York Fed, several officials have subsequently acknowledged that they underestimated not just the fragility of the banking system but also the looming mortgage crisis, the failure of risk management approaches, and the degree of interconnectedness of all this.

…

If officials do not adequately comprehend the price formation process, it is hard for them to be confident about delivering on their mandates. This was but one of the many complicated issues facing Chair Yellen when she assumed her position at the beginning of 2014. And while all three of her immediate predecessors—Paul Volcker with high inflation, Alan Greenspan with the “Black Monday” crash in the stock market (October 19, 1987), and Ben Bernanke with the global financial crisis—were tested early on during their new tenure, none faced the breadth of issues that she did (and still does). Commenting on what she was about to inherit as Fed chair, I noted at that time that while “not quite a poisoned chalice,…Yellen is taking over a Federal Reserve that has ended up, mostly inadvertently, underwriting a series of consequential and unusual disconnects.”15 And the consequences extend well beyond the welfare of the United States and of advanced countries.

SUPERHUBS: How the Financial Elite and Their Networks Rule Our World
by Sandra Navidi
Published 24 Jan 2017

Although he was a star in academic circles, he did not have the airtight old boy’s network to propel him to the top, never having worked on Wall Street or participated in the Washington political establishment. He was an introvert, not known for being a suave networker, and who for the most part shunned the Washington cocktail circuit. Although Bernanke lacked the strong relationship portfolio possessed by his well-connected predecessor, Alan Greenspan, once he became Fed chief, he actively embarked on developing relationships with members of Congress and the White House, while also relying on the much better connected Hank Paulson and Fed board member Kevin Warsh.8 Bernanke’s background is anchored in the values of Main Street rather than Wall Street.

…

But central bankers are human, and lines can be blurry, which in the past has led to leaks and suspicion that well-connected financiers had monetized confidential information. Conflicts of interest are exacerbated by the revolving door as numerous central bankers eventually join the private sector. Former Fed chief Alan Greenspan has advised Deutsche Bank, PIMCO, and Paulson & Co., and his successor Ben Bernanke has acted as senior adviser to PIMCO and Citadel following his departure from the Fed. Similarly, the former head of the German Bundesbank, Axel Weber, went on to become chairman of UBS, and Philipp Hildebrand of the Swiss National Bank took on the position of vice chairman of BlackRock.

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To avoid those conflicts, confidentiality agreements, “Chinese walls,” audits, and other control procedures were instituted. But PIMCO’s large bets, “confidence in its trading,” and consistently outsized returns attracted attention, particularly in view of the fact that it enjoyed close relationships with the Fed through its advisers, specifically former Fed chairman Alan Greenspan, New York Fed advisory committee member Mohamed El-Erian, and Bernanke confidante Richard Clarida. During the time in question, Greenspan had two confidential meetings with then Fed chairman Ben Bernanke. Bill Gross, CEO of PIMCO, used his close Fed connections as a selling point. He stated that his goal was to “shake hands with the government” and bragged about his access and foresight.

Keeping at It: The Quest for Sound Money and Good Government
by Paul Volcker and Christine Harper
Published 30 Oct 2018

February 22, 1987 Louvre Accord between the United States, United Kingdom, France, Japan, West Germany, and Canada signals the end of the decline of the dollar over previous two years. May 1987 Volcker tells Howard Baker and James Baker he doesn’t want to be reappointed. June 1, 1987 Volcker meets with Reagan and hands him a written resignation. June 2, 1987 Reagan nominates Alan Greenspan as Fed chairman. July 7, 1987 Volcker concludes his last FOMC meeting as chairman by saying, “I appreciate the cooperation of all, in these recent years in particular. This is a wild and woolly venture sometimes, with so many people. But it works and I trust it will continue with all your intelligent and forceful efforts.

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The New York Fed For a young economist interested in finance, a chance to work at the Fed, particularly the New York Fed, was a favored career step. The bank also encouraged some short-term appointments, a year or so, for economists still early in their academic careers. There was a lot of informal debate and discussion around the lunch table. Alan Greenspan, starting his consulting career, joined us once in a while. One tenet I don’t remember ever being challenged within the bank’s sturdy walls was that the Federal Reserve’s overriding responsibility—the cornerstone of effective economic policy—was to maintain the stability of the currency. The Arthur Smithies–Alvin Hansen doctrine that a little inflation was a good thing had no constituency in the New York Fed.

…

Whitehead was, at that time, serving as George Shultz’s deputy secretary of state and seemed to get along very well in Washington. (He later expressed to me with some feeling that his limited Washington years—where he met his new wife, the journalist Nancy Dickerson—were among the most satisfying of his life.) Alan Greenspan was the other, more obvious choice. I had known him, not well, since the earliest days of our professional lives in New York. He was a superb financial technician, a long-standing Republican, and had strong free-market views. A few days after I met with Howard Baker, Jim Baker chimed in. He told me that, in effect, it was my responsibility to stay.

Samuelson Friedman: The Battle Over the Free Market
by Nicholas Wapshott
Published 2 Aug 2021

CHAPTER 15: BEATING BIN LADEN WITH CHEAP MONEY 1.Friedman and Friedman, Two Lucky People, p. 391. 2.Ibid., p. 392. 3.Quoted in Jon Meacham, Destiny and Power: The American Odyssey of George Herbert Walker Bush (Random House, New York, 2015). 4.Friedman, “Oodoov Economics,” New York Times, February 2, 1992. https://miltonfriedman.hoover.org/friedman_images/Collections/2016c21/NYT_02_02_1992.pdf. 5.Friedman and Friedman, Two Lucky People, p. 396. 6.William Jefferson Clinton, State of the Union address, January 23, 1996. https://clintonwhitehouse4.archives.gov/WH/New/other/sotu.html. 7.John Hawkins interview with Milton Friedman, Rightwingnews.com, September 15, 2003. 8.Interview with Friedman, Wall Street Journal, July 22, 2006. 9.Tom DeLay with Stephen Mansfield, No Retreat, No Surrender: One American’s Fight (Sentinel, New York, 2007), p. 112. 10.Ibid. 11.David Asman interview with Friedman, Fox News, May 15, 2004. https://miltonfriedman.hoover.org/friedman_images/Collections/2016c21/2004mayfox.pdf. 12.Ibid. 13.Letter from Samuelson to Friedman, December 8, 1995. Hoover Institution Friedman archive. 14.Letter from Friedman to Samuelson, December 28, 1995. Hoover Institution Friedman archive. 15.Alan Greenspan (born March 6, 1926), American economist who served five terms as chair of the U.S. Federal Reserve 1987–2006. Once a close associate of Ayn Rand and a member of her inner circle. 16.Alan Greenspan, The Age of Turbulence: Adventures in a New World (Penguin, New York, 2007), p. 226. 17.Quoted in Henri Lepage, “Interview with Milton Friedman: The Triumph of Liberalism,” Politique internationale, no. 100, Summer 2003, pp. 7–34. 18.Greenspan, The Age of Turbulence, p. 228. 19.Ibid. 20.Often attributed to Keynes, the phrase was delivered in 1935 by Congressman T.

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The broadcast established him as Goldwater’s obvious successor. The 1980 election won, a meeting of Reagan’s coordinating committee on economic policy was promptly called in Los Angeles to discuss a vague program of action that would become known as Reaganomics. Among those attending were Friedman, George Shultz, Arthur Burns, and Alan Greenspan. On his return to Washington, D.C., from the meeting, an obviously agitated Burns called Volcker and asked to see him in his office at the Fed as soon as possible. Volcker recalled that Burns “had gotten so red at the end of the conversation that I thought he was going to have a stroke.” “Milton wants to abolish the Fed,” Burns told Volcker.

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Unlike his father, George W. had promised on the campaign trail to cut taxes, and cut taxes he did: $1.35 trillion over the rest of the decade, with an initial rebate in his first budget of $400 billion. But such drastic action had consequences. By July 2001, tax receipts were way down as the stock market tanked, prompting the Federal Reserve chief, Alan Greenspan,15 to slash interest rates to avoid the economy from crashing into recession. But Bush’s problems with the economy were soon overshadowed by an event that was to shake the world: the September 11, 2001, attacks by Al Qaeda terrorists on the World Trade Center in New York and on the Pentagon in Washington, D.C.

Wall Street: How It Works And for Whom
by Doug Henwood
Published 30 Aug 1998

Coming after Japan's extended slump, the collapse of the Southeast Asian economies in 1997 was a great booster shot for American triumphalism. Quickly forgetting the extraordinary growth performance that led up to it — which, together with Japan's is without precedent in the history of capitalism, sustained rates of growth two to three times what Britain and the U.S. experienced during their rise to wealth — Alan Greenspan, editorialists, and professors of economics have pronounced this the final word on economic policy. It's not clear why the weakest U.S. expansion in decades should be taken as vindication of the American Way. Growth between the recession's trough in 1991 and the last quarter of 1997 was the slowest of any post-World War II business cycle.

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Despite the small physical foundation on which the gold market is built, the metal still has a psychological grip on financial players, who view its rise as a portent of inflation or political problems, and view its fall as a sign of deflation and placidity. Calls for a return to a gold standard regularly emanate from the right wing of Wall Street — supply-siders like Jude Wanniski and Larry Kudlow adore gold, and even Fed chair Alan Greenspan professes to be fond of paying close attention to it when setting monetary policy. Greenspan, a one-time Ayn Rand acolyte, wrote an essay (Greenspan 1966) for her O^y^c^/m^ newsletter proclaiming gold the ultimate weapon of the haves against inflation, a way for the "owners of wealth" to "protect" themselves against all statist schemes to "confiscate the wealth of the productive members of society to support a wide variety of welfare schemes."^^ Gold remains, in Keynes' (CWVl, p. 259) phrase, an important "part of the apparatus of conservatism," and in more senses than one.

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Virtually every high-end profession around was involved (a point made well by Martin Mayer [1990]). Auditors repeatedly certified fictitious financial statements, lawyers argued on behalf of con artists and incompetents, investment banks bilked naive S&L managers, and consultants testified as character witnesses for felons. One of these character witnesses was Alan Greenspan, then an undistinguished economist from whom "you could order the opinion you needed" (Mayer 1990). Greenspan praised thrift-killer Charles Keating's "seasoned and expert" management team for rescuing a "badly burdened" thrift through "sound and profitable" investments. Every word of this was untrue.

The Global Minotaur
by Yanis Varoufakis and Paul Mason
Published 4 Jul 2015

Even China, which famously escaped the recession with a healthy growth rate at a time of global shrinkage, is in a bind over its falling consumption share of total income and its heavy reliance on state investment projects that are feeding into a worrying bubble – two portents that do not bode well at a time when the rest of the world’s long-term capacity to absorb the country’s trade surpluses is questionable. Adding to the general aporia, the high and mighty let it be known that they, too, were at a loss to grasp reality’s new twists. In October 2008, Alan Greenspan, the former chairman of the Federal Reserve (the Fed) and a man viewed as a latter-day Merlin, confessed to ‘a flaw in the model that I perceived is the critical functioning structure that defines how the world works’.2 Two months later, Larry Summers, formerly President Clinton’s treasury secretary and at the time President-Elect Obama’s chief economic adviser (head of the National Economic Council), said that ‘[i]n this crisis, doing too little poses a greater threat than doing too much…’ When the Grand Wizard confesses to having based all his magic on a flawed model of the world’s ways, and the doyen of presidential economic advisers proposes that caution be thrown to the wind, the public ‘gets’ it: our ship is sailing in treacherous, uncharted waters, its crew clueless, its skipper terrified.

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This meant a new take on the old fatalism: the Leviathan’s overwhelming power, while necessary to keep the bullies in their place, was choking growth, constraining innovation, putting the brakes on imaginative finance, and thus keeping the world stuck in a low gear just when technological innovations offered the potential to whisk us onto higher planes of development and prosperity. In 1987, President Reagan decided to replace Paul Volcker (a Carter administration appointment) as chairman of the Fed. His choice was Alan Greenspan. Some months later, the money markets experienced their worst single day ever, the infamous ‘Black Monday’ episode. Greenspan’s deft handling of the consequences earned him a reputation for cleaning up efficiently after a money market collapse.9 He was to perform the same ‘miracle’ again and again until his retirement in 2006.10 Greenspan had been chosen by Reagan’s staunch neoliberals not in spite of but because of his deeply held belief that the merits and capacities of regulation were overrated.

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Chronicle of a Crash foretold: Credit Crunch, bailouts and the socialization of nearly everything 2007 – The canaries in the mine April – New Century Financial, a mortgage company that had issued a great number of sub-prime mortgages, goes under, with reverberations throughout the sector. July – Bear Stearns, the respected merchant bank, announces that two of its hedge funds will not be able to pay their investors their dues. The new chairman of the Fed, Ben Bernanke (who had only recently replaced Alan Greenspan) announces that the sub-prime crisis is serious and its cost may rise to $100 billion. August – French merchant bank BNP-Paribas makes a similar announcement to that of Bear Stearns concerning two of its hedge funds. Its explanation? That it can no longer value its assets. In reality, this is an admission that its coffers are full of CDOs, the demand for which has fallen to precisely zero, thus making it impossible to price them.

The Cost of Inequality: Why Economic Equality Is Essential for Recovery
by Stewart Lansley
Published 19 Jan 2012

In response, Krugman described the authorities’ responses as full of ‘mendacity and sheer incompetence’.18 Although the row continued to blaze for years, the weight of evidence on the course of inequality became increasingly irrefutable. It all pointed in one direction—that the income gulf continued to widen throughout the 1990s and into the next century. Indeed, the argument about whether America had become more unequal was effectively closed in June 2005 with comments by Alan Greenspan, the longstanding and widely admired Chairman of the Federal Reserve. Greenspan, an outspoken champion of free markets, admitted before a hearing of the Congressional Joint Economic Committee that the divergence in the fortunes of different groups in its labour market had gone too far. ‘As I’ve often said, this is not the type of thing which a democratic society—a capitalist democratic society—can really accept without addressing.’19 Two years later, in 2007, Greenspan’s successor, the respected academic, Ben Bernanke, told the Omaha Chamber of Commerce that, after reviewing the evidence, he accepted the fact of growing inequality: ‘No-one should be allowed to slip too far down the economic ladder.’20 One of the most important pieces of research that finally clinched the argument was carried out by two leading economic experts on the distribution of income.

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The crash of 2008-2009 has been widely blamed on a mix of excessive profiteering, reckless financial risk-taking and blind-eye supervision by the regulatory authorities. In January 2009, the Guardian newspaper drew up a list of 25 guilty parties, a mix of Central Bank governors, American and British political leaders, top Wall Street financiers and British bankers and credit agency bosses. Some analysts—notably the former Chairman of the Federal Reserve, Sir Alan Greenspan, and its current Chairman, Ben Bernanke—have pinned some of the blame for the 2008-2009 crisis on what Bernanke described in 2005 as Asia’s ‘savings glut’. This was the surplus accumulated in a number of successful Asian exporting countries —notably China—that was then recycled via financial institutions into the main importing and deficit nations.

…

‘Easy credit has been used as a palliative throughout history by governments that are unable to address the deeper anxieties of the middle class directly.’294 To ensure access to credit, the monetary authorities—in both the UK and the US— kept interest rates at historically low levels. In the United States, the Chairman of the Federal Reserve, Alan Greenspan, reduced interest rates steadily from the millennium —when they stood at 6.5 per cent—to an all-time low of one per cent in June 2003. Greenspan—a man lauded by bankers and ordinary Americans alike and awarded the Presidential Medal of Freedom, a British Knighthood and the French Legion of Honour—was pumping money into the economy.

More Money Than God: Hedge Funds and the Making of a New Elite
by Sebastian Mallaby
Published 9 Jun 2010

All the sophisticated mathematics and computer wizardry essentially rested on one central premise: that the enlightened self-interest of owners and managers of financial institutions would lead them to maintain a sufficient buffer against insolvency by actively managing their firms’ capital and risk positions. For generations, that premise appeared incontestable [sic] but, in the summer of 2007, it failed.” Alan Greenspan, “We Need a Better Cushion Against Risk,” Financial Times, March 27, 2009, p. 9. 56. Alan Greenspan, “Private-sector refinancing of the large hedge fund, Long-Term Capital Management.” Statement before the Committee on Banking and Financial Services, U.S. House of Representatives, 105th Congress, Session 2, October 1, 1998. 57. Reflecting on the evolution of his thinking, Peter Fisher comments, “I was reluctant to say then, ‘Therefore we should regulate leverage.’

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In January he authorized one of his lieutenants to buy a staggering position in Canadian bonds, adding to the bets he already had in the United States, Japan, and Europe. Then, together with his wife and friends, he headed off to China on another vacation. ON JANUARY 21, 1994, FEDERAL RESERVE CHAIRMAN Alan Greenspan made his way over to the White House. Fueled by low interest rates, the economy had first recovered and then grown smoothly for thirty-four consecutive months, but now Greenspan was visiting President Clinton and his entourage to deliver an unwelcome message. Even though inflation was quiescent, it was time to preempt its resurgence with a small rate hike.

…

Hedge funds were willing to provide capital when others were not; once hedge funds led the way, other Western asset managers would eventually follow; and because foreigners were generally sophisticated in their choice of which companies to finance, their presence frequently boosted the quality of capital in an economy as well as the mere quantity.6 But the global spread of hedge funds also entailed risks. Hedge funds could provide capital to an emerging economy and juice its growth for a few years, but they could also yank their money out and cause growth to crater. As Britain’s government had discovered in 1992, and as Alan Greenspan had discovered two years later, deep and fast-moving capital markets could force wrenching movements in currencies and interest rates, shattering the illusion that economic statesmen were the masters of their nations’ destinies. If this was true in the rich world, it was even truer in frail emerging economies.

The Price of Time: The Real Story of Interest
by Edward Chancellor
Published 15 Aug 2022

Everyone agreed that lower interest rates were desirable but, as Volcker said, ‘the question is whether by reaching too fast for that objective we may not be able to keep them down.’19 By the end of the 1981–82 recession the battle against inflation was won. The advent of history’s greatest bond bull market was affirmed by Dr Henry Kaufman, the chief economist of Salomon Brothers, on 17 August 1982. Interest rates were heading down, said the man known on Wall Street as ‘Dr Doom’. Five years later, Volcker was replaced at the Fed by Alan Greenspan, a successful business economist with Republican Party connections. Greenspan was neither a career public servant, like Volcker, nor an academic economist (he dropped out of his PhD programme and later received an unconventional doctorate from New York University). He had once been a member of Ayn Rand’s ‘Collective’, the group of fervent admirers who gathered around the author of Atlas Shrugged, and even wrote a Randian article that upheld the Gold Standard and blamed the Federal Reserve for the 1929 crash.20 Despite this radical libertarian background, Greenspan was to prove an interventionist central banker.

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The Reserve Bank of New Zealand was the first central bank to adopt an explicit target in 1990 – coincidentally, the same year in which Japan’s bubble started to deflate. Canada did the same in 1991. Six years later, a newly independent Bank of England was given an inflation target. In 1998, the European Central Bank opened for business with a treaty-mandated target. Although the Fed under Alan Greenspan eschewed a formal target, it pursued a similar approach.41 Despite the fact that the widespread adoption of inflation targets had provided no protection against the financial crisis, the roll-out continued after 2008. In early 2012, Bernanke achieved his long-held ambition of getting the Federal Reserve to adopt a formal inflation target.fn10 The Bank of Japan soon followed.

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Back in 2003, the Oxford-educated Borio and White had delivered a paper at the Federal Reserve’s summer shindig at Jackson Hole, Wyoming.6 The BIS economists argued that financial storm clouds were gathering. Borio compared the situation to a Greek tragedy in which a calamity is portended but can’t be stopped. The Fed’s Alan Greenspan was unpersuaded by this presumptuous Cassandra. Five years later, White and Borio were vindicated. As head of the BIS’s Monetary and Economics Department from 2013, Borio provided a radically different account of secular stagnation to that of Summers. He took the unorthodox view of the BIS in a new direction and provided (by guiding the efforts of his research team) empirical evidence to counter the conventional central bankers’ narrative.

The Price of Inequality: How Today's Divided Society Endangers Our Future
by Joseph E. Stiglitz
Published 10 Jun 2012

If those on the regulatory commission serve the sector well, they get well rewarded in their post-government career. Sometimes, however, the capture is not just motivated by money. Instead, the mindset of regulators is captured by those whom they regulate. This is called “cognitive capture,” and it is more of a sociological phenomenon. While neither Alan Greenspan nor Tim Geithner actually worked for a big bank before coming to the Federal Reserve, there was a natural affinity, and they may have come to share the same mindset. In the bankers’ mindset—despite the mess that the bankers had made—there was no need to impose stringent conditions on the banks in the bailout.

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By the same token, the cut in the estate tax may have discouraged spending; the rich could now safely stow away more money for their children and grandchildren, and they had less incentive to give away money to charities that would have spent the money on good causes.10 Strikingly, the Fed and its chairman at the time, Alan Green-span, didn’t learn the lessons of the tech bubble. But this was in part because of the politics of “inequality,” which didn’t allow alternative strategies that could have resuscitated the economy without creating another bubble, such as a tax cut to the poor or increased spending on badly needed infrastructure.

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I will show how budget, tax, and expenditure policies can actually be used to reduce our country’s inequality at the same time that they promote economic growth and bring the deficit under control. THE HISTORY OF THE DEFICITS It may be hard to remember now, but just a decade before seemingly out-of-control deficits rose to the top of the nation’s policy agenda, the country had large surpluses, some 2 percent of GDP. So large were the surpluses that Fed chairman Alan Greenspan fretted that the entire national debt would soon be repaid, and that would make the conduct of monetary policy difficult. (The way the Federal Reserve increases or decreases interest rates is to sell or buy government Treasury bills, but if there was no government debt, there would be no Treasury bills to buy and sell.)

Utopia for Realists: The Case for a Universal Basic Income, Open Borders, and a 15-Hour Workweek
by Rutger Bregman
Published 13 Sep 2014

Solomon Asch, “Opinions and Social Pressure,” Scientific American (November 1955). http://kosmicki.com/102/Asch1955.pdf 9. Alan Greenspan, “Speech At the American Bankers Association Annual Convention, New York” (October 5, 2004). http://www.federalreserve.gov/boarddocs/Speeches/2004/20041005/default.htm 10. Quoted in: Edmund L. Andrews, “Greenspan Concedes Error on Regulation,” The New York Times (October 23, 2008). http://www.nytimes.com/2008/10/24/business/economy/24panel.html 11. He said this on ABC News: http://abcnews.go.com/ThisWeek/video/interview-alan-greenspan-10281612 12. Edward Krudy, “Wall Street cash bonuses highest since 2008 crash: report,” Reuters (March 12, 2014). http://www.reuters.com/article/us-usa-bonuses-idUSBREA2B0WA20140312 13.

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Long Was the Night In 2008, it seemed as if that time had finally come when we were confronted with the biggest case of cognitive dissonance since the 1930s. On September 15, the investment bank Lehman Brothers filed for bankruptcy. Suddenly, the whole global banking sector seemed poised to tumble like a row of dominoes. In the months that followed, one free market dogma after another crashed and burned. Former Federal Reserve Chair Alan Greenspan, once dubbed the “Oracle” and the “Maestro,” was gobsmacked. “Not only have individual financial institutions become less vulnerable to shocks from underlying risk factors,” he had confidently asserted in 2004, “but also the financial system as a whole has become more resilient.”9 When Greenspan retired in 2006, everyone assumed he would be immortalized in history’s financial hall of fame.

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Meanwhile, left-leaning political parties lost elections across most of Europe. Greece and Italy more or less canned democracy altogether and rolled out neoliberal-tinted reforms to please their creditors, trimming government and boosting labor market flexibility. In northern Europe, too, governments proclaimed a new age of austerity. And Alan Greenspan? When, a few years later, a reporter asked him if there had been any error in his ideas, his reply was resolute: “Not at all. I think that there is no alternative.”11 Fast forward to today: Fundamental reform of the banking sector has yet to happen. On Wall Street, bankers are seeing the highest bonus payments since the crash.12 And the banks’ capital buffers are as minuscule as ever.

The Payoff
by Jeff Connaughton

In Ted’s and my view, when confidence had been so shaken, when so much wealth had been destroyed, all options should be on the table for finding how best to reestablish wealth creation, restore public confidence, and protect investor interests. We believed Congress needed to restore the “solid edifices and critical pillars of our economic system”—which had crumbled, as even Alan Greenspan had admitted—wisely, carefully, and urgently. Ted would focus from the beginning on enforcing the rule of law on Wall Street and restoring investor confidence in our financial markets, a crucial prerequisite for America’s future economic success. Along with creating jobs, what else should be a higher priority for America’s political leaders?

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The largest of the megabanks would face the highest capital ratio requirement, providing the necessary incentive to restrain growth or even shrink. It all sounded very simple and straightforward. Just one problem, Ted said. What if two or six or ten or fourteen years from now we have a new president, one who is deeply conservative or even libertarian? What if that new president appoints regulators who, just like those of the Alan Greenspan era, don’t believe in bank regulation? The pendulum may eventually (or even fairly soon) swing back to laissez-faire. As the shock wears off from the last crisis, Ted added, regulators may again become captive of politically powerful megabanks (they are today). Congress, Ted believed, must write clear statutory lines; otherwise, Dudley was asking Ted to trust the wisdom of future regulators, when neither Dudley nor Ted could even predict who those regulators will be.

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Summers made the same arguments to Ted that he’d been making in public. “Most observers who study this believe that to try to break banks up into a lot of little pieces would hurt our ability to serve large companies and hurt the competitiveness of the United States.” Ted was prepared for that; he quickly cited Mervyn King, governor of the Bank of England, and Alan Greenspan himself. King had said: “Banks who think they can do everything for everyone all over the world are a recipe for concentrating risk.” And Greenspan had admitted that Fed research “had been unable to find economies of scale in banking beyond a modest-sized institution.” A decade ago, Greenspan had continued, “I noted that ‘megabanks being formed by growth and consolidation are increasingly complex entities that create the potential for unusually large systemic risks in the national and international economy should they fail.’

Bitcoin: The Future of Money?
by Dominic Frisby
Published 1 Nov 2014

Despite his denial, my conclusions (or my biases) remain unchanged. 7 Why Bitcoin is the Enemy of the State Congressman, as I have said to you before, the problem you are alluding to is the conversion of a commodity standard to fiat money…it is inevitable that the authority, which is the producer of the money supply, will have inordinate power. Alan Greenspan, former Chairman of the Federal Reserve Bank (N.B. If you have read Life After the State, you will already be familiar with the argument of this chapter.) Once upon a time, gold was money. On a gold standard, governments and banks could, broadly speaking, only print as many notes as they had the gold supply to back them.

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As this money is not backed by anything tangible, there is (almost) no limit to how much can be created. This makes inflation of some kind almost inevitable. It also gives disproportionate power to the body that is able to create the money, particularly if no significant effort is needed to create it. As Alan Greenspan said, standing before Congress, ‘it is inevitable that the authority, which is the producer of the money supply, will have inordinate power’.171 Without their control of money, none of the wars of the twentieth century could have dragged on to the same extent. No war has ever been fought on a transparent cash basis.

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One of my frustrations with the economics and finance is that they’re often written in a language lay-people can’t understand. Being a comedian you have to be understood – if the audience doesn’t understand, they don’t laugh and you’re screwed. But there is no such pressure in the world of finance. Sometimes it actually seems to suit people to be vague. Alan Greenspan, former head of the Federal Reserve Bank, was a master obfuscator. His utterings became known as ‘Fedspeak’, which, he said, ‘is a language of purposeful obfuscation to avoid certain questions’. Remember the famous George Orwell quote, ‘The great enemy of clear language is insincerity. When there is a gap between one’s real and one’s declared aims, one turns as it were instinctively to long words and exhausted idioms, like a cuttlefish spurting out ink’.

After the Music Stopped: The Financial Crisis, the Response, and the Work Ahead
by Alan S. Blinder
Published 24 Jan 2013

Of course, saying that there are persuasive rationales for financial regulations is not to claim that all financial regulations are well designed and well executed. On the contrary, regulatory failures were legion in the years leading up to the crisis. Bank Regulators, Reduced The Federal Reserve is the primus inter pares of the four federal banking regulators. It was led for more than eighteen years by Alan Greenspan, a self-described disciple of the libertarian philosopher Ayn Rand, and proud of it.* Greenspan was, shall we say, a less-than-enthusiastic regulator. He was also, as he later confessed, unduly enamored of banks’ mathematical risk models and their abilities to use them with both skill and integrity.

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Did the regulators really believe that subprime mortgage lending could expand that rapidly without deterioration of quality? Second, regulators were receiving plenty of unsolicited warnings. Alert journalists, for example, were writing about risky lending practices in the subprime mortgage sector as early as 2004. It was an open secret. Third, inside the Fed, the late governor Edward “Ned” Gramlich was warning Alan Greenspan that things were getting out of hand as early as 2000. And Sheila Bair, who was then a Bush Treasury official, was sounding alarms there. Finally, the four agencies kept declaring that they were getting ready to crack down on disgraceful subprime underwriting practices. But they never did—at least not until it was too late.

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In a famous incident earlier in 1998, Brooksley Born, then head of the CFTC, was sternly rebuked when she suggested that maybe OTC derivatives should be brought under the CFTC’s regulatory umbrella. Her efforts were blocked, to put it politely, by the government’s financial heavyweights at the time: Fed Chairman Alan Greenspan, Treasury Secretary Robert Rubin, Deputy Secretary Lawrence Summers, and SEC Chairman Arthur Levitt. Turf was involved, to be sure: The little CFTC apparently wanted to jump into the driver’s seat without taking too many other passengers along. But it was more than just turf. The quartet criticized Born publicly, warning that regulating derivatives would create legal uncertainties, stifle valuable innovations, and send derivative trading offshore—maybe even end capitalism as we know it.

The Asian Financial Crisis 1995–98: Birth of the Age of Debt
by Russell Napier
Published 19 Jul 2021

So as we wait for the new financial architecture and as European banks have bet well in excess of their core capital on foreign currency loans to the emerging markets, the world’s second largest economy – Euroland – is operating without a lender of last resort. So to paraphrase Princess Leia in Star Wars, “Help us Alan Greenspan, you’re our only hope. Help us Alan Greenspan, you’re our only hope. Help us Alan Greenspan, you’re our only hope …. ” The point of this regurgitation from a newspaper you will have all read yesterday is to point out that governments could be forced into certain ‘stop-gap’ measures as they plan the financial architecture for the 21st century.

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When economic policy and monetary policy diverge, asset price volatility is almost guaranteed. There is no prospect of Hong Kong’s economic cycle and monetary cycle converging in the foreseeable future. For the past two years, these cycles have diverged with negative impacts for Hong Kong’s asset prices. Chinese economic growth collapsed while Alan Greenspan raised interest rates. Even after the long-term interest rates peaked, the danger period was not over for the owners of assets in Hong Kong. Hong Kong’s inflation rate began to come down and real interest rates rose. This was the period of greatest risk for investors. That period of risk had passed by last November and we upgraded our recommendation on Hong Kong from underweight to overweight.

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I had argued that China was quite capable of reflating its own economy without need for a lender of last resort, but there was still no evidence that it was doing so. With the benefit of hindsight we can now see that the US Federal Reserve acted as the lender of last resort, not just for Asia in general, but for Hong Kong and China in particular. This was not yet evident by early August, but on 4 September Alan Greenspan spoke in California and stated that “it is just not credible that the United Sates can remain an oasis of prosperity” given what was happening in the rest of the world. He was not to cut US interest rates until later that month, but his willingness to do so had been flagged up by his speech of 4 September.

Hawai'I Becalmed: Economic Lessons of the 1990s
by Christopher Grandy
Published 30 Sep 2002

In August 1987 the Dow Jones Industrial Average reached the then-giddy height of 2,722, reflecting an annual average rate of growth of 16% over the previous seven years. On October 19 the Dow dropped 508 points to 1,739, a 23% fall. The crash brought with it fearful memories of 1929 and the Great Depression. Fortunately for the market, Alan Greenspan, who had replaced Paul Volcker as chair of the Federal Reserve, pumped funds into the markets and promised more, thereby calming the situation and moving the economy quickly past the danger. The situation was handled well, but the recession could not be avoided entirely. In reaction to signs of recession, the Federal Reserve began lowering interest rates in mid-1989.

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Randall W. Roth (Honolulu: Mutual Publishing, 1992), p. 77. 3. Honolulu Star-Bulletin, 13 December1990. 4. Honolulu Advertiser, 23 January1991: A1. 5. A state usually cannot engage in the macroeconomic stimulus role suggested here. But sometimes it can. Recently, Federal Reserve Board Chairman Alan Greenspan indicated that, to be effective, an economic stimulus of about 1% of gross domestic product (GDP) would be necessary (“Greenspan Says Any Stimulus Package Should Total as Much as $100 Billion,” Wall Street Journal, 25 September 2001). Because states have a much higher share of imports than the country as a whole, a larger stimulus is probably needed to produce a similar effect.

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Indeed, so much so that every Hawai‘i State Tax Review Commission has suggested abolishing such exceptions to the basic tax code—or at least, adding sunset dates.5 Second-Term Agenda
91 High Tech High tech was the second major area of economic legislation in Governor Cayetano’s second term, and the latest to be granted special tax concessions. Many economic experts, including Federal Reserve Board Chairman Alan Greenspan, credit high-tech with the long economic expansion on the mainland during the 1990s and see it as a likely source of economic growth in the new century. From this perspective, it is hardly surprising that Hawai‘i has tried to jump on the technology bandwagon. The Cayetano administration high-tech support efforts began with Act 178 of the 1999 legislative session.

Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else
by Chrystia Freeland
Published 11 Oct 2012

Within the investing class, this bifurcation of the world into the rich and the rest has become conventional wisdom. Bob Doll, chief equity strategist at BlackRock, the world’s largest fund manager, told a reporter in 2011, “The U.S. stock markets and the U.S. economy are increasingly different animals,” as the prior surged, while the later stagnated. Even Alan Greenspan, the high priest of free markets, is struck by the growing divide. In a recent TV interview, he asserted that the U.S. economy had become “very distorted.” In the wake of the recession, he said, there had been a “significant recovery . . . amongst high-income individuals,” “large banks,” and “large corporations”; the rest of the economy, by contrast, including small businesses and “a very significant amount of the labor force,” was stuck and still struggling.

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You could observe how superstar chefs benefit from both the Rosen and Marshall effects at a super-elite meal hosted by consulting firm Booz Allen Hamilton on a balmy late June evening in 2011 at the Aspen Meadows Resort during the Aspen Ideas Festival, where this evening’s guests included, among others, Alan Greenspan. “Curated” food has become part of the super-elite lifestyle, so for this “meal of a lifetime” the consulting firm flew in Craig Stoll, co-owner and cofounder of the Delfina group of restaurants in San Francisco, so he and his kitchen staff could prepare supper. Each course was “narrated” by Corby Kummer, a senior editor and food writer at the Atlantic.

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As Dick Fuld, the once lionized Lehman chief, told a congressional committee in October 2008, a month after his firm’s bankruptcy and more than a year after Soros’s lunch: “No one realized the extent and magnitude of these problems, nor how the deterioration of mortgage-backed assets would infect other types of assets and threaten our entire system.” Alan Greenspan was so wrong-footed by the crash of 2008 that he admitted intellectual defeat. “I made a mistake,” he told a congressional committee on October 23, 2008. “Something which looked to be a very solid edifice, and indeed a critical pillar to market competition and free markets, did break down. And I think that, as I said, shocked me.”

Naked Economics: Undressing the Dismal Science (Fully Revised and Updated)
by Charles Wheelan
Published 18 Apr 2010

In the spring of 1993, I had dinner with Paul Volcker, former chairman of the Federal Reserve. Mr. Volcker was teaching at Princeton, and he was kind enough to take his students to dinner. President Clinton had just given a major address to a joint session of Congress and Fed chairman Alan Greenspan, Volcker’s successor, had been seated next to Hillary Clinton. What I remember most about the dinner was Mr. Volcker grumbling that it was inappropriate for Alan Greenspan to have been seated next to the president’s wife. He felt that it sent the wrong message about the Federal Reserve’s independence from the executive branch. That is how seriously central bankers take their political independence.

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Because we can take the same inputs and make 2 percent more stuff. (Or we could make the same amount of stuff with 2 percent fewer inputs.) One of the most interesting debates in economics is whether or not the American economy has undergone a sharp increase in the rate of productivity growth. Some economists, including Alan Greenspan during his tenure as Fed chairman, have argued that investments in information technology have led to permanently higher rates of productivity growth. Others, such as Robert Gordon at Northwestern University, believe that productivity growth has not changed significantly when one interprets the data properly.

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Or the Fed may tap on the accelerator ever so slightly only to have Congress weigh it down with a brick. (4) Last, there is the obstacle course of world events—a financial collapse here, a spike in the price of oil there. Think of the Fed as always driving in unfamiliar terrain with a map that’s at least ten years out of date. Bob Woodward’s biography of Alan Greenspan was titled Maestro. In the 1990s, as the American economy roared through its longest expansion in economic history, Mr. Greenspan was given credit for his “Goldilocks” approach to monetary policy—doing everything just right. That reputation has since come partially unraveled. Mr. Greenspan is now criticized for abetting the housing and stock market bubbles by keeping interest rates too low for too long.

Crashed: How a Decade of Financial Crises Changed the World
by Adam Tooze
Published 31 Jul 2018

Veterans of the Clinton administration knew what they were talking about when they invoked a “negative cycle” of “underlying fiscal deficit, financial markets, and the real economy.” This, in their view, is what they had inherited from the high-spending Reagan and Bush administrations. In 1993, faced with a bond market sell, Clinton had shelved ambitious plans for a stimulus.12 Egged on by Rubin and Fed chair Alan Greenspan, deficit reduction became a mantra of the Clinton team. Chief political adviser James Carville was left to ruminate: “I used to think if there was reincarnation, I wanted to come back as the president or the pope or a .400 baseball hitter. But now I want to come back as the bond market. You can intimidate everybody.”13 In the 1980s and 1990s, the so-called bond vigilantes had their day in the sun.

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Those who got their money out first would be saved. Those who had borrowed in foreign currency would face bankruptcy. This was the saga of the 1990s: 1994 in Mexico; 1997 in Malaysia, South Korea, Indonesia and Thailand; 1998 in Russia; 1999 in Brazil. It was containing these crises that earned US Federal Reserve chairman Alan Greenspan, Treasury secretary Robert Rubin, and Larry Summers, Rubin’s number two, the accolade of the “Committee to Save the World.”23 What happened when the American superheroes were not on hand was revealed in 2001. With the Bush administration fully distracted by the terror attack of 9/11, financial speculation built against Argentina.

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But if what threatened was a Weimar-style disaster, then, surely, the left wing of the Democrats would fall into line and prioritize budget cutting. Given the political impasse over fiscal policy and the evident imbalances of the US economy, the other agents that one might have expected to swing into action were the mighty guardians at the Federal Reserve Board. Under the chairmanship of first Paul Volcker (1979–1987) and then Alan Greenspan (1987–2006), the authority of America’s central bank soared to new heights. In terms of its expert authority and unassailable position within the structure of the US government, it came to rival the US security apparatus.41 The irony, however, was that as the Fed’s reputation and authority grew, its key tool of policy seemed to be losing its effectiveness.

Economists and the Powerful
by Norbert Haring , Norbert H. Ring and Niall Douglas
Published 30 Sep 2012

By the second quarter of 2007, after two decades of exponential growth, assets held by securitization pools or at similar shadow banking institutions that buy up loans and fund themselves by issuing securities was US$16.5 trillion, or approximately the entire economic output of the United States for one year. This exceeded the assets held by banks, which were only US$12.8 trillion (Adrian and Shin 2009). When the credit crisis hit, Alan Greenspan, Robert Rubin and Larry Summers tried to create the impression that the subprime crisis and the ensuing global financial crisis was an accident that nobody could have foreseen. However, these men knew full well what they were doing and how it endangered the global financial system. One of their most pernicious actions was to prevent other regulators from doing anything to manage derivatives.

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“Without derivatives, leveraged bets on subprime mortgage loans could not have spread so far or so fast,” claims Frank Partnoy (1997/2009), a law professor at the University of San Diego and a former derivative structurer at investment banks Morgan Stanley and CS First Boston. Without derivatives, the complex risks that destroyed Bear Stearns, Lehman Brothers and Merrill Lynch and decimated dozens of banks and insurance companies, including AIG, could not have been hidden from view. Yet regulators, most infamously Alan Greenspan and treasury secretary Robert Rubin, with bankers like Hank Paulson and their lobbyists, worked and fought hard to make sure that no rules or restrictions would be applied to derivatives. In 1998, Brooksley Born, chairwoman of the Commodity Futures Trading Commission (CFTC), pushed for minimum regulation of derivatives.

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The CFTC issued a “concept release” report calling for greater transparency of derivatives that were traded over the counter (OTC), off the formal exchanges. The CFTC sought greater information disclosure, improvements in record keeping and controls on fraud. The response by Federal Reserve governor Alan Greenspan, treasury secretary Robert Rubin, his deputy Larry Summers and SEC chairman Arthur Levitt was swift: They obtained a moratorium on the CFTC’s ability to implement the strategies outlined in its concept release. Then they engineered passage of the Commodity Futures Modernization Act of 2000, which explicitly exempted OTC derivatives from government oversight.

Why Aren't They Shouting?: A Banker’s Tale of Change, Computers and Perpetual Crisis
by Kevin Rodgers
Published 13 Jul 2016

Chapter 8 1 ‘Forms and paradoxes of principles-based regulation’, Julia Black, Professor of Law and Research Associate, Centre for the Analysis of Risk and Regulation, London School of Economics and Political Science, Capital Markets Law Journal, 3/4, 10 September 2008, http://www.lse.ac.uk/collections/law/staff%20publications%20full%20text/black/forms%20and%20paradoxes%20of%20pbr%202008.pdf 2 The Age of Turbulence, Alan Greenspan, Penguin Books, 2008, p52. 3 ‘Testimony of Chairman Alan Greenspan, The regulation of OTC derivatives, Before the Committee on Banking and Financial Services, U.S. House of Representatives’, 24 July 1998, http://www.federalreserve.gov/boarddocs/testimony/1998/19980724.htm 4 For more on this fascinating topic, see The Myth of the Rational Market, Justin Fox, Harper Business, 2011. 5 The End of History and the Last Man, Francis Fukuyama, Penguin Books, 1992. 6 ‘The Financial Crisis and the Role of Federal Regulators’, Committee on Oversight and Government Reform, House of Representatives, 23 October 2008, http://www.gpo.gov/fdsys/pkg/CHRG-110hhrg55764/html/CHRG-110hhrg55764.htm 7 Stabilizing an Unstable Economy, Professor Hyman Minsky, McGraw-Hill Professional, 1986. 8 ‘Working Paper No. 74, The Financial Instability Hypothesis’, Hyman Minsky, The Jerome Levy Economics Institute of Bard College, May 1992, http://www.levyinstitute.org/pubs/wp74.pdf 9 Unsettled Account: The Evolution of Banking in the Industrialised World since 1800, Richard S.

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To me it felt like the exact opposite had happened. Instead I think there is ample evidence that, at the time, regulators believed that ‘light touch’ was the right course to take as matter of principle. The chief intellectual architect of the US’s all-important regulatory approach was Federal Reserve chairman Alan Greenspan, whose unprecedented five-term tenure at the Fed between 1987 and 2006 corresponded almost exactly with the period of most frantic change in the financial industry. Greenspan’s view on regulation was underpinned by a sweeping vision of the power of markets and of enlightened self-interest – a vision revealed to him in his youth by his ‘objectivist’, libertarian intellectual guru and friend, the author Ayn Rand, to whom Greenspan responded with ‘the fervor of a young acolyte drawn to a whole new set of ideas’.2 It made him profoundly suspicious of governmental interference with markets.

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His leap of logic seems absurd but was, emotionally speaking, in tune with the widespread triumphalism of the time: Western free-market economies had just won the Cold War; the argument between state control and ‘freedom’ was thus seen to have been conclusively settled; and a popular and influential book even explained that we might be ‘at the end of history’.5 This, then, was the background to the regulatory environment that emerged. A widespread faith in the efficacy and inexorable ‘rightness’ of markets led, first from changes in the US, and then via inter-country rivalry, to a regulatory framework embodying the belief that professionals had, in Alan Greenspan’s words, ‘[the] ability to protect themselves’. What is ironic is that the banking industry, in a reverse of the idea of ‘the wisdom of crowds’ that lay at the foundation of the theory of efficient markets, took a lot of extremely clever people and, collectively, as a mass, contrived to have us act like idiots.

Aftershock: The Next Economy and America's Future
by Robert B. Reich
Published 21 Sep 2010

We tried for universal health care. We offered students from poor families access to college, and expanded a refundable tax credit for low-income workers. We tied executive compensation to company performance. All these steps were helpful but frustratingly small in light of the larger backward lunge. Federal Reserve chief Alan Greenspan—who was no Marriner Eccles—insisted that Clinton cut the federal budget deficit rather than deliver on his more ambitious campaign promises, and Greenspan reciprocated by reducing interest rates. This ushered in a strong recovery. By the late 1990s the economy was growing so quickly and unemployment was so low that middle-class wages started to rise a bit for the first time in two decades.

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The rich and powerful also had substantial influence “in conditioning the attitude taken by people as a whole toward [the] rules,” as Eccles wrote in describing the pre-Depression years. They generously financed think tanks, books, media, and ads designed to persuade Americans that free markets always know best. Ronald Reagan, Margaret Thatcher, Alan Greenspan, Milton Friedman, and other apostles of free-market dogma reiterated a simple story: The choice was between a free market and big government. Government was the problem. Free markets were the solution. But how could the public have been so gullible as to accept this story? After all, America had gone through a Great Depression, suffering the consequences of an unfettered market and unconstrained greed.

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That also broke the back of the administration. Voters blamed Carter and elected Ronald Reagan. Reagan, by contrast, won reelection handily in 1984, largely because the economy was surging by then, and voters credited him. George Bush lost his reelection bid in 1992, this time at the hands of Alan Greenspan. Greenspan raised interest rates to ward off inflation, which also raised unemployment. Voters blamed Bush and in 1992 gave Bill Clinton a plurality of votes because he promised to fix the economy. (In the words of his colorful political advisor, James Carville, “It’s the economy, stupid.”) Clinton was reelected in 1996 mainly because jobs were returning.

Financial Market Meltdown: Everything You Need to Know to Understand and Survive the Global Credit Crisis
by Kevin Mellyn
Published 30 Sep 2009

They all have stood the test of time. They work for the people who use them. Some technology tweaks aside, nothing really new in banking and finance has been invented for centuries. 5 t THE FED DEMYSTIFIED Once upon a time, perfectly sane adults believed in a Wizard who could make them rich and happy. His name was Alan Greenspan. He was small, and old, and spoke in a language nobody could quite understand. But he was a very great Wizard because everyone believed it was so. In fact, when asked what he would do if the great Wizard died, John McCain once suggested putting dark glasses on Greenspan and propping him up like the dead boss in the movie Weekend at Bernie’s.

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His conclusion is that the Fed should have thrown open the floodgates and created as much money and credit as possible. He even once spoke about dropping bales of money from helicopters if need be. This earned him the nickname Helicopter Ben, which in part accounts for the generally good reception the market gave him when he succeeded Alan Greenspan as Board Chairman. The markets had always counted on the Greenspan put and Bernanke seemed likely to throw money at problems too. During 2008 and 2009, the Fed became very aggressive about taking loans onto its own balance sheet, expanding which firms could qualify for the discount window (if you are not yet a bank holding company, you can probably sign up using Legal Zoom) and cutting rates to the bone.

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Between 1982, when the ruinous inflation set off by the Great Society and Vietnam War spending of Lyndon Johnson in the late sixties had finally been broken by Paul Volcker’s Federal Reserve, and the credit market crisis of the summer of 2008, the global financial markets went from strength to strength for a quarter century. Not that there were not crises—there were, including whoppers like the U.S. Savings and Loan industry meltdown or the dot.com crash. However, the markets came to expect to be bailed out by the government, specifically by the Federal Reserve under the legendary Alan Greenspan, who presided over the Fed for 18 of these 25 years. The financial world came to believe that Uncle Alan would always bail them out. The markets also came to believe in the existence of a ‘‘plunge prevention committee’’ that included key figures from Wall Street and the federal government. The Plunge Prevention Committee (PPC) would pull strings to prevent any hiccup in the markets from turning into a real long-term bust.

Who Needs the Fed?: What Taylor Swift, Uber, and Robots Tell Us About Money, Credit, and Why We Should Abolish America's Central Bank
by John Tamny
Published 30 Apr 2016

Returning to ideas about what caused the credit-contracting housing boom, it was popular on the Left to say that banking deregulation was the driver. Others pointed to Fannie Mae, Freddie Mac, and the interest-rate tax deduction for those with mortgages. As mentioned previously, most commentary centered on how Alan Greenspan’s decision to cut the fed funds rate to 1 percent in 2002 allegedly made credit easy and fed the boom. About deregulation, that would be an interesting argument if it were true. But as John Allison, former CEO of BB&T Bank, pointed out in his 2013 book, The Financial Crisis and the Free Market Cure, “Financial services is a very highly regulated industry, probably the most regulated industry in the world.”14 In the 2000s alone, banking saw even more regulation, including Sarbanes-Oxley and the Patriot Act.

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Housing soared in England, which had neither Fannie Mae nor Freddie Mac, and despite the abolition of its own mortgage-interest deduction in the 1980s.17 In Canada it’s very difficult to obtain a home mortgage, yet housing boomed there as well. As for the most popular explanation—namely, that a low fed funds rate led to “easy credit”—it’s too often forgotten that interest rates were higher around the world and yet the boom was global. That’s why Alan Greenspan expressed surprise in a 2013 Wall Street Journal interview about all the blame that’s been piled on him.18 He was correct there. Interest rates were a sideshow in the housing boom. Furthermore, and going back to our discussion of John Paulson from Part One, Paulson ultimately made billions betting against the housing house of cards.

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Didn’t we learn in the twentieth century (often through mass murder and starvation) just how dangerous it is to empower central planners? One reply in the Fed’s defense is that we need it to keep the U.S. banking system in sound shape. But the obvious problem with that claim is that the Fed has been a rather lousy regulator of the banks it’s been told to oversee. As we learned in chapters 6 and 13, Ben Bernanke and Alan Greenspan were clueless about the problems bubbling up in banks related to subprime loans, and that eventually reduced many banks to bailed-out wards of the state. Another reply is that banks need some backstop in case of near-term cash shortages. We know from chapter 13 that the Fed initially existed solely as a lender of last resort to solvent banks (my, how that had changed by 2008) in the 1930s.

Life Inc.: How the World Became a Corporation and How to Take It Back
by Douglas Rushkoff
Published 1 Jun 2009

It would be easier to dismiss this carnival of land selling and reselling if it were just an isolated, bizarre corner of our corporatized society—some amusing, if pitiable, subculture covered in a lifestyle magazine. But it’s just an extension of the central and accepted operating premise of land valuation today. For, in addition to sales pitches from George Foreman, the self-help guru Tony Robbins, and The Secret teachers, the Wealth Expo is offering a keynote address by former Federal Reserve chairman Alan Greenspan. Greenspan is only too happy to confer legitimacy upon the Learning Annex event, as well as the real-estate speculation it has been invented to invigorate. Sure, he’s careful to distance himself just a bit from the proceedings. He appears by satellite instead of live, and makes sure he isn’t photographed actually interacting with the convention’s many victims.

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The last thing they wanted to be involved in was the buying and selling of real property—especially since its value had already been inflated by decades of mythmaking. No, the land would be at the very bottom of the pyramid. Instead, they invested in mortgages other people took out to buy land. As Alan Greenspan eventually explained it to Newsweek magazine, “This particular problem was an accident waiting to happen. The euphoria that existed in the expansion of the housing-market bubble induced investors around the world who’d had a huge buildup in liquidity—largely because of the lower real long-term interest rates that occurred as a consequence of the end of the cold war—to invest in something with a higher rate of return.

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(The firm bought “puts” on mortgage bonds, which go up in value as the bonds fail.) The trader John Paulson earned himself $4 billion and his funds another $15 billion in one year by betting against the housing market. For help predicting the extent of the downturn, Paulson hired none other than Alan Greenspan as an advisor to his hedge fund. The Fed chairman who encouraged the housing bubble even after it began to crash is now cashing in on the very devastation his policies created. The money did not disappear at all. It merely changed hands. The land was just a medium for the redistribution of wealth.

Keynes Hayek: The Clash That Defined Modern Economics
by Nicholas Wapshott
Published 10 Oct 2011

The New York Times, February 14, 1974. 83 Richard Nixon, The Memoirs of Richard Nixon (Arrow Books, London, 1979), p. 971. 84 George Shultz, in Commanding Heights, PBS, http://www.pbs.org/wgbh/commandingheights/shared/minitextlo/tr_show01.html#1. 85 The word is believed to have been coined by the British Conservative Party finance spokesman Iain Macleod in 1965, though its first use has also been credited to Paul Samuelson. 86 Gerald Ford (1913–2006), born Leslie Lynch King Jr., long-standing member of the House who was elevated to vice president, then became 38th president of the United States (1974–77) after Richard Nixon resigned in the wake of the Watergate scandal. 87 Alan Greenspan (1926– ), chairman of the Federal Reserve (1987–2006). 88 Greenspan’s confirmation hearings were held on the day Nixon resigned. 89 “Historical Inflation,” InflationData.com, http://inflationdata.com/inflation/Inflation_Rate/HistoricalInflation.aspx?dsInflation_currentPage=2. 90 Interview of Milton Friedman, October 1, 2000, Commanding Heights, PBS. 91 Alan Greenspan, The Age of Turbulence: Adventures in a New World (Penguin, London, 2008), p. 72. 92 Officially known as the “Full Employment and Balanced Growth Act.” 93 Canute (985–1035), Viking king of Denmark, England, Norway, and parts of Sweden. 94 Jimmy Carter, “‘Crisis of Confidence’ Speech,” July 15, 1979, Miller Center of Public Affairs, University of Virginia, http://millercenter.org/scripps/archive/speeches/detail/3402. 95 Jimmy Carter, “Anti-Inflation Program Speech,” October 24, 1978, Miller Center of Public Affairs, University of Virginia, http://millercenter.org/scripps/archive/speeches/detail/5547. 96 Paul Volcker (1927– ), chairman of the Federal Reserve (1979–87) under Presidents Carter and Reagan and chairman of President Obama’s Economic Recovery Advisory Board (2008– ).

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Bush, the White House, and the Education of Paul O’Neill (Simon & Schuster, New York, 2004), p. 291. 48 The Vietnam War cost 9.5 percent of GDP; the Korean War 14 percent. 49 Quoted in Republican senators’ newsletter the American Sound, November 19, 2003. 50 Gail Russell Chaddock, “US Spending Surges to Historic Level,” Christian Science Monitor, December 8, 2003. 51 Stein, Presidential Economics, p. 313. 52 Dick Armey, “End of the Revolution,” Wall Street Journal, November 9, 2006. 53 Alan Greenspan, testimony before the House Committee on Oversight and Government Reform, October 23, 2008, quoted in “Greenspan ‘Shocked’ That Free Markets Are Flawed,” The New York Times, October 23, 2008. 54 J. M. Keynes, “The Great Slump of 1930” (1930), in Collected Writings, vol. 9: Essays in Persuasion, p. 126. 55 Alan Greenspan, “Markets and the Judiciary,” Sandra Day O’Connor Project Conference, Georgetown University, Washington, D.C., October 2, 2008. 56 Collected Writings, vol. 13: General Theory and After, Part 1, p. 349. 57 Peter Clarke, Keynes: The Rise, Fall, and Return of the 20th Century’s Most Influential Economist (Bloomsbury, New York, 2009), p. 19. 58 Interview of John Kenneth Galbraith, September 28, 2000, Commanding Heights, PBS, http://www.pbs.org/wgbh/commandingheights/shared/minitext/int_johnkennethgalbraith.html. 59 Justin Fox, “The Comeback Keynes,” Time, October 23, 2008. 60 Ibid. 61 Ibid. 62 Chris Edwards, on All Things Considered, NPR, January 29, 2009. 63 Barack Hussein Obama II (1961– ), senator for Illinois and 44th president of the United States, elected in 2008. 64 President Obama, televised address, February 16, 2010, in “Obama Says Stimulus Halted ‘Catastrophe,’” Financial Times, February 17, 2010. 65 Paul Krugman (1953– ), American economist at Princeton and the LSE, and 2008 winner of Nobel Prize for economics. 66 Paul Krugman, “The Third Depression,” The New York Times, June 27, 2010. 67 The populist Tea Party emerged during 2009 and is a loose coalition of entryists into the Republican Party who favor lower taxes, smaller government, and paying off government debt.

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We did it. We’re very sorry. But, thanks to you, we won’t do it again.”16 The individual who bound together the whole of this period, dubbed the “Great Moderation,” and who came to personify the bipartisan approach of a largely Friedmanite monetary policy within a generally managed economy, was Alan Greenspan. His stewardship of the Federal Reserve from 1987 to 2006 was hailed as masterly. If he made false steps, they did not become apparent until long after he had departed. In his youth Greenspan learned the saxophone alongside Stan Getz, played sideman in a jazz band with the pop artist Larry Rivers, and flirted with both the termagant Ayn Rand and her libertarian ideas.

Inside the House of Money: Top Hedge Fund Traders on Profiting in a Global Market
by Steven Drobny
Published 31 Mar 2006

Paul Tudor Jones in particular was elevated to star status when he famously caught the short side of the stock market and the long side of the bond market by identifying similarities be- 13 THE HISTORY OF GLOBAL MACRO HEDGE FUNDS tween technical trading patterns in 1987 and the great crash of 1929. (See Figure 2.4.) Jones’s Tudor Investment Corporation returned 62 percent for the month in October 1987 and 200 percent for the year. The year 1987 also marked the introduction of a new Federal Reserve chairman in Alan Greenspan. Greenspan came into office in August 1987 and his first act a few weeks later was to raise the discount rate by 50 basis points.This unexpected tightening created volatility and uncertainty in the markets as traders adjusted to the style of a new Fed chairman. Some argue that Greenspan’s rate hike was actually the cause of the subsequent equity market meltdown a month-and-a-half later.

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Immediately after the stock market crash, Greenspan flooded the market with liquidity, initiating a process that came to be known as the “Greenspan put.”The Greenspan put is an implicit option that the Fed writes anytime equity markets stumble, in hopes of bailing out investors. Former Federal Reserve chairman William McChesney Martin famously observed that the job of a central banker is to “take away the punch bowl just when the party is getting started.”Alan Greenspan, on the other hand, seemed to interpret his role as needing to intervene only as the partygoers are stumbling home. As he has claimed, bubbles can only be clearly observed in hindsight, such that the role of a central banker is to 400 350 1982–1987 300 Base Value (100) 1925–1929 250 200 150 1929 and 1987 Stock Market Crashes 100 Ja n8 2 Ap r-8 2 Ju l-8 2 Oc t-8 Ja 2 n83 Ap r-8 3 Ju l-8 3 Oc t-8 3 Ja n84 Ap r-8 4 Ju l-8 4 Oc t-8 Ja 4 n85 Ap r-8 5 Ju l-8 5 Oc t-8 Ja 5 n86 Ap r-8 6 Ju l-8 6 Oc t-8 Ja 6 n87 Ap r-8 7 Ju l-8 7 Oc t-8 7 50 FIGURE 2.4 Dow Jones Industrial Average: The Late 1920s versus the Late 1980s Source: Bloomberg. 14 INSIDE THE HOUSE OF MONEY soften the impact of the bubble’s bursting rather than to take away the fuel for the party.

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Indeed, efforts to take advantage of such misalignments force prices into better alignment and are soon emulated by competitors, further narrowing, or eliminating, any gaps. No matter how skillful the trading scheme, over the long haul, abnormal returns are sustained only through abnormal exposure to risk. Source: Testimony of Chairman Alan Greenspan before the Committee on Banking and Financial Services, U.S. House of Representatives, on PrivateSector Refinancing of the Large Hedge Fund, Long Term Capital Management, October 1, 1998. that they were in LTCM’s portfolio. In other words, their models didn’t provide for the LTCM liquidity premium.

Stocks for the Long Run 5/E: the Definitive Guide to Financial Market Returns & Long-Term Investment Strategies
by Jeremy Siegel
Published 7 Jan 2014

Academicians were increasingly investigating this unprecedented rise in stock values. Robert Shiller of Yale University and John Campbell of Harvard wrote a scholarly paper showing that the market was significantly overvalued and presented this research to the Board of Governors of the Federal Reserve System in early December 1996.32 With the Dow surging past 6,400, Alan Greenspan, chairman of the Federal Reserve, issued a warning in a speech before the annual dinner for the American Enterprise Institute in Washington on December 5, 1996. He asked, “How do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade?

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The volatility of key economic variables, such as the quarterly changes in real and nominal GDP, fell by about one-half during the 1983-2005 period compared with the average levels that existed since World War II.5 Although part of this stability was ascribed to the increase in the size of the service sector and advances in inventory control that moderated the “inventory cycle,” many attributed the reduction of economic volatility to the increasing effectiveness of monetary policy, primarily as practiced during the tenure of Alan Greenspan as Fed chairman from 1986 through 2006. As one might expect, risk premiums on many financial instruments declined markedly during the Great Moderation as investors believed that prompt central bank action would counteract any severe shock to the economy. Indeed, the 2001 recession reinforced the market’s opinion that the economy was more stable.

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15 Dean Baker, codirector of the Center for Economic and Policy Research in Washington, also had written and lectured extensively about the dangers of the housing bubble in 2005 and early 2006.16, 17 The disagreement among experts about whether a real estate bubble actually existed should have alerted the rating agencies to refrain from rating these securities as if there were essentially no probability that they could default.18 Regulatory Failure Despite these warnings, regulatory bodies in general, and the Federal Reserve in particular, did not believe the house price inflation posed a threat to the economy, and they did not question the high ratings given to the subprime mortgage securities. Furthermore, they did not monitor the buildup of risky mortgage-related securities in the balance sheet of key financial institutions. These failures leave a serious blot on the record of the U.S. Monetary Authority. It is especially tragic that Federal Reserve Chairman Alan Greenspan, by far the most influential public official in economic affairs, did not warn the public of the increasing risks posed by the unprecedented rise in housing prices. Greenspan should have been aware of the burgeoning sub-prime debt and the potential threat that it posed to the economy since one of his fellow governors at the Federal Reserve, Edward Gramlich, wrote extensively about these subprime instruments and published a book entitled Subprime Mortgages: America’s Latest Boom and Bust in June 2007.19 Some have maintained that the Fed lacked oversight over nonbank financial institutions and that the impact of higher real estate prices was outside its purview.

Money Free and Unfree
by George A. Selgin
Published 14 Jun 2017

Through its influence on the supply of money and credit in the United States and, indirectly, in other parts of the world, and also through its role in regulating the U.S. financial market, the Fed directly influences both the long-run behavior of spending and prices and the short-run behavior of real interest rates, real output, and unemployment. Occasionally—such as during the so-called Great Moderation roughly coinciding with Alan Greenspan’s tenure (1987–2006) as Fed chairman—its conduct has been tolerable, if not beneficial. At other times its policies have been at best controversial and at worst widely condemned. Despite the Fed’s spotted record, most people, economists included, continue to regard it and, more particularly, its governing and monetary-policymaking bodies, the Federal Reserve Board and the Federal Open Market Committee, as the best of all possible means for managing the U.S. dollar, and for indirectly regulating interest rates, prices, unemployment, and countless other macro- and microeconomic variables.

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Consequently, that episode seems especially likely to reflect a genuine if belated improvement in the conduct of monetary policy. We next turn to research concerning this possibility. THE “GREAT MODERATION” The beginning of PaulVolcker’s second term as Fed chairman coincided with a dramatic decline in the volatility of real output that lasted through the Alan Greenspan era. Annual real GDP growth, for example, was less than half as volatile from 1984 to 2007 as it was from 1959 to 1983. The inflation rate, having been reduced to lower single digits, also became considerably less volatile. Many, including Alan Blinder (1998), Romer (1999), Thomas Sargent (1999), and Bernanke (2004), have regarded this “Great Moderation” of inflation and real output as evidence of a substantial improvement in the Fed’s conduct of monetary policy—a turn to what Blinder (1998: 49) terms “enlightened discretion.”18 Bernanke (2004), conceding that the high inflation in the 1970s and early 1980s was largely due to excessive monetary expansion aimed at trying to maintain a below-natural rate of unemployment, argues similarly that Fed authorities learned over the course of that episode that they could not exploit a stable Phillips curve; Romer (1999: 43) claims that, after the early 1980s, the Fed “had a steadier hand on the macroeconomic tiller.”19 The “enlightened discretion” view has, however, been challenged by statistical studies pointing to moderating forces other than improved monetary policy.

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“Political pressure,” Thomas Cargill and Gerald O’Driscoll (2013: 423) observe, “is political pressure even if it happens to lead to correct policy.” More recently still, political pressure appears to have played a part in the Fed’s ill-fated decision to keep interest rates low despite evidence of an overheating housing market. On the occasion of his testifying before the Financial Crisis Inquiry Commission, Alan Greenspan pointed out “that if the Federal Reserve had tried to slow the housing market amid a ‘fairly broad consensus’ about encouraging homeownership, ‘the Congress would have clamped down on us”’ (Cargill and O’Driscoll 2013: 424–25).12 In short, while the Treasury Accord may ultimately have relieved the Fed of its former duty to serve as the Treasury’s “bond buyer of last resort,” it did not otherwise free monetary policy from political influence.

Why Stock Markets Crash: Critical Events in Complex Financial Systems
by Didier Sornette
Published 18 Nov 2002

chapter 4 positive feedbacks Human behavior is a main factor in how markets act. Indeed, sometimes markets act quickly, violently with little warning.    Ultimately, history tells us that there will be a correction of some significant dimension. I have no doubt that, human nature being what it is, that it is going to happen again and again. — Alan Greenspan, before the Committee on Banking and Financial Services, U.S. House of Representatives, July 24, 1998. The previous chapter 3 documented convincingly that essentially all markets exhibit rare but anomalously large runs of successive daily losses. How can we explain the existence of these exceptionally large drawdown outliers?

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Reaction to the crash varied from sentiments that the market was due for a correction to feelings of outright despair. President Ronald Reagan sought to reassure investors, saying: “All the economic indicators are solid. There is nothing wrong with the economy.” And the day after the crash, Federal Reserve Chairman Alan Greenspan gave a lucid one-sentence statement indicating the Fed would provide sufficient funds to banks, allowing them to provide credit to securities firms. “The Federal Reserve, consistent with its responsibilities as the nation’s central bank, affirmed today its readiness to serve as a source of liquidity to support the economic and financial system,” 230 chapter 7 the statement said.

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The fundamental origin of the crashes on the U.S. markets in 1929, 1962, 1987, 1998, and 2000 belongs to the same category, the difference being mainly in which sector the bubble was created: in 1929, it was utilities; in 1962, it was the electronic sector; in 1987, the bubble was supported by a general deregulation and new private investors with high expectations; in 1998, it was fueled by strong expectation regarding investment opportunities in Russia that ultimately collapsed; in 2000, it was powered by expectations regarding the Internet, telecommunication, and the rest of the New Economy sector. However, sooner or later, investment values always revert to a fundamental level based on real cash flows. This fact did not escape U.S. Federal Reserve chairman Alan Greenspan, who said: Is it possible that there is something fundamentally new about this current period that would warrant such complacency? Yes, it is possible. Markets may have become more efficient, competition is more global, and information technology has doubtless enhanced the stability of business operations.

The Bankers' New Clothes: What's Wrong With Banking and What to Do About It
by Anat Admati and Martin Hellwig
Published 15 Feb 2013

The new Basel rules would demand that banks maintain more dollars on reserve for the same amount of business, or more capital for no new economic work.” Both of these statements, as well as others in the piece, are false and misleading, implying that capital is the same as cash reserves and that Basel concerns reserve requirements. Alan Greenspan, former chairman of the Federal Reserve, is quoted by the Financial Times (“Alan Greenspan, Silently Fade Away, Please,” July 27, 2011) as writing that “excess bank equity capital … would constitute a buffer that is not otherwise available to finance productivity-enhancing capital investment.” See, in response, Paul Krugman, “The Malevolent Ex-Maestro,” New York Times, July 30, 2011, and a letter from 20 academics, “Greenspan Reasoning on ‘Excess Capital’ Is Misleading,” Financial Times, August 2, 2011.

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Bankers gained prestige and wealth, and their political influence increased. An anti-regulation ideology helped as well.49 Prior to the financial crisis, regulators failed to set proper rules and supervisors failed to enforce the rules in place so as to prevent the reckless behavior of bankers.50 In the United States, for example, Alan Greenspan (chairman of the Federal Reserve), Arthur Levitt (chairman of the Securities and Exchange Commission [SEC]), and Robert Rubin (Treasury secretary) prevented an initiative in 1998–2000 that would have imposed more transparency on derivatives markets. Such transparency was sorely missing in the run-up to the financial crisis.51 A 2004 ruling of the SEC allowed U.S. investment banks to determine their regulatory capital on the basis of their own risk assessments, and this enabled Lehman Brothers and other investment banks to become highly indebted and vulnerable.52 The United Kingdom also insti-tuted so-called light-touch regulation in order to expand its role as a major financial center.53 An important factor in explaining the financial crisis of 2007–2009 is the failure of regulators and supervisors in the United States and in Europe to set and enforce proper rules to prevent the reckless behavior of bankers.54 Supervisors in the United States and Europe allowed banks to circumvent capital requirements by creating various entities that did not appear on the banks’ balance sheets.

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When describing lobbying by banks, Barofsky (2012, 148) writes, “A key tactic is to argue that issues related to high finance are so hopelessly complex that it is nearly impossible for mere mortals to understand the unintended consequences of the legislation. The advocates … so the argument goes, just don’t have the requisite experience to understand.” 7. We are not the only ones who refer to Andersen’s tale in the context of banking and financial regulation. The first chapter of Hayes (2012), which discusses Alan Greenspan, Robert Rubin, and Larry Summers, the leading policymakers of the 1990s, is titled “The Naked Emperors.” 8. For example, at a conference held in New York in November 2009, Lloyd Blankfein, Goldman Sachs CEO, admitted that they “participated in things that were clearly wrong and … have reasons to regret and apologize for.”

Predictive Analytics: The Power to Predict Who Will Click, Buy, Lie, or Die
by Eric Siegel
Published 19 Feb 2013

Levin, “Effect of Feeling Good on Helping: Cookie and Kindness,” Journal of Personality and Social Psychology 21, no. 3 (March 1972), 384–388, doi:10.1037/hoo32317. http://psycnet.apa.org/index.cfm?fa=buy.optionToBuy&id=1972–22883–001. Alan Greenspan on The Daily Show with Jon Stewart: “The Former Federal Reserve Chairman Bums Jon Out with His Thesis on Human Nature,” The Daily Show with Jon Stewart, Comedy Central, September 18, 2007. www.thedailyshow.com/watch/tue-september-18–2007/alan-greenspan. Eric and Karrie were influenced by this Paul Tetlock research paper: Paul C. Tetlock, “Giving Content to Investor Sentiment: The Role of Media in the Stock Market,” Journal of Finance 62, no. 3 (June 2007). www.gsb.columbia.edu/faculty/ptetlock/papers/Tetlock_JF_07_Giving_Content_to_Investor_Sentiment.pdf.

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Without evidence that the system’s output relates to events in the world, there’s no way to argue that they have succeeded in capturing the collective mood, and the scheme’s status remains “just a bunch of numbers.” Put Your Money Where Your Mouth Is The one thing all human beings do when they’re confronted with uncertainty is pull back, withdraw, disengage—and that means economic activity . . . just goes straight down. —Alan Greenspan Eric and Karrie placed their hopes on one surefire winner: money. That’s something we certainly get emotional about. Money is a singular measure of how people are faring, so can’t we expect our emotional and financial well-being to be closely tied? A classic psychological study from 1972 even demonstrated that a dramatic increase in kindness results from discovering a single coin in a pay phone.

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One could say that everything comes down to feelings, even money. More cynically, you might ask whether it’s actually the other way around. Either way, there could be a connection that would provide Eric and Karrie much needed validation for their study. The pair drew inspiration from renowned economist and former chairman of the Federal Reserve Alan Greenspan, who had spoken prophetically on The Daily Show with Jon Stewart in September 2007. He said, “If I could figure out a way to determine whether or not people are more fearful or changing to euphoric . . . I [wouldn’t] need any of this other stuff—I could forecast the economy better than any way I know.

Irrational Exuberance: With a New Preface by the Author
by Robert J. Shiller
Published 15 Feb 2000

She has given the most careful reading and criticism to the entire book and has helped me greatly in articulating my ideas. She also kept the home fires burning while I spent long days and nights working. This page intentionally left blank Irrational Exuberance This page intentionally left blank One The Stock Market Level in Historical Perspective W hen Alan Greenspan, chairman of the Federal Reserve Board in Washington, used the term irrational exuberance to describe the behavior of stock market investors in an otherwise staid speech on December 5, 1996, the world fixated on those words. Stock markets dropped precipitously. In Japan, the Nikkei index dropped 3.2%; in Hong Kong, the Hang Seng dropped 2.9%; and in Germany, the DAX dropped 4%.

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We are unsure whether the high levels of the stock market might reflect unjustified optimism, an optimism that might pervade our thinking and affect many of our life decisions. We are unsure what to make of any sudden market correction, wondering if the previous market psychology will return. Even Alan Greenspan seems unsure. He made his “irrational exuberance” speech two days after I had testified before him and the Federal Reserve Board that market levels were irrational, but a mere seven months later he reportedly took an optimistic “new era” position on the economy and the stock market. In fact, Greenspan has always been very cautious in his public statements, and he has not committed himself to either view.

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When I tried to establish how often the phrase new era has been used in the past few years, I found that the term has been used in so many different contexts that a search on this phrase alone is not meaningful for our purposes. On the other hand, I have established from the Nexis database that the term new era economy did not have any currency until a Business Week cover story in July 1997 attributed this term to Alan Greenspan, marking an alleged turning point in his thinking since the “irrational exuberance” speech some months earlier.1 The term new era economy has been in regular use ever since. (The association of this term with one powerful figure provides yet another striking example of how individual actors or media events can change public thinking.)

The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy
by Stephanie Kelton
Published 8 Jun 2020

As Margaret Thatcher famously quipped, the problem is that “eventually you run out of other people’s money.” To some people, finding new investors to purchase a never-ending mountain of government debt can start to look like a fraudulent pyramid scheme.13 The kind run by the notorious huckster Bernie Madoff. It isn’t. Madoff was defrauding investors. The United States Treasury is not. As Alan Greenspan explained in an appearance on NBC’s Meet the Press, investors face “zero probability of default” when it comes to US Treasuries.14 And here we should distinguish between voluntary and involuntary default. Greenspan’s statement referred to the latter. His point was that the US could not end up like Greece, desiring to make scheduled payments to bondholders but lacking the authority to instruct its central bank to clear the payments.

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As the witness began to answer the question, Ryan’s face lost all color. It wasn’t the answer Ryan was looking for. It did, however, separate two of the most important issues regarding entitlements: the government’s financial ability to pay and our economy’s productive capacity to deliver promised real benefits. The witness was Alan Greenspan. As many readers will know, Greenspan was chairman of the Federal Reserve from 1987 to 2006. Appointed by Reagan, Greenspan was hardly what you’d call a progressive. Teeing up a question about the need to “deal with entitlements” with the Fed chair must have seemed like a safe move. Ryan almost certainly assumed that Greenspan, a fellow libertarian, would agree that Social Security’s financing was unsustainable and that moving to a system of personal retirement accounts was a good idea.

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The real challenge involves managing any inflationary pressures that might arise as that money gets spent into the real economy. No wonder Ryan was surprised. In other settings, Greenspan often spoke as if the major challenge facing Social Security was its financial viability. But on that day, responding while under oath in the US Capitol, Alan Greenspan told the truth, the whole truth, and nothing but the truth: Social Security will be fine as long as the government is committed to paying promised benefits. It’s not easy to find experts who are willing to speak so honestly about the fact that the so-called crisis facing Social Security is a man-made, political problem and not a financial one.

Too big to fail: the inside story of how Wall Street and Washington fought to save the financial system from crisis--and themselves
by Andrew Ross Sorkin
Published 15 Oct 2009

When it failed, however, the result was catastrophic. The Wall Street juggernaut that emerged from the collapse of the dot-com bubble and the post-9/11 downturn was in large part the product of cheap money. The savings glut in Asia, combined with unusually low U.S. interest rates under former Federal Reserve chairman Alan Greenspan (which had been intended to stimulate growth following the 2001 recession), began to flood the world with money. The crowning example of liquidity run amok was the subprime mortgage market. At the height of the housing bubble, banks were eager to make home loans to nearly anyone capable of signing on the dotted line.

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He said, ‘Secretary Paulson gave me an update, and it’s clear that we’re in challenging times.’” Paulson, looking sleep deprived, was standing in the White House pressroom, straining to listen to the question coming through in his right ear. Lauer continued: “I want to contrast that to what Alan Greenspan wrote in an article recently,” he said. A photo of Greenspan flashed on the screen accompanying his quote: “The current financial crisis in the U.S. is likely to be judged in retrospect as the most wrenching since the end of the Second World War.” “Doesn’t ‘we’re in challenging times’ seem like the understatement of the year?”

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He also worked diligently to fill in gaps in his own knowledge, educating himself on the derivatives markets and eventually becoming something of a skeptic on the notion of risk dispersion. To his way of thinking, the spreading of risk could actually exacerbate the consequences of otherwise isolated problems—a view not shared by his original boss at the Fed, Alan Greenspan. “These changes appear to have made the financial system able to absorb more easily a broader array of shocks, but they have not eliminated risk,” he said in a speech in 2006. “They have not ended the tendency of markets to occasional periods of mania and panic. They have not eliminated the possibility of failure of a major financial intermediary.

When Free Markets Fail: Saving the Market When It Can't Save Itself (Wiley Corporate F&A)
by Scott McCleskey
Published 10 Mar 2011

An enthusiastic devotion to innovation may be ideologically satisfying but it defies both logic and history, and especially recent history. It is hard to argue that innovations that were at the center of the financial crisis—namely mortgage-backed securities and credit default swaps—were good for anyone. Some distinguished economists and bankers put the case more strongly. Paul Volcker, Alan Greenspan’s predecessor as Fed chairman and never a man to express half an opinion, has made clear his views on unrestrained innovation: I hear about these wonderful innovations in the financial markets, and. . . . I can tell you of two—credit-default swaps and collateralized debt obligations—which took us right to the brink of disaster.

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protection under the existing legal and regulatory structures— particularly aimed at filling the gaps of regulation and supervision of non-bank financial providers—is likely to be more successful, more quickly, than a separate consumer regulator.4 History seemed to justify both sides of the argument. In particular, Democrats pointed to the failure of the Federal Reserve under Alan Greenspan to enforce provisions of the Home Ownership and Equity Protection Act of 1994 (HOEPA). HOEPA gave the Federal Reserve the authority to oversee mortgage loans, but the Fed did not produce any implementing rules until well after Greenspan’s departure and the onset of the financial crisis (to be fair, the authority did not extend to non-bank institutions beyond the reach of the Fed, and so it would not have been a silver bullet).

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The debate had all the elements of a great political plot—big corporations allegedly abusing consumers, big government attempting to add another layer of bureaucracy solely to soothe the savage breast of indignant voters, entrenched agencies fighting for their turf, and the chance to take a swing at Alan Greenspan. And C07 06/16/2010 11:19:55 Page 65 What Powers Would the Agency Have? & 65 this would be no obscure little agency like the Federal Interagency Committee for the Management of Noxious and Exotic Weeds: It could dictate what products and services institutions could and could not provide.

The Alpha Masters: Unlocking the Genius of the World's Top Hedge Funds
by Maneet Ahuja , Myron Scholes and Mohamed El-Erian
Published 29 May 2012

Over the years he has benefited from sage advice from influential advisors to the fund, one of whom is a rather famous former chairman of the Federal Reserve. In the spring of 2007, Deutsche Bank’s global head of investment banking, Anshu Jain, threw a dinner in the firm’s executive dining room on the forty-sixth floor of 66 Wall Street. The dinner was hosted by special adviser to the bank Dr. Alan Greenspan, and the guest list comprised a selective group of the firm’s biggest trading clients. Among those invited were Paulson, Bruce Kovner of Caxton Associates, Henry Swieca of Highbridge, Israel “Izzy” Englander of Millenium Partners, and Boaz Weinstein, the firm’s hot-shot head of credit-focused proprietary fund Saba Capital.

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“Chancellor Opens Man’s New Headquarters in Swan Lane, London.” Man Group. Print, June 14, 2011. Sen, Neil. “The Odd Couple,” Institutional Investor, March 2011. Chapter 3: The Risk Arbitrageur: John Paulson, Paulson & Co. Interviews Ace Greenberg, former chairman, Bear Stearns, July 2011. Alan Greenspan, former chairman, Federal Reserve System, August 2011. John Paulson, founder, Paulson & Co., December 2011. John Paulson, founder, Paulson & Co., May 2011. John Paulson, founder, Paulson & Co., April 2011. John Paulson, founder, Paulson & Co., December 2010. John Paulson, founder, Paulson & Co., December 2010.

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To all of the data providers that generously compiled charts and graphs for this book, especially Hedge Fund Intelligence, LCH Investments NV, Ipreo: Bigdough, and Hedge Fund Research. To all of my friends, sources in the industry, and individuals who have aided me through various stages of the book, including: David & Cheryl Einhorn, Whitney Tilson, James Grant, Alan Greenspan, Katie Broom, Sam Zell, Terry Holt, Barry Sternlicht, Beth Shanholtz, Ace Greenberg, Israel Englander, John Novogratz, Nelson Peltz, Anne Tarbell, Marc Andreessen, Michael Vachon, Elissa Doyle, Margit Wennmachers, Randall Kroszner, Jenny Farrelly, Tom Hill, Jonathan Gray, Peter Rose, Anne Popkin, Anthony Scaramucci, Victor Oviedo, David Waller, Sallie Krawcheck, Armel Leslie, Stefan Prelog, Chris Gillick, Alexis Israel, Lex Suvato, Kenny Dichter, Steve Starker, Saadi Ouaaz, Jonathan Wald, Jayesh Punater, James Wong, Joseph Weisenthal, Julie Vadnal, Darcy Bradbury, Trey Beck, Kyle Bass, and Jacob Wolinsky.

Twilight of the Elites: America After Meritocracy
by Chris Hayes
Published 11 Jun 2012

Hours after Clinton gave that speech, a European economist who had spent the last three decades consulting with a major American investment bank admitted to me that he, too, had lost faith in his own profession, and in the competence of the global ruling elite gulping down cocktails at the bar on all sides of us. “In retrospect we were all illiterate! I include myself in that. Larry Summers and Bob Rubin thought they were intellectual masters of the universe. Alan Greenspan, too. But the emperor had no clothes!” In the early 1970s, Vietnam and Watergate provoked such national paroxysms of self-doubt and distrust that both Gallup and the General Social Survey began asking Americans how much trust they had in their major institutions—big business, public schools, the Supreme Court, and about a dozen others.

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Iraq was such a colossal failure of consensus it would be tempting to chalk it up to a once-in-a-generation screwup, but then along came the housing bubble, which was inflated by economists, policy-makers, and others who’d reached the consensus that housing prices had entered some new universe of asset appreciation in which prices would never come down. In 2003, Federal Reserve chairman Alan Greenspan dismissed the very notion of a housing bubble, saying that while it was “of course, possible for home prices to fall as they did in a couple of quarters in 1990 … any analogy to stock market pricing behavior and bubbles is a rather large stretch.” A year later, even as predatory lending exploded and underwriting standards degraded, Greenspan advised that as long as lenders “continue their prudent lending practices,” households would be more likely to “weather future challenges.”

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Sure enough, between early 2006 and 2011 housing prices declined by a third nationwide, and as much as 50 percent or more in particularly overheated markets, like Las Vegas and Miami. The popping of the bubble precipitated a financial crisis that produced the worst economic contraction in eighty years. Summing up the consensus that led to this calamity, Alan Greenspan said, in 2010: “Everybody missed it: academia, the Federal Reserve, all regulators.” Once again, “everybody” was wrong. Of course, we know consensus isn’t foolproof. Whether it’s the structure of the solar system or the morality of slavery, entire societies can achieve unanimity around deeply flawed beliefs.

Nine Crises: Fifty Years of Covering the British Economy From Devaluation to Brexit
by William Keegan
Published 24 Jan 2019

Anxious to please the City, Brown and Balls were happy to go along with light-touch regulation, although Brown had for some years been calling for stronger global financial regulation – ‘a proper monitoring of risk and an early warning system’. But, as he wrote after the deluge, ‘I had to accept that I had lost the argument.’ However, Brown freely acknowledged in retrospect that it had been a mistake to subscribe to what had become an international consensus. This consensus, led by the then chairman of the Federal Reserve, Alan Greenspan, held that the sophistication of modern financial markets had reduced the dangers of a financial crisis via the diversification of risk, all those fancy new ‘products’ and what became known as ‘financial engineering’. During the summer of 2007, and the advent of the Northern Rock crisis, Brown had moved on to No. 10, and his long-time colleague and fellow Scot Alistair Darling was installed at the Treasury.

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On 9 August, the French bank BNP Paribas froze three of its investment funds. As the crisis unfolded, it became evident that globalised financial engineering had certainly spread risk. But there were also the risks of ‘irrational exuberance’. Way back in the late ’90s, the then Governor of the US Federal Reserve, Alan Greenspan, had expressed concern about ‘irrational exuberance’ in the markets. But they had seen nothing yet. The spreading of risk had ensured that European financial institutions, not least supposedly staid German banks, were also severely affected by what had begun as the US sub-prime crisis. As the crisis unfolded, it became clear that the kind of German bank that had been considered cautious and staid was up to its neck in dubiously valued securities.

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The general atmosphere was epitomised by the slogan ‘This time it’s different’ – an indication of the human propensity not to learn from history. My great hero J. K. Galbraith was particularly good on this subject. In my last interview with him, he had some wonderfully irreverent remarks to make about the faith that the world was putting in Alan Greenspan. Of all the quotes I have waded through in thousands of pages on the crisis, the one that seemed to capture it most was by the Conservative MP for Hereford, Jesse Norman: ‘I can tell you precisely what was responsible for the crash. It was because bank leverage, which was twenty times capital in 2000, went up to fifty times in seven years.’

The Greed Merchants: How the Investment Banks Exploited the System
by Philip Augar
Published 20 Apr 2005

Markets were in the ascendant and share ownership became a popular passion. In bar rooms, around dinner tables and at cocktail parties, a public eager to make money from the bull market listened to the investment banker’s every word. Their influence was growing. A former director of J. P. Morgan, Alan Greenspan, held the world economy in his thrall as chairman of the Federal Reserve; the outgoing chairman of Goldman Sachs, Jon Corzine, was running for the US Senate; Wall Street was the career of choice for over a third of those graduating from Harvard Business School. When it came to interest rates, exchange rates, regulation, indeed almost any conceivable aspect of government policy, Washington listened to Wall Street: let the market decide appeared to be the answer to every problem.

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These special purpose entities (SPEs as they became known) were ideal for issuing complex derivatives, especially if based off-shore, and became an essential link in the chain. Opinions about derivatives are sharply divided into two camps. In the blue corner, former Chairman of the Federal Reserve, Mr Markets himself, Alan Greenspan. Greenspan believes derivatives are good for the global economy. They make the financial system more flexible, increase growth and allow banks, businesses and governments to control risk. In support of Mr Greenspan: nine out of every ten of the world’s top five hundred companies who regularly use derivatives of one kind or another; the Basel Committee on Banking Supervision; an army of academics led by the Nobel Prize winner, the late Merton Miller; and most financial institutions.

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Historians look for context to explain recent events, turning for parallels to previous examples of markets overshooting such as the seventeenth-century Dutch tulip mania, the South Sea Bubble in the eighteenth century and the Roaring Twenties. Defenders of the free market have been quick to use these explanations to deflect criticism from the system and the institutions they believe in. Prominent figures such as Alan Greenspan have qualified their criticism of corporate excess by saying that the nineties saw no increase in human greed, just an increase in the opportunities to be greedy resulting from economic growth. According to this view, it wasn’t the system that was at fault, merely the re-emergence of familiar human foibles.3 Michael Lewis went so far as to write an article ‘In Defense of the Boom’ for the New York Times in 2002, the first words of which were ‘Wall Street Didn’t Do It’.4 ‘These things happen in markets’ is perhaps the most common conclusion to discussions about the euphoria, the bubble and the errors of judgement that were made.

The Blockchain Alternative: Rethinking Macroeconomic Policy and Economic Theory
by Kariappa Bheemaiah
Published 26 Feb 2017

Households, firms, and nations need to borrow increasing amounts of debt to repay existing loans and maintain economic growth. The fact that the credit system has been allowed to develop in this direction on an international scale with the aid of shadow banking is the final piece needed to understand this puzzle. Shadow Banking and Systemic Risk In 2005, Alan Greenspan gave a speech titled “Economic Flexibility ” at the Federal Reserve Board in which he stated, “These increasingly complex financial instruments have contributed to the development of a far more flexible, efficient, and hence resilient financial system than the one that existed just a quarter-century ago.

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As consumers demanded more debt, which was increasingly easily available, it gave the incentives to create these products and also led to the growth of the intra-financial system through which these products were traded. Increasingly, there was a strong accord that the activities which the intra-financial system were engaging in led to better price discovery, better allocation of capital, resources, and risk, and was making economies more stable and resilient to shocks. The statement made by Alan Greenspan was indicative of this consensus, although there is no evidence that economies have become more efficient since the increase in financial complexity since the 1970s (Turner, 2010). What had come out of this increased complexity was an addiction to debt-led growth and the development of the shadow banking system.

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Source: https://research.stlouisfed.org/fred2/series/HDTGPDUSQ163N 15Data from OECD Stats—Financial Indicators. Source : http://​stats.​oecd.​org/​index.​aspx?​queryid=​34814 16Data from OECD Stats—Financial Indicators. Source : https://data.oecd.org/gga/general-government-debt.ht 17Remarks by Chairman Alan Greenspan, “Economic flexibility.” Before the National Italian American Foundation, Washington, D.C. October 12, 2005. Source: www.​federalreserve.​gov/​Boarddocs/​speeches/​2005/​20051012 18This includes derivatives and other contract-based assets that derive their value from an underlying asset, index, or interest rate.

Anatomy of the Bear: Lessons From Wall Street's Four Great Bottoms
by Russell Napier
Published 18 Jan 2016

Initially, the war on inflation was fought through targeting the growth of the monetary aggregates, such as M-1, rather than targeting interest rates. Implementation of the policy was fraught with difficulty and resulted in volatile, and often very high, interest rates. In 1995, Volcker asked Alan Greenspan: ‘Whatever became of M-1?’ His successor replied: ‘It was once the name of a pretty good rifle.’ [73] FIGURE 102. FED FUNDS EFFECTIVE RATE 1970-1983 Source: Datastream In the short term, it was evident the Fed’s M-1 growth target would necessitate tighter liquidity and thus higher interest rates.

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And the 7.4% cost-of-living increase in Social security payments is to pump an additional $11 billion into the economy at an annual rate. 1 July: The Commerce Department’s composite index of leading indicators rose 0.3% in May, the third consecutive monthly increase… Before the March rise, the index had fallen or remained unchanged for 10 months. 1 July: Alan Greenspan, President of a New York forecasting firm and a close adviser to President Reagan, contends that ‘in a matter of weeks.’ The nation will see the signs of recovery. 6 July: Believers in a strong economic upturn are getting support from an uncommon source: Robert Wilson the prominent New York investor who heads a money-management firm bearing his name.

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‘What he’s missing are emerging signs of a healthy economy.’ 23 August: The 3.2% increase in factory orders for durable goods in July, the first rise since March, may presage improved industrial production in coming months. 22 September: The U.S. economy appears to be growing at a 1.5% annual rate after inflation in the current quarter… The revised report shows that in the second quarter the economy expanded at a seasonally adjusted 2.1% annual rate. 27 September: So it might come as a surprise that business start-ups are at a near-record high. A reduction of the capital gains tax last year to a maximum of 20% vs. the maximum 49% in 1978 has encouraged more investment in small companies. 1 October: Alan Greenspan, a New York economist who advises President Reagan, expects the ‘real’ gross national product, of total value of all goods and services adjusted for inflation, to grow at an anaemic 2.3% annual rate in the fourth quarter and about the same pace in the 1983 first half. 5 October: The confidence of business leaders in the U.S. economy has improved for the third consecutive quarter, the Conference Board disclosed.

The Scandal of Money
by George Gilder
Published 23 Feb 2016

Spearheading the Wall Street expansion and the jobs boom were thousands of initial public offerings, from Apple and Genentech to Netscape and Qualcomm, the most lucrative coming from a carnival of invention in Silicon Valley.3 American creativity ramified through a globalizing world economy, with the number of poor people living at the subsistence level of less than a dollar a day, adjusted for inflation, dropping by 20 percent. Markets battened on two billion new entrants into the middle classes from China and other emerging nations. All seemed to be well with the monetary regime, dubbed the “great moderation” by Alan Greenspan, the guru of growth. But beneath a placid surface, the worldwide monetary system was breaking down. Toward the end of the millennium, the world plunged into an Asian monetary debacle, the dot-com crash, the telecom debauch, and the Russian ruble meltdown. A thousand telecom companies went bankrupt.

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The instrument [would be] an obligation of the U.S. government to redeem the nominal value (“face value”) in terms of a precise weight of gold stipulated in advance or the dollar amount established as the monetary equivalent. The rate of convertibility [in gold grams] is permanent throughout the life of the bond; it defines the gold value of the dollar.9 As Alan Greenspan declared in the Wall Street Journal during the previous era of monetary turmoil, in 1981: In years past a desire to return to a monetary system based on gold was perceived as nostalgia for an era when times were simpler, problems less complex and the world not threatened with nuclear annihilation.

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Keynes and the Reshaping of the Global Economy (New York, NY: Pegasus Books, 2015), epilogue. 4.Maurice McTigue, “Rolling Back Government, Lessons from New Zealand,” Hillsdale College Imprimis 33, no. 4 (April 2004). 5.George Gilder, The Israel Test: Why the World’s Most Besieged State Is a Beacon of Freedom and Hope for the World Economy (New York, NY: Encounter Books, 2012). 6.Steve Forbes with Elizabeth Ames, Reviving America: How Repealing Obamacare, Replacing the Tax Code, and Reforming the Fed will Restore Hope and Prosperity (New York, NY: McGraw Hill Education, 2016), 124 and passim. 7.Metcalfe’s Law ordains that the power and value of a network rises roughly by the square of the number of compatible devices linked to it. 8.Judy Shelton, Fixing the Dollar Now: Why U.S. Money Lost Its Integrity and How We Can Restore It (Washington, DC: Atlas Economic Research Foundation, 2011). 9.Ibid., 40–44. 10.Ibid., 48, citing Alan Greenspan, “Can the U.S. Return to a Gold Standard?,” Wall Street Journal, September 1, 1981. Index A Access to Energy, 48 Affordable Care Act, 6 Allied Powers, 151 Amazon, 119, 122, 160, 170 America, Americans, 55 economy and, xii, xvii–xviii, 5, 15, 25, 51, 54, 58, 66–68, 88–89, 107–8, 115, 121, 128, 150, 154, 160 GDP and, xiii, 130.

The Production of Money: How to Break the Power of Banks
by Ann Pettifor
Published 27 Mar 2017

This, I will argue, is the worst possible combination for society and the ecosystem as high and rising real rates of interest require high and rising rates of return from investment, from labour and from the earth’s finite assets. Most orthodox economists also have an unhealthy dislike of the state, which they accuse of ‘rent-seeking’ while simultaneously ignoring the rent-seeking of the private sector. As recently as October 2008 former governor of the US Federal Reserve Alan Greenspan made the orthodoxy explicit under cross-examination by a Congressional committee, chaired by Henry Waxman.7 The chairman reminded Mr Greenspan that he had once said, ‘I do have an ideology. My judgement is that free, competitive markets are by far the unrivalled way to organise economies. We’ve tried regulation.

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Central bankers have, since the 1990s, turned a blind eye and largely failed to understand these and more innovative self-enriching activities. Shadow banking was only named and identified by the economist Paul McCulley as late as 2007, in a speech at the annual financial symposium hosted by the Kansas City Federal Reserve Bank in Jackson Hole, Wyoming.9 Members of the shadow banking ‘blind-eye brigade’ include Alan Greenspan, who in 2004 said that under the deregulated system of credit creation, ‘Not only have individual financial institutions become less vulnerable to shocks from underlying risk factors, but also the financial system as a whole has become more resilient.’10 Credit creation and Goethe’s ‘Sorcerer’s Apprentice’ As argued above, to ensure that the monetary system addresses society’s varied needs, credit (debt) creation must be managed to ensure it is offered at low real rates of interest, and used productively and sustainably to create employment, and with it savings, income and other revenues, part of which can be used to repay the debt.

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Emphases mine. 5John Maynard Keynes, ‘National Self-Sufficiency’, The Yale Review, Vol. 22(4), June 1933, pp. 755–69, mtholyoke.edu, accessed 6 June 2016. 6Michael McLeay, Amar Radia and Ryland Thomas, ‘Money in the Modern Economy: An Introduction and Money Creation in the Modern Economy’, Bank of England Quarterly Bulletin, Vol. 54(1), 2014, bankofengland.co.uk, accessed 6 June 2016. 7John Maynard Keynes, The Collected Writings, A Treatise on Money: The Pure Theory of Money, Vol. 5, Cambridge: Cambridge University Press, 2012 (1930). 8Andy Haldane speech, ‘The $100 Billion Question’, Bank of England, March 2010, bankofengland.co.uk, 7 June 2016. 9Laura E. Kodres, ‘What Is Shadow Banking’, in IMF publication Finance and Development, June 2013, Vol. 50, No. 2, imf.org. 10Alan Greenspan speech, ‘Remarks by Chairman Alan Greenspan’, American Bankers Association Annual Convention, 5 October 2004, New York, federalreserve.gov, accessed 6 June 2016. 11Mark Carney speech, ‘Fortune Favours the Bold’, Lecture to Honour the Memory of The Honourable James Michael Flaherty, 28 January 2015, Dublin, bankofengland.co.uk, accessed 6 June 2016. 3.

The End of Loser Liberalism: Making Markets Progressive
by Dean Baker
Published 1 Jan 2011

Fighting inflation became the Fed’s overwhelming concern, and it was willing to tolerate high unemployment rates to reduce inflation to levels it considered acceptable. This was clearly demonstrated by Paul Volcker in 1982 when he pushed the unemployment rate to almost 11 percent in order to rein in inflation. His successor, Alan Greenspan, was similarly committed to low inflation. The modest acceleration in the inflation rate at the end of the 1980s was sufficient to prompt a round of interest rate hikes that eventually led to the 1990-1991 recession. The current Fed chairman, Ben Bernanke, has committed the Fed to a 2.0 percent inflation ceiling, implying that he would raise interest rates and push up unemployment if he believed that core inflation might exceed this level.

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This response can lead to the sort of wage-price spiral the country experienced in the 1970s, when productivity growth lagged real wage growth for a short period. However, in a climate where workers have considerably little bargaining power, a wage-price spiral is a less serious threat. This diminished risk was the reason Alan Greenspan felt so comfortable in the 1990s with allowing interest rates to remain low and for the unemployment rate to fall to levels unseen since the 1960s. With the weak bargaining position of workers in the 1990s, inflation simply was not a problem, and Greenspan was an astute enough observer of the economy (unlike most academic economists) to recognize this fact.

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Rather than higher taxes or spending cuts, the entire cause of the shift from deficit to surplus was better-than-expected growth and lower-than-expected unemployment. In its 1996 projections, CBO assumed that the unemployment rate would be 6.0 percent in 2000, which was its estimate of the non-accelerating inflation rate of unemployment (NAIRU) at the time. It was only because the stock bubble drove demand much faster than expected, and Fed Chairman Alan Greenspan allowed the unemployment rate to fall below the generally accepted estimates of the NAIRU, that the deficit turned into a surplus. There is another important chapter of the Clinton morality tale that turns out to be more fiction than fact. Nominal interest rates indeed fell, but the decline in the real interest rate from the high-deficit years of the 1980s was quite modest.

Them And Us: Politics, Greed And Inequality - Why We Need A Fair Society
by Will Hutton
Published 30 Sep 2010

This total hardly changed from the early 1990s, and was not much of a return, given that so much government attention was lavished upon it. But the investment was cost-free, largely consisting of light-touch regulation. It was not a bargain that New Labour was minded to challenge. Brown’s position over-praised the benefits of finance, and made far too many concessions to the prevailing, yet incorrect, wisdom. In this universe, Alan Greenspan, the chair of the US Federal Reserve – whose supposedly uncanny ability to read the US economy had become legendary – suddenly became not an ideological foe but a lionised hero: the ‘maestro’. Brown pushed for Greenspan’s knighthood, insisted that he should be given an honorific plaque in the Treasury, and later saw to it that he received an honorary degree from the Chancellor’s own alma mater, Edinburgh University.

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The whole basis of banking and money creation was being reinvented. The banks, as much as the governments, had become sources of liquidity creation as long as there were providers of cash for any given collateral and counter-parties ready to hedge the risks in the derivative markets. As everybody was individually guarding against risk, luminaries like Alan Greenspan claimed that the system as a whole was not risky, even as it created a growing mountain of credit and debt. Moreover, inflation targeting would ensure that there was no consequent inflation. All of these assumptions exploded to devastating effect in 2008. If the 1980s were the decade of interest and currency swaps, the 1990s were the decade of securitisation, and the 2000s the decade of credit default swaps.

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As Simon Johnson and James Kwak point out: Robert Rubin, once the co-chairman of Goldman Sachs, served in Washington as Treasury secretary under Clinton, and later became chairman of Citigroup’s executive committee. Henry Paulson, CEO of Goldman Sachs during the long boom, became Treasury secretary under George W. Bush. John Snow, Paulson’s predecessor, left to become chairman of Cerberus Capital Management, a large private-equity firm that also counts Dan Quayle among its executives. Alan Greenspan, after leaving the Federal Reserve, became a consultant to Pimco, perhaps the biggest player in the international bond markets. These personal connections were multiplied many times over at the lower levels of the past three presidential administrations, strengthening the ties between Washington and Wall Street.

Evil Geniuses: The Unmaking of America: A Recent History
by Kurt Andersen
Published 14 Sep 2020

In the early 1970s, at a conference in Washington of what its organizer Milton Friedman called “free enterprise radicals,” he said that it was “important for people of our political persuasion to come together and realize that they’re not such kooks as they are sometimes made to appear in their communities.” Among his fellow kooks at that meeting was the not-yet-widely-known economic consultant and Ayn Rand associate Alan Greenspan. The new Libertarian Party’s 1972 presidential candidate, an entirely unknown philosophy professor then and now, won a total of 3,674 votes nationally. For a few years during the 1970s, Charles Koch published a stylish-looking San Francisco–based magazine called Libertarian Review. In it he wrote an essay that reiterated the gists of the Friedman Doctrine and the Powell Memo but went further, arguing that their “movement…for radical social change” must seek to take over American conservatism, radicalize it.

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In addition to keeping costs low for the employers of Kroger cashiers and Burger King cooks and Holiday Inn maids, the lower national floor for pay has the invisible-hand effect of pulling down the low wages of people earning more than the legal minimum. Economic right-wingers have publicly reveled in their squashing of workers’ power in so many different ways. Federal Reserve chair Alan Greenspan said in a speech in the 2000s that spectacularly firing and replacing all the striking air traffic controllers in 1981 had been “perhaps the most important domestic” accomplishment of the Reagan presidency. [It] gave weight to the legal right of private employers, previously not fully exercised, to use their own discretion to both hire and discharge workers.

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Today only one in eight private sector employees are in line to get such a pension, and most American workers don’t even have a 401(k) or an IRA or any other retirement account. It’s yet another route by which the U.S. political economy made a round trip from 1940 to 1980 and then back again. I mentioned the libertarian Fed chair Alan Greenspan’s remark that it was “difficult to judge” if the “increased ability to lay off workers” starting in the 1980s had had structurally, permanently increased Americans’ “sense of job insecurity.” I am frequently concerned about being laid off. From 1979 through the 2000s, that statement was posed in a regular survey of employees of four hundred big U.S. corporations, each person asked if they agreed or disagreed.

Trend Commandments: Trading for Exceptional Returns
by Michael W. Covel
Published 14 Jun 2011

Bernanke told the Senate Banking Committee in March 2011 that he saw “little evidence” that the stock market was a bubble, but provided certainty with this ditty of a response: “Of course, nobody can We inhabit a complex know for sure.” Why again do we system that has virtually nothing care what this man says? to do with the neoclassical But before Bernanke, Alan Greenspan was also laying the model taught in Econ 101. groundwork. From recently That’s why economists failed to released 2005 documents comes predict the financial crisis.7 former Atlanta Federal Reserve President Jack Guynn: “Nearly every major city in Florida has experienced increases in the double-digit range, and some, like Miami, Palm Beach, Sarasota, and West Palm, have been reporting increases in housing prices on a yearover-year basis of between 25 and 30 percent.

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The ugly picture we have seen before—and that they think we may very likely see again before long— goes something like this: The drying up of sales of new units; the Intoxication 177 painful decision of developers to go ahead and complete the construction of additional units to make them saleable, further depressing the market; and speculators who had hoped to see big capital gains walking away or defaulting on their contracts, giving their properties back to the lender. Perhaps it’s because of where I sit, but I am less comforted than some of my colleagues about the housing situation.” Former Chairman Greenspan responded: “Let’s take a break for coffee.”8 Six years later, in 2011, Alan Greenspan declared: “I conclude that the current government activism is hampering what should be a broad-based robust economic recovery, driven in significant part by the positive wealth effect of a buoyant U.S. and global stock market.”9 He means by government activism…QE2? But if there were none of that, would there be a buoyant stock market?

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Did Clinton sink the economy in that short time? No. Then magic happened. During late 1994, the Internet started to roll, and in August 1995 Netscape went public, a trigger still felt today. Stock markets boomed during 1995–1999. The Dot-com bubble was on. However, this bubble was a problem and people knew it. Federal Reserve Chairman Alan Greenspan uttered the phrase “irrational exuberance” in a December 1996 182 Tre n d C o m m a n d m e n t s speech, but simply pointing out a bubble was only so useful. In fact, he was resoundingly ignored, and even jeered by some in the financial media. The good times kept rolling. President Clinton had an approval rating of 73 percent on December 19, 1998, six years into his presidency.

How Music Got Free: The End of an Industry, the Turn of the Century, and the Patient Zero of Piracy
by Stephen Witt
Published 15 Jun 2015

Something like this had happened before, in the early 1980s, with the home audio cassette, after the introduction of the dual-head tape deck. The investment bankers considered this a relevant case study. They had dusted off a 16-year-old analysis of the adverse effects of the home-taping craze, conducted by the economist Alan Greenspan, who was now the chairman of the Federal Reserve. Drafted during a severe sales slump in 1982, Greenspan’s paper had taken an independent look at the industry. His analysis blamed tape bootlegging for declining revenues, then considered various pricing strategies the industry might employ to counteract this trend.

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The merger brought international presence. The key markets were North America and Europe. China was potentially huge, as were Russia, India, and Brazil, but, even though representatives from those countries had pledged to respect U.S. copyright law, enforcement on the street was effectively nil. As Alan Greenspan had correctly observed, selling intellectual property meant suppressing unauthorized products with the same vigor that you created legitimate goods. Where the political will to do this did not exist, neither could a legitimate market. Still, the overall picture was fantastic. Universal was the largest music company in the world, controlling one quarter of the global market.

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Like Morris, Carter had an ear for hits, but also a mind for business, cultivated by his past participation in the criminal narcotics trade. He was the CEO of his own music label and spent as much time developing and promoting other acts as he did his own. He saw himself not just as a rapper but ultimately as the head of a diversified business empire. And, like Alan Greenspan, Carter understood the importance of suppressing the bootleggers. Late in 1999, when he suspected a rival record producer of leaking his new album to the street a month before it was due in stores, Carter had confronted him on the floor of a nightclub and stabbed him. Def Jam in New York; Interscope in Los Angeles; Cash Money in New Orleans—Morris’ market corner on the rap game was paying dividends, and the first 12 months after the merger were fantastic for Universal, exceeding even the rose-colored predictions that the deal prospectus had offered to shareholders.

The Big Short: Inside the Doomsday Machine
by Michael Lewis
Published 1 Nov 2009

In an auditorium at Deutsche Bank's Wall Street headquarters, Eisman was scheduled to precede the retired chairman of the Federal Reserve, Alan Greenspan, and be paired with a famous investor named Bill Miller--who also happened to own more than $200 million of Bear Stearns stock. Eisman obviously thought it insane that anyone would sink huge sums of money into any Wall Street firm. Greenspan he viewed as almost beneath his contempt, which was saying something. "I think Alan Greenspan will go down as the worst chairman of the Federal Reserve in history," he'd say, when given the slightest chance. "That he kept interest rates too low for too long is the least of it.

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"The salient point about the modern vintage of housing-related fraud is its integral place within our nation's institutions," he added. This wasn't all that different from what he'd been saying in his quarterly letters to his investors for the past two years. Back in July 2003, he'd written them a long essay on the causes and consequences of what he took to be a likely housing crash: "Alan Greenspan assures us that home prices are not prone to bubbles--or major deflations--on any national scale," he'd said. "This is ridiculous, of course.... In 1933, during the fourth year of the Great Depression, the United States found itself in the midst of a housing crisis that put housing starts at 10% of the level of 1925.

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"From the time you started talking, Bear Stearns stock has fallen more than twenty points. Would you buy more now?" Miller looked stunned. "He clearly had no idea what had happened," said Vinny. "He just said, 'Yeah, sure, I'd buy more here.'" After that, the men in the room rushed for the exits, apparently to sell their shares in Bear Stearns. By the time Alan Greenspan arrived to speak, there was hardly anyone who cared to hear what he had to say. The audience was gone. By Monday, Bear Stearns was of course gone, too, sold to J.P. Morgan for $2 a share.* The people rising out of the hole in the ground on the northeast corner of Madison Avenue and Forty-seventh Street at 6:40 in the morning revealed a great deal about themselves, if you knew what to look for.

Republic, Lost: How Money Corrupts Congress--And a Plan to Stop It
by Lawrence Lessig
Published 4 Oct 2011

Before the meeting, Larry Summers, Rubin’s top deputy at the Treasury Department, called Born and berated her. Summers huffed, “There are thirteen bankers in my office. They say if this is published we’ll have the worst financial crisis since World War II.”20 By the April meeting, tempers had not cooled. Lowenstein: [Alan] Greenspan got in Born’s face, blowing and blustering until he reddened. Rubin, always more politic, spoke with controlled fury, as if Born’s proposal were unsuited to his society. He repeated that the CFTC was out of its jurisdiction and asked if Born (who had been elected president of the Stanford Law Review in 1963, when most of the women in law firms were still pouring coffee) would like an education in the applicable law from Treasury’s general counsel.21 Born persisted.

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That’s the story of Wall Street in the 2000s: While some portion of the market for derivatives was no doubt driven by a genuine need for the particular flexibility of a derivative, a huge proportion was simply black cars being painted red. The winners in this new market were the drivers of these freshly painted cars, and the firms that had donenanup filepos-id="filepos184813">27 To say that the financial sector escaped the government’s regulation, however, is not to say that the sector escaped regulation. As Alan Greenspan put it: “It is critically important to recognize that no market is ever truly unregulated…. The self-interest of market participants generates private market regulation.”31 Even if the banks didn’t have to worry about rules emanating from the CFTC, SEC, or Federal Reserve, they still had to worry about the constraints imposed upon them by the competitive market.

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That is the business of government.”32 It is this gap between the interests of the banks alone and the interests of the “economy as a whole” that explains the need for regulation. “Banks,” Posner writes, “can be made safe by regulation, but that is not their natural state, and so if regulation is removed they may careen out of control.”33 Thus, commenting upon Alan Greenspan’s confession that he had expected the self-interest of Wall Street firms to be enough to induce them to behave properly, Posner writes: That was a whopper of a mistake for an economist to make. It was as if the head of the Environmental Protection Agency, criticized for not enforcing federal antipollution laws, had said he thought the self-interest of the polluters implied that they are best capable of protecting their shareholders and their equity.

Unelected Power: The Quest for Legitimacy in Central Banking and the Regulatory State
by Paul Tucker
Published 21 Apr 2018

Although independent central banks are often seen as the embodiment of liberalism, or even neoliberalism, I want to argue that price stability can be seen as a legitimate goal for the state under both liberal and republican conceptions of politics and, subject to one qualification, under social democracy too. For liberals (progressive as well as conservative), the definition of price stability favored by former Fed chair Alan Greenspan seems to warrant its legitimacy: that it obtains when “economic agents no longer take account of the prospective change in the general price level in their economic decision-making.”44 That is almost the canonical liberal case for any measure or regime: that it helps to leave autonomous people (and businesses) free to pursue their private projects and well-being without interference (in this case from noise in the value of money).

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On the Nixon-Burns relationship more generally, see Conti-Brown, Power and Independence, pp. 192–195. Whereas Conti-Brown concludes that presidents can dominate the Fed if they wish and find themselves with a soulmate chair, I argue that the Principles’ provisions would help to make this obvious and so deter both parties. 9 Abrams, “How Richard Nixon”; and, for a striking account involving Alan Greenspan, Mallaby, Man Who Knew, pp. 139–144. 10 Burns, “Anguish of Central Banking.” 11 On veto points and CBI, Moser, “Checks and Balances”; Keefer and Stasavage, “Improve Credibility”; and Hallerberg, “Veto Players.” 12 Surveyed in Bernhard, Broz, and Clark, “Monetary Institutions.” For a critical review, see Forder, “Central Bank Independence.” 13 Posen, “Central Bank Independence” and “Declarations Are Not Enough.”

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On the other side of the Atlantic, in the face of concerted efforts by the Reagan administration to pack the Federal Reserve Board against him, Paul Volcker had enjoyed sufficient public support (just) to take the decisive steps in conquering inflation in the world’s reserve currency, a job consolidated during Alan Greenspan’s early years at the helm, and which seemed to have laid the foundations for an exceptional period of growth.6 By the early 1990s, economists were compiling evidence that central bank independence could improve inflation performance without exacerbating volatility in output and jobs: an apparent free lunch.7 Something seemed to be going very well if only the right policy regime existed.

The Lights in the Tunnel
by Martin Ford
Published 28 May 2011

Our simulation in Chapter 1 used just one tunnel to represent the entire world mass market. Export and import flows between nations are not simulated in our tunnel because they are just accounting contrivances. Our tunnel is just a bunch of lights—each of which represents someone, somewhere with a job. The conventional view is echoed strongly by former Federal Reserve Chairman Alan Greenspan in his book, The Age of Turbulence. Greenspan’s book includes an entire chapter devoted to the growing problem of income inequality. Greenspan tells us that income in the United States is now more concentrated that at any time since the late 1920s.34 He correctly attributes this to globalization and, especially, technological advance, pointing out that many of the jobs previously held by “moderately skilled workers” are now handled by computers.

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The problem is that, for the first time, we will have a very large number of older people actively selling assets, while at the same time, a relatively smaller number of younger workers will be available to buy those assets. The obvious result is that asset values of nearly all types are likely to fall under the duress of this lopsided selling pressure. A number of people—including Alan Greenspan in his book The Age of Turbulence—have suggested that the solution to this problem is going to be huge numbers of newly wealthy young workers from China, India and other developing nations who will step forward to buy our assets. As we have seen, that might not be such a good bet. The reality is that the idea of this tremendous new market resulting from an exploding Chinese middle class is something of a mirage.

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Web: http://www.census.gov/Press-Release/www/releases/archives/education/011196.html 32 William Easterly, The Elusive Quest for Growth: Economists’ Adventures and Misadventures in the Tropics, Cambridge, MA, MIT Press, 2002, p.53. 33 “Outsourcing not the Culprit in Manufacturing Job Loss”, AutomationWorld, December 9th, 2003. Web: http://www.automationworld.com/webonly-320 34 Alan Greenspan, The Age of Turbulence, New York, The Penguin Press, 2007, p.397. 35 ABC News 20/20 Special, “Last Days on Earth”, 2006 36 Kurtzweil predicts the Technological Singularity by 2045: Fortune Magazine, May 14, 2007, Web: http://money.cnn.com/magazines/fortune/fortune_archive/2007/05/14/100008848/ 37 “Vernor Vinge on the Singularity,” Web: http://mindstalk.net/vinge/vinge-sing.html Chapter 3: Danger 38 Robert J.

Numbers Rule Your World: The Hidden Influence of Probability and Statistics on Everything You Do
by Kaiser Fung
Published 25 Jan 2010

Other critics deride the technology as “garbage in, credit score out,” charging the credit-reporting agencies with gross incompetence in compiling data that form the basis of credit scores. Still others accuse insurers of co-opting credit scoring as “the 21st century tool for redlining,” referencing the outlawed commercial practice of denying mortgages to inner-city neighborhoods. The supporters of credit scoring are equally fervent. At the Federal Reserve, then-chairman Alan Greenspan averred, “Lenders have taken advantage of credit scoring models and other techniques for efficiently extending credit to a broader spectrum of consumers. The widespread adoption of these models has reduced the costs of evaluating the creditworthiness of borrowers, and in competitive markets, cost reductions tend to be passed through to borrowers.”

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Before long, the Have-Nots notice deterioration in their loss performance. The most discerning Have-Not figures out why; it implements scoring to even the playing field, thus becoming a Have. As more and more firms turn into Haves, the Have-Nots see ever-worsening results, and eventually everyone converts. Acknowledging this domino effect, Alan Greenspan once remarked: “Credit-scoring technologies have served as the foundation for the development of our national markets for consumer and mortgage credit, allowing lenders to build highly diversified loan portfolios that substantially mitigate credit risk. Their use also has expanded well beyond their original purpose of assessing credit risk.

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Many authors have studied the impact of credit scoring on our society; of these efforts, I recommend the book Paying with Plastic by David Evans and Richard Schmalensee, and the PBS report on “Credit Scores—What You Should Know About Your Own” by Malgorzata Wozniacka and Snigdha Sen. Although little direct evidence has been published, industry insiders agree on the substantial benefits of credit-scoring models, and their rapid penetration into many industries provides indirect proof. Federal Reserve chairman Alan Greenspan and FTC chairman Timothy Muris made the cited comments at various conferences and hearings. Consumer advocacy organizations, including the National Consumer Law Center, Center for Economic Justice, and Consumers Union, issued reports critical of credit scoring. The quotation of Representative Steven Wolens was reported by Gary Boulard in State Legislatures.

The Penguin and the Leviathan: How Cooperation Triumphs Over Self-Interest
by Yochai Benkler
Published 8 Aug 2011

Nowhere has this fact been more obvious than online, where Wikipedia and open-source software have been so successful. Tux, the Linux Penguin, is beginning to nibble away at the grim view of humanity that breathed life into Thomas Hobbes’s Leviathan. • • • Testimony of Dr. Alan Greenspan to the Senate Committee of Government Oversight and Reform, OCTOBER 23, 2008 Alan Greenspan: Those of us who have looked to the self-interest of lending institutions to protect shareholder’s equity (myself especially) are in a state of shocked disbelief. Senator Henry Waxman: In other words you found that your view of the world, your ideology was not right.

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Senator Henry Waxman: In other words you found that your view of the world, your ideology was not right. It was not working. Greenspan: Precisely … that’s precisely the reason I was shocked because I’ve been going for forty years or more with very considerable evidence that it was working exceptionally well. Former Federal Reserve chairman Alan Greenspan’s unwavering belief in the power of self-interest is based on two of our society’s most widely held, long-standing, and erroneous assumptions. The first is the assumption that inspired philosopher Thomas Hobbes’s Leviathan: that humans are fundamentally and universally selfish, and the only way to deal with people is for governments to step in and control us so that we do not, in our shortsighted pursuit of self-interest, destroy one another (or make one another’s lives too miserable to bear).

A Colossal Failure of Common Sense: The Inside Story of the Collapse of Lehman Brothers
by Lawrence G. Mcdonald and Patrick Robinson
Published 21 Jul 2009

Greenspan, in some quarters, was a national hero because his actions essentially provided people with free money, with hardly any interest to pay on funds borrowed at 1 percent. Mind, there were rumblings of discontent in very high places, and as ever, the bears thought the whole system could go south. But no one argued with Alan Greenspan. Into the picture came the soft tread of the Chinese, with their dirt-cheap consumer products and an economy exploding with growth. China made it possible for Alan Greenspan to hold those interest rates down, avoid inflation, and keep the U.S. economy buzzing. China actually made it possible for the whole world to keep the lid on inflation, which surely would have gone mad without the armies of devoted workers slaving away in the Chinese industrial cauldron.

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Larry joined Lehman as managing director and head of distressed trading, a position of enormous responsibility and one which he occupied with immense distinction. Meanwhile, back at Morgan Stanley, along with all the other bond people, we were experiencing an upsurge in the market after mid-2003. Alan Greenspan, head of the Federal Reserve in Washington and probably the most powerful man in the country, was in the process of cutting interest rates to near-unprecedented lows. He began the process to prevent damage to the U.S. economy from the dot-com bubble, and he cut rates again to prevent a sharp recession after 9/11.

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And every time we looked at the consumer spending charts or the mortgage origination chart, there grew a sneaking suspicion that we were somehow on the verge of the greatest debt binge in the history of global finance. Worse yet, it was emanating from the United States of America. Starting in 2001, when Alan Greenspan dropped interest rates to 1 percent, the chart that tracks U.S. consumer debt as a percentage of income suddenly broke out, upward. It showed an alarming rise from the acceptable average of between 95 percent in a recession and 85 percent in boom markets. But now, in early 2006, it was on a relentless ascent, driving through 135 percent and still rising.

Culture and Prosperity: The Truth About Markets - Why Some Nations Are Rich but Most Remain Poor
by John Kay
Published 24 May 2004

The United States economy performed well in the 1990s. Business Week proclaimed the "new economy": technology had transformed America's long-term growth potential. With the aid of Blootnberg television, this strong economic performance was translated into an extraordinary stock market boom. In 1996, the chairman of the Federal Reserve Board, Alan Greenspan, warned of "irrational exuberance." As he spoke the valuation of stocks was at the highest level ever recorded in American history-surpassing the records of 1929. But far more was to come. The chairman, having once put his head above the parapet, retreated. Greenspan famously speaks in riddles.

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These countries have high incomes per head, low inflation and unemployment, and an environment and physical and social infrastructure unmatched elsewhere. Small, homogeneous communities are particularly well placed to sustain regulatory structures that are both tacit and complex, and modern economies function through such structures: systems that typically work well but are harder to sustain in diverse, multicultural societies. The young Alan Greenspan wrote that "beneath the paperwork of regulation lies a gun," 7 but this reveals a profound misunderstanding of the nature of economic regulation in a democratic society: if such regulation requires a gun for its enforcement, it cannot be enforced effectively for long. If you do business in Norway and do not do it the Norwegian way, you will not encounter a gun-there are few guns in Norway-but your venture will not be very successful.

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If you do business in Norway and do not do it the Norwegian way, you will not encounter a gun-there are few guns in Norway-but your venture will not be very successful. Nor will you be faced by a gun in Switzerland, although there are many guns in Switzerland: the Swiss National Army, a universal citizen militia, plays an important role in forming the structure of relationships that underpin Swiss business. Alan Greenspan has distinctive, even distinguished eyebrows, and the raising of them is precisely the mechanism that could, and should, have been used to discourage the speculative excesses of asset markets in the late 1990s. Globalization, and the development of rights-based models of economic and political behavior, have somewhat undermined the ability to regulate through moral authority.

Last Man Standing: The Ascent of Jamie Dimon and JPMorgan Chase
by Duff McDonald
Published 5 Oct 2009

“Sandy feels like he did all this by himself,” he told one colleague. A constant refrain from Dimon was, “What about us?”—and it was the source of ever-increasing tension between him and Weill. He could hardly contain his growing resentment. 6. THE BOILING WITHIN By the late 1990s, Wall Street worshipped at the altar of Alan Greenspan, the chairman of the Federal Reserve. Greenspan, who had been given the nickname Maestro, had ushered in a new golden era. Weill knew the Maestro well. In the early 1970s, he’d hired the wonky economist to speak to Shearson’s research department, and they had engaged in long-running debates about the economy ever since.

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Frustrated as he was by what he saw as the unfairness of the situation, Dimon somehow failed to grasp the larger implication of Weill’s remark. Sandy Weill had begun to dismantle what had been corporate America’s longest-running, best-known, and most widely lauded succession plan. • • • The next few weeks were filled with phone calls and meetings to make sure the deal went off without a hitch. Weill called Alan Greenspan to make sure they’d at least get preliminary approval from the Federal Reserve. He called Secretary of the Treasury Robert Rubin, who actively lobbied for repeal of Glass-Steagall, ultimately making the transaction legal. (Rubin subsequently resigned from the government and joined Weill at Citigroup.

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I couldn’t leave them. But Sandy doesn’t always think about just right or wrong; he thinks about his options down the road. The board decision was the sign, and I should have known better. But look, you live and learn.” Things then proceeded according to Weill’s grand plan. At a meeting with Alan Greenspan, chairman of the Federal Reserve, and other Fed officials later in April, Weill was given a “positive response” to the merger. Although Weill continued to push to have Glass-Steagall changed, Citigroup was given two years to divest itself of the Travelers insurance unit. On May 6, Weill and Reed unveiled the new management structure to the public.

The End of Alchemy: Money, Banking and the Future of the Global Economy
by Mervyn King
Published 3 Mar 2016

The cult of celebrity has reached even the gloomy halls of central banking. President Clinton was once asked by a journalist what it was like to be the most powerful man in the world. Pointing to Andrea Mitchell, White House correspondent for NBC, he replied, ‘Ask her. She’s married to him.’ Her husband was Alan Greenspan, then Chairman of the Federal Reserve. Put on its cover by Time magazine as the key member of the ‘Committee to Save the World’, lionised by former presidential candidate John McCain (who said in one of the debates, ‘I would not only reappoint Mr Greenspan – if Mr Greenspan should happen to die, God forbid, I would do like they did in the movie, Weekend at Bernie’s.

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Put on its cover by Time magazine as the key member of the ‘Committee to Save the World’, lionised by former presidential candidate John McCain (who said in one of the debates, ‘I would not only reappoint Mr Greenspan – if Mr Greenspan should happen to die, God forbid, I would do like they did in the movie, Weekend at Bernie’s. I’d prop him up and put a pair of dark glasses on him and keep him as long as we could’), and subsequently vilified on stage and screen (not to mention in print) as the architect of the financial crisis of 2008, Alan Greenspan is unrecognisable, in either guise, as the thoughtful and careful central banker I knew. So it is vital to strip away the magic and mystique of central bankers and see them for who they really are: people. Only then can we ensure that the system in which individuals operate provides the right incentives to behave in a way that leads to the best outcomes for the rest of us.

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Even where market economies survived, inflation was a problem. In the twenty-five years before the Bank of England adopted an inflation target in 1992, prices rose by over 750 per cent, more than over the previous two hundred and fifty years.12 Inflation was simply taken for granted. Price stability seemed an unlikely state of affairs. Alan Greenspan, former Chairman of the Fed, defined price stability as when ‘inflation is so low and stable over time that it does not materially enter into the decisions of households and firms’.13 Alan Blinder, the Princeton economist who was Greenspan’s deputy at the Federal Reserve Board, put it even more clearly.

Competition Overdose: How Free Market Mythology Transformed Us From Citizen Kings to Market Servants
by Maurice E. Stucke and Ariel Ezrachi
Published 14 May 2020

The Federal Reserve Board, however, dismissed this and other concerns, which presaged the financial crisis a decade later, like how consumers were harmed by “Travelers’s marketing and sales practices for its subprime mortgage loans, personal loans and insurance products” and how the merger “would provide incentives for Citigroup to ‘steer’ [low to moderate income] and minority consumers to its subprime lenders.”13 The chairman of the Fed, Alan Greenspan, urged Congress that removing the regulatory barriers “would permit banking organizations to compete more effectively in their natural markets. The result would be a more efficient financial system providing better services to the public.”14 Greenspan in 2000 pressed for more deregulation, including federal legislation that eliminated virtually all federal government regulation of the over-the-counter derivatives market and also preempted certain state laws relating to it.

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The result would be a more efficient financial system providing better services to the public.”14 Greenspan in 2000 pressed for more deregulation, including federal legislation that eliminated virtually all federal government regulation of the over-the-counter derivatives market and also preempted certain state laws relating to it. As an editor of the Financial Times noted, “All the ingredients—including, crucially, a laissez-faire Federal Reserve under Alan Greenspan—were now in place for high-octane financial capitalism.”15 Not only did the government deregulate, but Greenspan, among others, under the guise of promoting competition, resisted recommendations to crack down on subprime mortgages or impose regulations on the complex financial instruments that include credit default swaps, which figured prominently in the financial crisis.16 As the economist Paul Krugman chronicled in a column written during the George W.

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Using our legislative process to protect and promote a competition ideal embedded within a vision of a just society In the 1990s, well before the financial crisis, the CFTC became alarmed by the lack of oversight of the secretive, multitrillion-dollar, over-the-counter derivatives market, which included the credit derivatives that spawned the mortgage and housing boom (and later bust). The chair of the independent federal agency Brooksley Born attempted to regulate these derivatives, only to be rebuffed by the then Fed Chairman Alan Greenspan, then–Treasury Secretary Robert Rubin, and then–Deputy Treasury Secretary Lawrence Summers.5 Born left in 1999, after her agency was marginalized, while Greenspan and the other policy makers pushed to deregulate further. Greenspan, as we saw in chapter 5, believed that competition minimized the need for regulatory oversight: “Those of us who support market capitalism in its more competitive forms might argue that unfettered markets create a degree of wealth that fosters a more civilized existence.

Limitless: The Federal Reserve Takes on a New Age of Crisis
by Jeanna Smialek
Published 27 Feb 2023

Anyone who thinks they have the unquestioned answer to that balance has not dealt with this subject in any very great detail. —Alan Greenspan, in congressional testimony, October 1993 “We should not pretend the Federal Reserve, of all institutions in government, is infallible,” Henry Gonzalez, a Texas Democrat and chairman of the House Banking Committee, declared at a hearing on October 13, 1993.[1] The seventy-seven-year-old representative leaned forward in his high-backed chair, peering down at the bespectacled Fed chairman hunched over the witness table below him.[2] Alan Greenspan, sporting a comb-over and a digital watch, wore an expression that registered something between boredom and polite exasperation as he waited to respond, resting his mouth on his hand and arching his eyebrows slightly.

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Fed officials, in turn, tried to explain in basic terms what they were up to and how their policies were playing out in the real world. The point was to make it clear to lawmakers, to the press, and ultimately to the American public that the modern Fed was not the central bank of decades past. That old Fed had been obscure. Alan Greenspan, the chairman who presided over the prosperous 1990s and early 2000s, had once declared that his role had made him an expert at “mumbling with great incoherence.” Monetary policy’s inscrutability had been a sort of merit badge. America was happy with the economy in those days, and content to leave the Fed to tend to Wall Street.

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“It is the central bank, in its conduct of monetary policy, that inevitably exerts an influence, sometimes a dominant influence, on exchange rates,” Volcker would write.[29] Through interconnected currency markets, the Fed had become more than just a powerful domestic economic agenda-setter. It had become central banker to the world. * * * — Such was the legacy, and the mighty influence, that Alan Greenspan inherited when he became chair of the Fed in 1987, a job he would hold until 2006. Greenspan, a New Yorker who had made his reputation in economic consulting, presided over a golden era for the Fed. After two reputationally bruising decades, the central bank had gained an air of mystique. Free market economics had come back into vogue during Ronald Reagan’s presidency in America and Margaret Thatcher’s time as prime minister in the United Kingdom, and Greenspan’s Fed embraced the philosophy.

Seven Crashes: The Economic Crises That Shaped Globalization
by Harold James
Published 15 Jan 2023

The investment manager and bond specialist Bill Gross claimed that “[t]here’s becoming an embedded inflationary premium in the bond market that wasn’t there six months ago.” Interestingly, the market was often personified as being China, as Chinese surpluses accumulated and were held in U.S. government securities: Chinese premier Wen Jiabao said in March that China was “worried” about its $767.9 billion investment in U.S. Treasuries. Former Fed Chairman Alan Greenspan was quoted as saying: “The yield spreads opening up imply that inflation premiums are rising. If we try to do too much, too soon, we will end up with higher real long-term interest rates which will thwart the economic recovery.”28 The Wall Street Journal commented, “It’s not going too far to say we are watching a showdown between Fed Chairman Ben Bernanke and bond investors, otherwise known as the financial markets.

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One of the concerns raised in the meeting was that the major mechanism through which QE might be expected to work was through depreciation of the exchange rate—was that not a declaration of currency war? The criticism was further fueled by an interview in the Financial Times by former Fed Chair Alan Greenspan, a large part of which was aimed at China, which “has become a major global economic force in recent years. But it has not yet chosen to take on the shared global obligations that its economic status requires.” But Greenspan added the critical comment, which quickly drew more attention than the China-bashing: “America is also pursuing a policy of currency weakening.”69 The expectations of Seoul were thus low to begin with.

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He self-consciously wanted to normalize central banking and mark a break with the cult of personality that had accompanied the Greenspan years, when the star Watergate journalist Bob Woodward wrote a fawning biography of the “Maestro.”116 A young artist who appeared on CNBC to do a live painting of Alan Greenspan stated that the successor would be more difficult: “His beard is covering his face, and I don’t think he has the same facial expressions.”117 The historian Adam Tooze unfairly describes Bernanke as a “placid and undersized persona.”118 In fact, Bernanke was mostly dry and laconic. As chair of the Princeton Economics Department he was both admired and (by some) disdained for his capacity to break off long-winded discussions and end debate with a few pithy words.

The greatest trade ever: the behind-the-scenes story of how John Paulson defied Wall Street and made financial history
by Gregory Zuckerman
Published 3 Nov 2009

But the Federal Reserve Board, which had been lowering interest rates to aid the economy, responded to the shocking September 11 attacks by slashing interest rates much further, making it cheaper to borrow all kinds of debt. The key federal-funds rate, a short-term interest rate that influences terms on everything from auto and student loans to credit-card and home-mortgage loans, would hit 1 percent by the middle of 2003, down from 6.5 percent at the start of 2001, as the Fed, led by Chairman Alan Greenspan, worked furiously to keep the economy afloat. Rates around the globe also fell, giving a green light to those hoping for a cheap loan. For years, Americans had been pulled by two opposing impulses—--an instinctive distaste of debt and a love affair with the notion of owning a home. In 1758, Benjamin Franklin wrote: “"The second vice is lying; the first is running in debt.”"1 The dangers of borrowing were brought home in the Great Depression when a rash of businesses went bankrupt under the burden of heavy debt, scarring a generation.

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The government made the interest on mortgage payments tax deductible, and pressure on Congress from vested interests in the real estate business kept it that way; other benefits doled out to home sellers and buyers became equally sacred cows. Low-income consumers and those with poor credit histories who once had difficulty borrowing money found it easier, even before Alan Greenspan and the Federal Reserve started slashing interest rates. In 2000, more than $160 billion of mortgage loans were outstanding to “"subprime”" borrowers, a euphemistic phrase invented by lenders to describe those with credit below the top “"prime”" grade. That figure represented more than 11 percent of all mortgages, up from just 4 percent in 1993, according to the Mortgage Bankers Association.

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One-third of new mortgages and home-equity loans were interest-only, up from less than 1 percent in 2000, while 43 percent of first-time home buyers put no money down at all. Rather than rein it all in, regulators gave the market encouragement, thrilled that a record 69 percent of Americans owned their own homes, up from 64 percent a decade earlier. In a 2004 speech, Federal Reserve chairman Alan Greenspan said that borrowers would benefit from using adjustable-rate mortgages, which had seemed risky to some, and were a type of loan the Bank of England was campaigning against. Greenspan clarified his comments eight days later, saying he wasn’'t disparaging more conservative, fixed-rate mortgages, but his comments were interpreted as a sign that he was unconcerned with the housing market.

The Price of Everything: And the Hidden Logic of Value
by Eduardo Porter
Published 4 Jan 2011

Researchers have even suggested the sex imbalance pushed Chinese households into a race to save more, so their sons would have money to compete in the increasingly tight marriage market. This enormous savings rate has contributed to China’s accumulation of some $2.5 trillion in foreign exchange reserves at the end of 2009. If one can believe Alan Greenspan, the former Fed chairman, China’s gender imbalance helped inflate the global housing bubble, as the mass of Chinese savings sloshing through the world’s financial system kept interest rates low and fueled the boom in housing prices all over the world. Beyond marriage imbalances, China’s disregard for women is squandering a valuable resource.

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Investment booms built upon technological breakthroughs like electricity, railways, or the Internet ultimately revolutionized the world economy—fueling surges of productivity that could—at least temporarily—justify the exuberance. The long-standing American approach, shared by the chairman of the Federal Reserve, Ben Bernanke, as well as his predecessor, Alan Greenspan, has been that bubbles should be dealt with only after the fact. The Fed should be ready to pick up the pieces after they burst—flooding the economy with cheap money to encourage lending and help debtors avoid bankruptcy as the value of their assets deflates. But the government should do nothing to the bubbles themselves.

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But if we learn only one thing from the economic disaster of the last two years, it should be this: we should never again accept unchallenged the notion that the prices set by unfettered markets must inevitably be right. Sometimes they are. Sometimes they are not. Consider the testimony before Congress of Alan Greenspan, the former chairman of the Federal Reserve, on October 23, 2008. Greenspan was known as “the Maestro” for his seemingly deft management of monetary policy, evidenced by a long tenure during which the United States experienced low inflation, long economic expansions, and short and shallow recessions.

End This Depression Now!
by Paul Krugman
Published 30 Apr 2012

CHAPTER FOUR BANKERS GONE WILD [R]ecent regulatory reform, coupled with innovative technologies, has stimulated the development of financial products, such as asset-backed securities, collateral loan obligations, and credit default swaps, that facilitate the dispersion of risk. . . . These increasingly complex financial instruments have contributed to the development of a far more flexible, efficient, and hence resilient financial system than the one that existed just a quarter-century ago. —Alan Greenspan, October 12, 2005 IN 2005 ALAN GREENSPAN was still regarded as the Maestro, a source of oracular economic wisdom. And his comments about how the wonders of modern finance had ushered in a new age of stability were taken to reflect that oracular wisdom. The wizards of Wall Street, said Greenspan, had ensured that nothing like the great financial disruptions of the past could happen again.

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Larry Summers, who was President Obama’s top economic adviser for much of his first three years, once mocked finance professors with a parable about “ketchup economists” who “have shown that two-quart bottles of ketchup invariably sell for exactly twice as much as one-quart bottles of ketchup,” and conclude from this that the ketchup market is perfectly efficient. But neither this mockery nor more polite critiques from other economists had much effect. Finance theorists continued to believe that their models were essentially right, and so did many people making real-world decisions. Not least among these was Alan Greenspan, whose rejection of calls to rein in subprime lending or address the ever-inflating housing bubble rested in large part on the belief that modern financial economics had everything under control. Now, you might imagine that the scale of the financial disaster that struck the world in 2008, and the way in which all those supposedly sophisticated financial tools turned into instruments of disaster, must have shaken the grip of efficient-markets theory.

Pity the Billionaire: The Unexpected Resurgence of the American Right
by Thomas Frank
Published 16 Aug 2011

Self-interest is what would make bankers play fairly and oil companies drill safely. Do you remember the smugness, reader? The sheer complacency with which the free-market catechism would be pronounced? Then surely you will permit me to include the following memorable passage from a 1999 issue of Time magazine whose cover hailed Alan Greenspan, Robert Rubin, and Larry Summers as the “Committee to Save the World.” The magazine observed, dispassionately, that “Rubin, Greenspan, and Summers have outgrown ideology.” What it meant by this was that “their faith is in the markets and in their own ability to analyze them.” This faith beyond ideology recalls nothing so much as the objectivist philosophy of the novelist and social critic Ayn Rand.… During long nights at Rand’s apartment and through her articles and letters, Greenspan found in objectivism a sense that markets are an expression of the deepest truths about human nature and that, as a result, they will ultimately be correct.

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The brand-new president persuaded Congress to approve a $787 billion stimulus package early in 2009 and to partially reregulate Wall Street. He even managed to push through a universal health-insurance bill. It looked at times as though Roosevelt really was riding again. From grandees of the old order, meanwhile, came the same cries of recantation that one heard in 1932. The most remarkable disavowal was that of Alan Greenspan, a member of the aforementioned “Committee to Save the World.” As Fed chairman, Greenspan had fought fiercely to keep derivatives markets unregulated and took a comfy snooze when called upon to supervise the nation’s intoxicated mortgage lenders. But now Greenspan confessed to feeling “shocked disbelief” at all that had gone on.

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Two useful lists can be found at http://economicsofcontempt.blogspot.com/2008/07/official-list-of-punditsexperts-who.html and http://bubblemeter.blogspot.com/search/label/Flashback. 12. See Frank Easterbrook and Daniel Fischel, The Economic Structure of Corporate Law (Harvard University Press, 1996), p. 283. The best-known advocate of market self-regulation was probably Alan Greenspan; in 1996 he reportedly told Brooksley Born of the Commodity Futures Trading Commission that there was really no need for laws against fraud of the kind she had proposed. (See the profile of Born in the March–April 2009 edition of the Stanford University alumni magazine by Rick Schmitt, “Prophet and Loss.”)

Stigum's Money Market, 4E
by Marcia Stigum and Anthony Crescenzi
Published 9 Feb 2007

Ostensibly, the Bush administration was concerned that the long lag between interest-rate cuts and their impact on the economy might mean that the economy would not recover in time to help Bush in the 1992 election campaign. Bush wanted the Fed to move faster, as he stated during the 1992 presidential debates: “Alan Greenspan is respected. [But] I’ve had some arguments with him about the speed in which we have lowered interest rates.” Bush may have had a point. Despite the recession and the slow economic growth that followed, the Fed had lowered rates in baby steps. It took the Fed three and a half years before settling on an interest-rate level it felt would help revive the economy.

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Monetary policy has therefore been conducted without the influence of any undue political pressures. That said, members of Congress, particularly members of the House of Representatives, continue to chide the Fed, seeking to play to their home audiences with criticism of the Fed’s policies. Luckily, however, the Fed, led by Fed Chairman Alan Greenspan from 1987 to 2006, has shown a great understanding of the dynamic that shapes such behavior and not let Congress have any meaningful influence on monetary policy. Despite the apparent lack of politicization to monetary policy making, speculation naturally arises around the time of national elections.

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Once a consensus is reached, the committee issues a directive to the Federal Reserve Bank of New York—the bank that handles transactions for SOMA. The directive provides guidance to the manager of SOMA for the implementation of the committee’s decision on interest rates. Although the Fed chairman has only one vote in this process, his power of persuasion goes far beyond that single vote. Federal Reserve Chairman Alan Greenspan, for instance, was well known to seek a consensus around his own personal views on the appropriate policy stance. There’s little doubt that the Fed chairman wields immense power at the FOMC, even though existing laws do not mandate that power. Rifts can develop, of course, and it takes a chairman with astute political skills to negotiate them without undermining the credibility of the committee.

Program Or Be Programmed: Ten Commands for a Digital Age
by Douglas Rushkoff
Published 1 Nov 2010

Now that digital technologies offer us identity confirmation, secure transactions, and distributed networks, we have the ability to operate local-style currencies on a global scale. Net-based, or “e-currencies,” have already been experimented with successfully in gaming environments, and are now under development around the world for more practical applications across great distances. This is not as far-fetched a concept as it may appear. Even former Fed Chairman Alan Greenspan sees private electronic currencies as a promising solution to the fiscal challenges posed by the information age.[7] Instead of buying the things other people make through centralized banks and credit card companies, peer-to-peer currencies allow for the direct transfer of value from one person on the periphery to another.

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Digital society may always be biased toward sharing, but a real understanding of the codes through which it has been built makes stealing a nonstarter. * * * 6. See the LETSystems home page at http://www.gmlets.u-net.com/ for some simple explanations of how this works. Or see the currency chapter in my own Life Inc: How Corporatism Conquered the World and How We Can Take it Back (New York: Random House, 2009). 7. See Alan Greenspan, “Fostering Financial Innovation: The Role of Government” in The Future of Money in the Information Age (Washington, DC: Cato Institute, 1997). Or watch any of Greenspan’s later testimonies to Congress. 8. See CreativeCommons.org for more detailed descriptions of these choices for publication without traditional copyright.

Getting Back to Full Employment: A Better Bargain for Working People
by Dean Baker and Jared Bernstein
Published 14 Nov 2013

In order to limit the economy’s growth and to prevent the unemployment rate from continuing to drop, the Fed raised the interest rate on overnight money from 3.0 percent in February 1994 to 6.0 percent by February 1995. The rate hikes had the intended effect of slowing the economy and limiting the decline in the unemployment rate. However, in the summer of 1995 then-Federal Reserve Board Chairman Alan Greenspan made a remarkable break with the orthodoxy within the profession. He insisted that he saw no evidence of inflation in spite of the fact that the unemployment rate, at 5.7 percent, was below the conventional range of estimates for the structural rate of unemployment. As a result, he pushed through a cut in interest rates that opened the door for a speedup of the economy and further declines in the unemployment rate.

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While it can be argued that the 4.0 percent unemployment rate was in fact below the economy’s structural unemployment rate, and therefore leading to limited inflationary pressure, the evidence from this period suggests that the true structural rate of unemployment was well below the range of estimates that were widely accepted in the economics profession in the middle of the decade. Had Alan Greenspan not been an eclectic economist who was willing to challenge economic orthodoxy, we might never have had the 1990s experiment with low unemployment. If he followed the script as his colleagues urged, he would have raised interest rates enough in 1995 and 1996 to keep the unemployment rate from dropping below the range of estimates for the structural rate of unemployment.

Saudi America: The Truth About Fracking and How It's Changing the World
by Bethany McLean
Published 10 Sep 2018

He became a flag waver for natural gas—“Mr. Gas,” Fortune magazine once called him. “Aubrey was the first one to say, ‘Let’s create demand,’” Henry Hood says. Back in 2003, when McClendon was just getting started, the consensus view had been that the U.S. was running out of natural gas. It became a fixation for Alan Greenspan, the once-revered chair of the Federal Reserve, who warned Congress during a rare appearance that the shortage and rising cost of gas could hurt the American economy. Greenspan recommended that the U.S. build terminals to accept deliveries of LNG from other countries. “We see a storm brewing on the horizon,” said Representative Billy Tauzin, Republican of Louisiana and the then-chairman of the Energy and Commerce Committee.

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He was Saudi Arabia’s oil minister. Al-Naimi had joined Aramco, the gargantuan state-owned oil company—which according to press reports oversees the production of one in every eight barrels of oil sold worldwide—as a twelve-year-old and rose to become its president. Former U.S. Federal Reserve Chairman Alan Greenspan called Al-Naimi the most powerful man you never heard of. When Al-Naimi spoke, energy markets listened. In late November, 2014, Al-Naimi and his fellow OPEC oil ministers gathered for a meeting in Vienna. The price of a barrel of oil had already begun to slide to below the level experts had expected, to around $80 a barrel.

How an Economy Grows and Why It Crashes
by Peter D. Schiff and Andrew J. Schiff
Published 2 May 2010

Unfortunately, the longer our leaders pursue ever larger doses of the identical policies that were responsible for the financial crisis in the first place, the greater that eventuality becomes. Although the idea of government stimuli as an antidote to the apparent failures of capitalism was born with Keynes, and nurtured with Roosevelt, it wasn’t until Alan Greenspan, George Bush, Ben Bernanke, and Barack Obama that the idea really came into its own. Before 2002, we had never seen federal deficits of this magnitude (now exceeding $1.5 trillion annually), and we had never experimented so radically with ultra low interest rates and manipulation of credit markets.

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The result was a credit and real estate bubble that could only grow—until it could grow no more. Artificially low interest rates (which made the economy appear healthy) invigorated the market for adjustable-rate mortgages and gave birth to the teaser rate, which made overpriced homes seam affordable. Alan Greenspan himself actively encouraged home buyers to partake. Then government agencies and government-sponsored entities compounded the problem by guaranteeing adjustable-rate mortgages based solely on the ability of borrowers to afford the teaser rates. Without such guarantees most of these mortgages never would have been funded.

The Future of Money
by Bernard Lietaer
Published 28 Apr 2013

Central bankers, in particular, still shroud their doings in priestly mystery. A hearing of the Chairman of the Federal Reserve in Congress has just as much ritual and studied ambiguities as the oracles of the priests of Apollo in Delphi in Ancient Greece. Two quotations illustrate this perfectly. The first is my favorite Alan Greenspan witticism: 'If you have understood me, then I must not have made myself clear.' The other comes from William Greider in his well-named best-selling book on the Federal Reserve, Secrets of the Temple: 'Like the temple, the Fed did not answer to the people, it spoke for them. Its decrees were cast in a mysterious language people could not understand, but its voice, they knew, was powerful and important.'

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For instance, gold or diamonds, land or any other traditional commodities are valuable because they are scarce. What are the consequences of these characteristics for a society that uses information as its primary economic resource? First, such an economy is literally dematerialising. In 1996, Alan Greenspan noted: 'The US output today, if measured in tons, is the same as one hundred years ago, yet the GDP?" has multiplied by a factor of twenty over that time.' The average weight of one real dollar's worth of US exports is now less than half of what it was in 1970. Even in 'manufactured' goods, 75% of the value now consists of the services embedded in it: research, design, sales, advertising, most of which could be 'delocated' anywhere in the world and transmitted via highspeed data lines.

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Specialised corporate currencies like frequent flyer miles are thinkable only because of cheap and ubiquitous computing power. It is only a question of time before someone (American Express, Microsoft, some newly formed cyber-entity, or a consortium of corporations?) will issue a full corporate scrip, backed by its own goods and services. Even Alan Greenspan says he 'envisages proposals in the near future for issuers of electronic payment obligations, such as stored-value cards or "digital cash" to set up specialised issuing corporations with strong balance sheets and public credit ratings' and he foresees 'new private currency markets in the 21st century'.

Boom and Bust: A Global History of Financial Bubbles
by William Quinn and John D. Turner
Published 5 Aug 2020

The episode that came after the Japanese Bubble made this contrast abundantly clear. 151 CHAPTER 9 The Dot-Com Bubble Clearly, sustained low inflation implies less uncertainty about the future, and lower risk premiums imply higher prices of stocks and other earning assets . . . But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade? Alan Greenspan, 19961 T h e d i s m a nt l i n g of p os t - w a r fi na n c i a l r e g ul a ti on that led to the Japanese Bubble ushered in an era of abundant marketability, money and credit. Securities became much more marketable as a result of the removal of restrictions on foreign ownership of firms and an accompanying boom in the use of derivatives, especially in the United States.2 The 1970s and 1980s saw a global decline in the use of capital controls and fixed exchange rates, making it easier than ever for money to cross borders.

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Robert Shiller’s cyclically adjusted price-to-earnings ratio (CAPE) stood at 28, meaning that S&P 500 companies were, after adjusting for the business cycle, valued at an average of 28 times their annual earnings. This was well above the longterm average of 15, leading Shiller to advise the Federal Reserve that a correction was due.19 Alan Greenspan, the Federal Reserve’s Chairman, gave what would become an iconic speech 3 days later, in which he questioned the point at which rising asset prices could be said to result from ‘irrational exuberance’ rather than changes in their intrinsic value. This was accompanied by a warning that inflated asset prices could eventually result in similar problems to those seen in Japan.

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During 1999, most broker-dealers extended after-hours trading services to small retail investors, who had previously been excluded on the grounds that the thinness of after-hours markets made them vulnerable to market manipulation.42 As a result, individual investors could now buy and sell shares in the comfort of their own homes, at any time of day, and at a significantly lower cost than before. Money was relatively abundant during the 1990s, providing sufficient liquidity for the bubble to develop. Alan Greenspan’s decision to intervene after the 1987 stock market crash led many to believe that the Federal Reserve would respond to a price drop by cutting interest rates, thereby limiting the potential losses of investors. This became known as the ‘Greenspan put’ and acted as an incentive to take greater risks.

The Bond King: How One Man Made a Market, Built an Empire, and Lost It All
by Mary Childs
Published 15 Mar 2022

It was a story they could tell clients: Pimco didn’t just trust the data, they actually went out and checked. And anyway Gross had insisted: “We needed to get a feel for the rest of the country,” he’d said. Some economists had begun to warn about a housing bubble, but the sound of money has a way of drowning out other noise. The price-appreciation party had raged on, even as Federal Reserve chair Alan Greenspan cited “a little froth” in the market. Pimco analysts thought they knew how out of hand things were getting, based on their customary intensive research and the black-and-amber figures on their twenty-thousand-dollar-a-year Bloomberg Terminals. But Gross wanted “real” data, information beyond what his mortgage traders had already begun to conclude.

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The equity market was telling you, ‘It’s Goldilocks; everything’s perfect; the great moderation, nothing to worry about.’ “We figured out the market is trying to tell us that there’s a major fundamental transformation going on, and the system is not ready for it.” Now, he told Rose, the unthinkable had become thinkable. The following week, McCulley appeared on CNBC with Alan Greenspan, the former chair of the Federal Reserve, who was now consulting for Pimco. On Closing Bell with Maria Bartiromo, they unpacked what they thought the Fed needed to do with regard to a huge and growing problem: the “government-sponsored enterprises,” or GSEs. Fannie Mae and Freddie Mac bought mortgages from the firms that lent directly to consumers.

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Beginning in the depths of the crisis, it was the first call for a freaked-out government official—say, a Tim Geithner or a Hank Paulson. Pimco saw no reason that it shouldn’t get that call. It had strong relationships in quasi-government. Fed presidents ranging from Bill Dudley to Tim Geithner called the firm all the time. Alan Greenspan literally worked for Pimco, hired in 2007 as a consultant, his first gig after he stepped down as Fed chair. Why not “Pimco Solutions”? To make their own consultancy a formal business, they needed someone with polish to run it. Someone who could credibly glad-hand and bullshit fluently, who could act normal.

Circle of Greed: The Spectacular Rise and Fall of the Lawyer Who Brought Corporate America to Its Knees
by Patrick Dillon and Carl M. Cannon
Published 2 Mar 2010

And yet, it cautioned, a serious downturn could still be imminent, especially when the housing slump interacted with possible problems in the credit markets. “Act sooner than later,” Lerach said derisively under his breath, as if speaking directly to Fed chairman Ben Bernanke, who had succeeded Alan Greenspan, the person who had given Charles Keating and Ken Lay his benediction even when their giant scams were imploding. The second article drew greater focus. Another Times piece, this one signaled that E. Stanley O’Neal was expected to end his six-year reign at Merrill Lynch as early as that day.

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It was a name destined to be linked to scandal and shame—and to one of Bill Lerach’s greatest legal triumphs. CHARLES KEATING WAS DOING everything in his power not to cooperate with federal bank examiners. In fact, he was resisting Gray’s attempts at reform—enlisting an A-list of financial heavyweights to portray Ed Gray as Chicken Little. Keating even ginned up Alan Greenspan, then an esteemed private economist, who argued that deregulation was working. Greenspan gave his stamp of approval to some twenty innovative thrifts, including Lincoln Savings, which he singled out in writing as being a soundly run institution with record profits that “poses no foreseeable risk to FSLIC.”

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“But the allegation is clearly a mistake, isn’t it?” challenged Hansen. “If I had had this letter, I would have alleged it differently,” Lerach sputtered. “I did not have this letter at the time we prepared the fifth amended complaint.” Hansen asked Lerach if he was aware that then–economic consultant Alan Greenspan had given three separate opinions hailing Lincoln’s solvency to the FHLBB. “Were you aware, Mr. Lerach, that Mr. Greenspan had represented to the Federal Home Loan Bank Board that in his opinion Lincoln had, through skill and expertise, transformed itself into a financially strong institution that presents no foreseeable risk to the Federal Savings and Loan Insurance Corporation?”

The New Ruthless Economy: Work & Power in the Digital Age
by Simon Head
Published 14 Aug 2003

Erik Brynjolfsson and Brian Kahin (Cambridge, Mass., 2000), p. 54. 24. Quoted by Alan Greenspan in "Remarks at the 81st Annual Meeting of the American Council on Education," Washington, D.C., February 16,1999, p. 2. Available at www.federakeserve.gov. 25. Daniel Aaronson and David G. Sullivan, "The Decline of Job Security in the 1990s: Displacement, Anxiety and Their Effect on Wage Growth," prepared for the Federal Reserve Bank of Chicago, Economic Perspectives, first quarter 1998, pp. 17-43. Available at www.frbchi.org/pubs-speech/ publications/periodicals. 26. Alan Greenspan, "Education, Technology, and Economic Growth," Remarks at the Building Dedication Ceremonies at the Kenan-Flagler Business School, University of North Carolina, Chapel Hill, September 12, 1997, p. 1.

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it is because the "techno-economic regime" actually devalues the experience of front line workers and diminishes their role in production that many employers believe they can treat the employee more and more as a white-collar proletariat. While Professor David's "techno-economic regime" contributes indirectly to employee insecurity, it also has a direct and visible impact as well. There are the phenomena of skill substitution and skill debilitation themselves bringing about, in Alan Greenspan's words, "a perception that skills are becoming redundant at a rate unprecedented in human history."26 There is the manner in which skill substitution and skill debilitation are taking place, with much of the workforce finding itself the passive tool of elite management and reengineering teams with virtually unlimited powers.

Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages
by Carlota Pérez
Published 1 Jan 2002

She designated this combination of new ways of thinking about the productive system, including its organization, its techniques and its interdependencies as a change of ‘techno-economic paradigm’. This concept of a paradigm change, with each major technological revolution, has become very widely accepted, particularly since Alan Greenspan began to use the expression in the 1990s to explain the upsurge in the American economy at that time. The second major contribution which Carlota Perez made in that paper was to point out that such a ‘meta-paradigm’ change, affecting the entire economy entailed the very widespread use of new inputs.

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Chris Freeman was one of many economists arguing the inevitable outcome in his paper on ‘A Hard Landing for the “New Economy”’, 182 though he was one of the very few connecting the likely collapse with technical and institutional change issues. The Economist, as it did in the 1840s,183 ran several articles from the late 1990s predicting the inevitable fall;184 Alan Greenspan, Chairman of the Federal Reserve Board, popularized the expression ‘irratio- 180. 181. 182. 183. 184. Soros (1998) p. xiv. Abraham and Daniels (2001). Freeman (2001a). The Economist, 25 October 1845, cited by Chancellor (1999) p. 136. The Economist (1998). See for example, ‘Will Internet shares join tulip bulbs and the South Sea Company on the list of great financial bubbles?’. 

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The Turning Point: Rethinking, Regulation and Changeover 121 one, of course, and the stakes can be huge. In 1998, Newsweek’s Wall Street editor, Allan Sloan, scandalized about the orchestration by the Federal Reserve Board of the $3.65 billion bail-out of Long-Term Capital, the biggest hedge fund in the USA, reports that: Alan Greenspan argued … that the Fed didn’t dare let Long-Term Capital go out of business because its failure could have triggered worldwide havoc. Markets are already nervous about the seemingly endless series of financial collapses … [though, Sloan adds] the IMF has thrown billions into the pot, with little success so far …193 So, once the destabilizing forces have got loose, the risks of not rescuing are huge.

The Long Good Buy: Analysing Cycles in Markets
by Peter Oppenheimer
Published 3 May 2020

All of a sudden, there was a gnawing anxiety that the optimism driven by falling interest rates and lower inflation had been unjustified. Indeed, the parallels to the 1929 crash were also clear to policymakers. In an attempt to avoid repeating the mistakes of the past, they responded swiftly and decisively. The Federal Reserve in the United States immediately acted to provide liquidity to the financial system and Chairman Alan Greenspan issued a statement on the following day in which he affirmed ‘[the Fed's] readiness to serve as a source of liquidity to support the economic and financial system’. The next day the Fed cut the funds rate to about 7%, from over 7.5% on the Monday before the crash. It worked. Although it took nearly 25 years for the stock market in the US to fully recover from the losses from the 1929 crash, the recovery took less than two years following the crash of 1987.

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Once again, the susceptibility to price shocks is an additional factor that slows the recovery process and lengthens the time it takes for the prospective return on capital to rise sufficiently to generate a recovery. Belief in a New Era/New Valuations Many of the great structural bears were preceded by financial bubbles and a belief in a ‘new era’. As Alan Greenspan said in testimony before the US Congress on February 26, 1997, ‘Regrettably, history is strewn with visions of such “new eras” that, in the end, have proven to be a mirage’. A more detailed account of these surges in sentiment and how they are related to financial bubbles and ‘manias’ is given in chapter 8.

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This component of a strong narrative that drives the interest in investment was observed by renowned Austrian economist Joseph Schumpeter, who argued that speculation often occurs at the start of a new industry. More recently, in a testimony before the US Congress on 26 February 1997, then-chairman of the Federal Reserve Alan Greenspan noted that ‘regrettably, history is strewn with visions of such “new eras” that, in the end, have proven to be a mirage’. A recent study by data scientists found that, in a sample of 51 major innovations introduced between 1825 and 2000, bubbles in equity prices were evident in 73% of the cases.

The Growth Delusion: Wealth, Poverty, and the Well-Being of Nations
by David Pilling
Published 30 Jan 2018

But we struggle to put our finger on it. The global financial crisis of 2008 was the ultimate signal that economics had let us down. In the run-up to the collapse of Lehman Brothers and the onset of recession in virtually the whole Western world, the cult of growth had led us to celebrate our economies. People like Alan Greenspan, chairman of the Federal Reserve, said everything was going swimmingly and that the markets should be left alone to create ever more wealth. In fact, our standard measures had told us little about how growth was being created: that it was built on a foundation of exploding household debt and ever cleverer (for which read “ever more stupid”) financial engineering by bonus-crazed bankers.

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* * * — The problem with growth as measured by GDP is that it has become the overlord of measures. It is the number we use to define success. Of course economists and policymakers look at dozens of data points—unemployment, inflation, net exports, retail sales, house prices, and wages—to arrive at their models and predictions; Alan Greenspan, the former chairman of the Federal Reserve, used to examine men’s underwear sales as a proxy for economic activity. But in popular discourse GDP is king. Remember, economic growth is synonymous with GDP. To test out the supremacy of GDP, all you need to do is imagine a politician saying the following: “I propose shrinking our economy in return for X.”

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And if they’re right, it seems eminently sensible to track the level of CO2 and then do something about it.15 What’s the worst that could happen? More breathable air? * * * — These are my suggestions. But they might not be yours. You may want to measure happiness or the regional distribution of income, or emphasize broader measures of unemployment.16 You may like Alan Greenspan’s underpants. Whatever your preferences, there is always a trade-off between too much information and too little. As soon as you disaggregate numbers or come up with new things to measure, you have to weigh their importance. Many of the outcomes we might seek—a clean environment, healthy lives, safe streets, higher income, job security—are on different dimensions.

99%: Mass Impoverishment and How We Can End It
by Mark Thomas
Published 7 Aug 2019

Unfortunately, they are wrong. There is a considerable free-market literature, from Hayek and Ayn Rand through Milton Friedman and Davidson and Rees-Mogg to Tyler Cowen. Distinguished followers of these writers include some of the wealthiest and most powerful people on the planet:20 Jeff Bezos, the founder of Amazon; Alan Greenspan, former Chairman of the US Federal Reserve; Steve Jobs, former CEO of Apple; the Koch brothers, one the chairman and the other the EVP of Koch Industries, the second largest privately owned company in the US21; Rupert Murdoch, executive chairman of News Corp; Politicians Donald Trump,22 Rex Tillerson, Ron and Rand Paul, and Paul Ryan in the US, and Daniel Hannan and Sajid Javid in the UK; Pay-Pal co-founder, Peter Thiel and Wikipedia co-founder Jimmy Wales.

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Very few people warned of the problems inevitably growing because of the scale of global imbalances (trade surpluses and deficits between countries) and rising inequality within countries – although Wynne Godley did so and was generally ignored.8 Very few warned about the dangers of house price bubbles – although Dean Baker did so and was generally ignored.9 Very few accepted that there was a downside to globalization that needed to be managed – though Dani Rodrick did so and was generally ignored.10 Bankers, and those who regulated them, wanted to believe that modern approaches to risk management were sophisticated and robust – especially within the large banks – and that banks could safely be trusted to assess for themselves what level of capital buffer was required to keep them safe. In other words, markets know best and regulation should be kept to a minimum. As Alan Greenspan, the former Chairman of the US Federal Reserve, said after the crisis materialized: I made a mistake in presuming that the self-interest of organizations, specifically banks and others, were such that they were best capable of protecting their own shareholders. I have been dealing with the American economy for sixty years.

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Ben Bernanke, then Chairman of the Federal Reserve, put it this way: … we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spill-overs from the subprime market to the rest of the economy or to the financial system.16 After the peak of the crisis, when such denial was no longer possible, Alan Greenspan explained that his free-market view of reality had been flawed: Well, remember what an ideology is, it is a conceptual framework with the way people deal with reality. Everyone has one. You have to – to exist, you need an ideology. The question is whether it is accurate or not. And what I’m saying to you is, yes, I found a flaw.

I Hate the Internet: A Novel
by Jarett Kobek
Published 3 Nov 2016

The Presidency, which was limited to eight years, had an incentive for deregulation. The incentive was simple. The short term gains caused by deregulation appeared very fast. The damage took decades to arrive. It’s worth noting that the one constant in all four Presidencies was the presence of Alan Greenspan, the Chairman of the Federal Reserve. Alan Greenspan loved deregulation. He was also one of Ayn Rand’s disciples. He’d sat at her knee whilst she talked about poor people being garbage who deserved to die in the gutter. Ayn Rand was the most formative intellectual influence on the man who oversaw the Federal Reserve during a period of intense deregulation.

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Peter Thiel, a co-founder of PayPal, a billionaire weapons profiteer and incompetent hedge fund manager who wanted to build independent nation states on floating ocean platforms. Jeff Bezos, the founder of Amazon.com, an unprofitable website dedicated to the destruction of the publishing industry. Ron Paul, a septuagenarian medical doctor and perennial Presidential protest candidate. Alan Greenspan, the Chairman of the Federal Reserve from 1986 to 2006. In his relative youth, Greenspan sat at the knee of Ayn Rand whilst she explained that poor people were garbage who deserved to die in the gutter. None of these men had eumelanin in the basale strata of their epidermises. Another of Erik Willems’s favorite writers was Adeline’s best friend, Baby.

GDP: The World’s Most Powerful Formula and Why It Must Now Change
by Ehsan Masood
Published 4 Mar 2021

To this day no one knows where it has gone. Introduction The Great Invention Washington, DC, December 7, 1999: members of President Bill Clinton’s economics team were assembled for a press conference to announce the US government’s achievement of the century. The once invincible Federal Reserve Board chairman Alan Greenspan was there, as was Clinton’s top economics adviser, Martin Baily; Commerce Secretary William Daley and Undersecretary Robert Shapiro were in the audience too. As the identity of “one of the great inventions of the 20th century”1 was revealed, the only notable absentee was Clinton himself. As US government agencies go, the relatively small Commerce Department is responsible for a collection of critical government-run services, every one of which could have been a contender for the top prize.

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“Obviously, the GDP accounts are not solely responsible for putting America’s economy on a steadier track—as much as I’d like to make that claim. But no question about it: They have had a very positive effect on America’s economic well-being.” The Washington party therefore had an extra-special resonance for the DC elite: at the same time as celebrating one of their own—William Daley—Alan Greenspan and colleagues were honoring a system of measurement that had contributed to the United States becoming the most powerful nation on Earth. The only hint of caution that morning came, ironically enough, from Greenspan. This was still some years before the crash of 2008, and the Federal Reserve Board chairman was at the height of his powers and regarded as the chief architect and steward of America’s seemingly unending run of prosperity.

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Daley, “Press Conference Announcing the Commerce Department’s Achievement of the Century,” Survey of Current Business, Bureau of Economic Analysis, January 2000, 10. 3. Jan Luiten van Zanden, Joerg Baten, Marco Mira d’Ercole, Auke Rijpma, Conal Smith and Marcel Timmer, How Was Life: Global Well-Being Since 1820 (Paris: OECD Publishing, 2014), 64. 4. Alan Greenspan, “Press Conference Announcing the Commerce Department’s Achievement of the Century,” Survey of Current Business, Bureau of Economic Analysis, January 2000, 12. 5. Josiah Stamp, “The Measurement of National Income,” in Wealth and Taxable Capacity: The Newmarch Lectures for 1920–1 on Current and Statistical Problems in Wealth and Industry (London: P.

Reaganland: America's Right Turn 1976-1980
by Rick Perlstein
Published 17 Aug 2020

I am ashamed of my profession for the fact that a handful of its members have suggested or endorsed this policy.” Milton Friedman said the raging inflation it would produce made it merely “a proposal to change the form of taxes.” Franco Modigliani said it would “do irreparable damage to the United States economy.” Alan Greenspan, Gerald Ford’s former chief economic advisor, said of Laffer, “I don’t know anyone who seriously believes his argument.” Another free-market economist, George Stigler, bound for a Nobel Prize four years later, labeled his former University of Chicago colleague “a propagandist.” The economics editor of Business Week called supply-side “more a source of amusement than a basis for public policy.”

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Phil Crane feared that Reagan would wait until late in 1979, announce that he was retiring, and leave conservatives without a candidate at all. That was why Crane was the first Republican to throw his hat into the ring. But Reagan’s recent schedule made his ambitions plain. There had been a dinner at Stanford at which Reagan grilled Milton Friedman, Bill Simon, Alan Greenspan, and Nixon labor and treasury secretary George Shultz about the nuts and bolts of White House operations. A visit to Bohemian Grove, the secret society in the Northern California woods where Republican power brokers frolicked and cut deals. This trip to Washington—then, his first day back, a meeting with a group of fifteen political writers, then individual audiences with reporters from the Los Angeles Times, the Chicago Tribune, the New York Daily News, and the London Daily Telegraph; and a tête-a-tête with a friend who owned a hotel in Palm Springs, perhaps for some political intelligence: Gerald Ford lived in Palm Springs, and in a recent poll, Republican voters had preferred Ford to Reagan for the nomination by a margin of 37 to 31 percent.

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The Washington Star published a poll showing Republican front-runner Ronald Reagan ahead of Carter 42 percent to 38 percent in a general election matchup, Baker tied with him, and John Connally (“thought by many political professionals and opinion makers as a major threat”) behind him by four points; “Carter is not strong” beat “Carter is strong” by 41 percentage points. On September 8, at a Reagan campaign meeting to discuss public policy, two distinguished Republican economists, Alan Greenspan and George Shultz, game-planned political scenarios should the economy fall into a depression. On September 13, an NBC News poll showed the president with a 19 percent approval rating. Two days later, the president strapped on running togs and pinned the number “39” to his breast for that hilly ten-kilometer race in the Catoctin Mountains.

Beyond Outrage: Expanded Edition: What Has Gone Wrong With Our Economy and Our Democracy, and How to Fix It
by Robert B. Reich
Published 3 Sep 2012

Now that Social Security has started to pay out more than it takes in, the trust fund, by law, is entitled to collect what the rest of the government owes it. This will keep it fully solvent for those twenty-five years. The only reason there will be a problem after that point concerns a mistake made in 1983, when Alan Greenspan’s National Commission on Social Security Reform was supposed to have fixed the system for good. Congress accepted the Greenspan Commission’s recommendations to gradually increase payroll taxes and raise the retirement age (early boomers like me can start collecting full benefits at age sixty-six; late boomers born after 1960 will have to wait until they’re sixty-seven).

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It claimed the jobs, homes, and the basic security of millions—innocent, hardworking Americans who had met their responsibilities but were still left holding the bag. Precisely—and it was about time he used the term “wrong” to describe Wall Street’s antics and the abject failure of regulators (led by Alan Greenspan and the Fed) to stop what was going on. These were among the remarks that earned Obama the enmity of much of Wall Street—and encouraged them to empty their wallets for the Republicans in 2012. Nonetheless, these “wrongs” were only the proximate cause of the economic crisis that befell the nation in 2008 and lingered for years after.

Hopes and Prospects
by Noam Chomsky
Published 1 Jan 2009

The failure of the economics profession to attend to these factors is sometimes startling, perhaps similar to the myths about development that Bairoch and other economic historians have discussed. Until the crash of the financial markets he administered in 2007–8, the world’s most revered economist, I suppose, was Alan Greenspan, so let us take him as an example. In one of his orations on the miracles of the market, based on entrepreneurial initiative and consumer choice, he went beyond the usual rhetorical flourishes and gave actual examples: the Internet, computers, information processing, lasers, satellites, and transistors.

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But for the West in 2008–9, the phrase “the crisis” refers unambiguously to the financial crisis that has its deeper roots in inherent market inefficiencies, neoliberal doctrines about the alleged value of financial liberalization, dogmas about “efficient markets” and “rational expectations,”6 deregulation, exotic financial instruments that yielded profits beyond the dreams of avarice for a few—all brought to a head by an $8 trillion housing bubble that somehow regulators and economists did not perceive, portending ultimate disaster, as a few warned all along, notably economist Dean Baker. The costs of underpricing of risk are magnified by the perverse incentives designed by policy makers, primary among them the government insurance policy called “too big to fail.” After the bursting of the housing bubble in 2007, Fed chairman Alan Greenspan was criticized because he hadn’t followed through on his brief warning about “irrational exuberance” at the height of the late ’90s tech bubble. But that is the wrong criticism: it was quite rational exuberance, when the taxpayer is there to bail you out under the operative principles of state capitalism.

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As discussed earlier, the power of financial institutions reflects the increasing shift of the economy from production to finance since the liberalization of finance in the 1970s, one of the root causes of the greatest economic crisis since the Great Depression: the financial collapse of 2007–8, deep and ongoing recession in the real economy, and the miserable performance of the economy for the large majority, whose real wages stagnated for thirty years, while benefits and social indicators declined. The steward of this impressive record, Alan Greenspan—“Saint Alan” as he was sometimes called during his glory years—attributed his success to “greater worker insecurity,” which led to “atypical restraint on compensation increases,” and corresponding increases into the pockets of those who matter.10 Greenspan’s failure even to perceive the $8 trillion housing bubble, following the collapse of the earlier tech bubble that he oversaw, was the immediate cause of the current financial crisis, as he ruefully conceded.

Making It Happen: Fred Goodwin, RBS and the Men Who Blew Up the British Economy
by Iain Martin
Published 11 Sep 2013

As a downpayment, he pledged that for the first two years after the election Labour would stick to the relatively tough spending limits of the outgoing Tories. Brown also started to wonder about the possibility of giving away control over interest rates, in order to prove that a new government would be committed to continuing the fight against inflation. Alan Greenspan, the chairman of the US Federal Reserve and by then already regarded as the world’s most impressive central banker, certainly thought that it was a great idea. In March 1997, just a few weeks before the May general election, Brown met Greenspan on another trip to the United States and sought his counsel.6 Would it be wise, Brown asked the man who would become his guru, to make the Bank of England independent?

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Brown had fused a quasi-Thatcherite belief in the power of liberalised markets with New Labour modernisation, enabling an expansion of the state and public services. They were sure that the situation would continue being benign, which is why Brown’s speeches were peppered with the phrase ‘no return to boom and bust’. In confidently declaring a new paradigm Brown was hardly operating in isolation. In America, his friend Alan Greenspan, the chairman of the Federal Reserve, was seen as the sagacious progenitor of never-ending global stability. Greenspan made occasional mild warnings about irrational exuberance in the markets, but generally the rise of the emerging economies such as China was thought to have combined with the rise of information technology and new trade patterns to create a second industrial revolution that could power growth for decades.

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Gogarburn: a landscaped campus for 3,500 staff, a symphony in glass, steel and sandstone built to Goodwin’s specifications as a home for a global financial giant. 12. Gordon Brown opening the London office of the US investment bank Lehman Brothers at Canary Wharf on 5 April 2004. Here he is chatting to the company’s chief executive, Dick Fuld. 13. Alan Greenspan receiving his honorary degree at Edinburgh University in 2005, accompanied by Brown and the then Governor of the Bank of England Mervyn King. The night before, the Governor of the US Federal Reserve had given the Adam Smith memorial lecture in Brown’s home town of Kirkcaldy, Fife. 14. Larry Fish, boss of Citizens, the American retail arm of RBS. 15.

The Snowball: Warren Buffett and the Business of Life
by Alice Schroeder
Published 1 Sep 2008

The next morning, Friday, August 16, the New York Times front page ran a photograph of Gutfreund with the headline “Wall Street Sees a Serious Threat to Salomon Bros.—ILLEGAL BIDDING FALLOUT—High-Level Resignations and Client Defections Feared—Firm’s Stock Drops.”53 The story featured prominent photographs of Gutfreund and Strauss. The two of them and Marty Lipton called Corrigan’s office in New York and were patched through to Federal Reserve Chairman Alan Greenspan’s office in Washington, where Corrigan and Greenspan had been on a conference call with Treasury Secretary Nick Brady since dawn “trying to figure out who the hell we’re going to get to come in and run the firm.”54 Strauss, a longtime friend, knew they were in trouble when Corrigan greeted him as “Mr.

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And I felt they looked silly too, but they would look a whole lot sillier a few days later when financial carnage was spread from this act.”89 Brady said he thought Buffett was overreacting but agreed to call back again. He needed to consult with SEC Chairman Breeden, with Corrigan, and with Federal Reserve Chairman Alan Greenspan. Buffett sat and waited for Brady’s call. He couldn’t call Brady. He didn’t know that Brady was sitting on Ogden Phipps’s porch in Saratoga Springs, at the horse races. It was Brady’s prerogative to call him—or not. The phone system on the conference floor didn’t ring on Sundays. To keep from missing an incoming call, someone had to stare continually at the phone to see whether a little green light lit up.

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They were well aware of the likely second-order effects. The global financial market could potentially collapse. Did they think the Federal Reserve could handle it? “I was always an optimist,” Corrigan says. “I always said to myself, ‘You do what you have to do.’”90 Hours passed while Buffett waited for the phone to ring. Alan Greenspan called once, saying, no matter what, he wanted Buffett to stay. “It was a plea to just sort of stand there at the bridge regardless of what happened.” Little by little, the trading floor began to fill with people, as if summoned by some invisible jungle drum. They lit their cigarettes and their cigars, sat around The Room, and waited.

Zero to One: Notes on Startups, or How to Build the Future
by Peter Thiel and Blake Masters
Published 15 Sep 2014

By spring of ’98, each company’s stock had more than quadrupled. Skeptics questioned earnings and revenue multiples higher than those for any non-internet company. It was easy to conclude that the market had gone crazy. This conclusion was understandable but misplaced. In December ’96—more than three years before the bubble actually burst—Fed chairman Alan Greenspan warned that “irrational exuberance” might have “unduly escalated asset values.” Tech investors were exuberant, but it’s not clear that they were so irrational. It is too easy to forget that things weren’t going very well in the rest of the world at the time. The East Asian financial crises hit in July 1997.

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But the existence of financial bubbles shows that markets can have extraordinary inefficiencies. (And the more people believe in efficiency, the bigger the bubbles get.) In 1999, nobody wanted to believe that the internet was irrationally overvalued. The same was true of housing in 2005: Fed chairman Alan Greenspan had to acknowledge some “signs of froth in local markets” but stated that “a bubble in home prices for the nation as a whole does not appear likely.” The market reflected all knowable information and couldn’t be questioned. Then home prices fell across the country, and the financial crisis of 2008 wiped out trillions.

The Wake-Up Call: Why the Pandemic Has Exposed the Weakness of the West, and How to Fix It
by John Micklethwait and Adrian Wooldridge
Published 1 Sep 2020

Press, 2011), 126. 28.Quoted in Thomas Frank, The Wrecking Crew: How Conservatives Rule (New York: Metropolitan Books, 2008), 15. 29.The Economist, November 19, 1955. 30.G. Calvin Mackenzie and Robert Weisbrot, The Liberal Hour: Washington and the Politics of Change in the 1960s (New York: Penguin Press, 2008), 357. 31.Mackenzie and Weisbrot, The Liberal Hour, 313. 32.Alan Greenspan and Adrian Wooldridge, Capitalism in America: A History (New York: Penguin Press, 2018), 303. CHAPTER TWO: THE DECLINE OF THE WEST 1.Edward Gibbon, Autobiography (Letchworth, UK: Temple Press, 1924 ed.), 126. 2.Christian Caryl, Strange Rebels: 1979 and the Birth of the 21st Century (New York: Basic Books, 2013), 183. 3.Charles Moore, Margaret Thatcher: The Authorized Biography (London: Allen Lane, 2013), 1:315. 4.Steven F.

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CHAPTER THREE: THE OVERLOADED STATE 1.Michael Garland and Gaurav Pal, “Government Needs to Get Serious About IT Modernization,” The Business of Federal Technology, June 18, 2019. 2.Paper from the Partnership for Public Service: Tech Talent for 21st Century Government, April 2020. 3.Statement of Max Stier to the House Committee on Oversight and Government Reform’s hearing on “Workforce for the 21st Century,” May 16, 2018. 4.This is helped, it should be disclosed, by Bloomberg Philanthropies. 5.Alan Greenspan and Adrian Wooldridge, Capitalism in America: A History (London: Penguin, 2018), 404–5. 6.Morris Kleiner, “Reforming Occupational Licensing Policies,” The Hamilton Project, March 2015. 7.Mancur Olson, The Logic of Collective Action: Public Goods and the Theory of Groups (Cambridge, MA: Harvard Univ.

Shortchanged: Life and Debt in the Fringe Economy
by Howard Karger
Published 9 Sep 2005

Type of charge Fee Cashier’s check 5.0% Government check 2.7% Handwritten payroll check 2.7% Insurance draft/checks 5.0% Money order 5.0% Tax refund check 3.9% No I.D. check 5.0% Special risk 5.0% Bank processing fee $0.49 Minimum charge per item $1.99 Returned-check charge $25 109 Although market specialization, competition, and innovation have vastly expanded credit to virtually all income classes, under certain circumstances this expanded access may not be entirely beneficial. … Of concern are abusive lending practices that target specific neighborhoods or vulnerable segments of the population and can result in unaffordable payments, equity stripping, and foreclosure. –Alan Greenspan, “Economic Challenges in the New Century,” Annual Conference of the National Community Reinvestment Coalition, Washington, DC, March 22, 2000 Congress knows predatory lending is a problem. The Clinton administration knows this is a problem. Now the chairman of the Federal Reserve himself is saying this is a problem.

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Schmitt with Heather Timmons and John Cady, “A Debt Trap for the Unwary,” BusinessWeek, October 29, 2001 10 The Getting-Out-of-Debt Industry We are besieged by advertising on two fronts: how to get more and cheaper credit, and how to get out of debt. On the one hand, we are lured into taking on more debt through cheap credit; on the other hand, we’re warned of being in too much debt.174 Federal Reserve chairman Alan Greenspan pointed out in 2004 that because of low interest rates, we could more easily handle high levels of personal debt.1 In 2003 economics journalist Robert Samuelson argued that Americans were already too heavily in debt and the last thing we needed was more “cheap credit.”2 Despite Greenspan’s insouciance, “cheap credit” still mounts up and must be paid off.

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Think tanks and advocacy organizations that are doing excellent work on the fringe economy are referenced in the various chapters. 4 David Cay Johnston, Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich-and Cheat Everybody Else (New York: Portfolio Hardcover, 2003). 5 Darrell McKigney, Lawmakers, Regulators and the Consumer Credit Counseling Service Have All Let Payday Loan Victims Down, Consumers for Responsible Credit Solutions, August 27, 2004, www.responsiblecredit.com/resources/082704.php. 6 Alan Greenspan, “Challenges in the New Century” (presented at the Annual Conference of the National Community Reinvestment Coalition, Washington, DC, March 22, 2000). 7 Lucy Lazarony, “Credit Card Companies Sidestep Usury Laws,” Bankrate, March 20, 2002, www.bankrate.com/brm/news/cc/20020320a.asp. 8 Board of Governors of the Federal Reserve System, Purposes and Functions, Washington, DC, 1994: 5. 9 Credit Union National Association, “CUNA Testifies on Serving the Underserved,” June 26, 2003, www.cuna.org/press/press_releases/cuna_062603.html. 10 For an examination of the Community Reinvestment Act (CRA), see Karger and Stoesz, American Social Welfare Policy. 11 Muhammad Yunus, “Grameen Bank at a Glance,” November 2004, Grameen, www.grameen-info.org. 12 ShoreBank Corporation, Annual Report, Chicago, IL, 2004. 13 Quoted in Credit Union National Association, Credit Union Consumer Facts, 2002. 14 Neil F.

Winner-Take-All Politics: How Washington Made the Rich Richer-And Turned Its Back on the Middle Class
by Paul Pierson and Jacob S. Hacker
Published 14 Sep 2010

Indeed, as the massive expansion of Wall Street strained the agency, Gramm repeatedly resisted calls to increase the SEC’s funding. To Levitt, his message was blunt, if inadvertently and chillingly prescient: “Unless the waters are crimson with the blood of investors, I don’t want you engaging in any regulatory flights of fancy.”3 Gramm was perhaps second only to Alan Greenspan as a high priest of deregulation. “Some people look at subprime lending and see evil,” he said during the fight over predatory lending. “I look at subprime lending and I see the American dream in action.” “When I am on Wall Street,” he said the previous year, “to me that’s a holy place.”4 The tithing, however, went the other direction.

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The administration’s 1993 decision to place the highest priority on deficit reduction and jettison its plans for social investments marked the critical moment in the Democrats’ broader economic repositioning.14 At the time, Clinton faced considerable pressure from strong economic voices like Robert Rubin (then head of Clinton’s National Economic Council) and Fed Chair Alan Greenspan. In both 1992 and 1996, he also faced political threats from Ross Perot’s surprisingly effective third-party effort. And in a foreshadowing of the circumstances that would face the next Democrat to occupy the White House, Clinton knew that even if he adopted a more progressive policy stance, it would assuredly be blocked in the Senate by his own party’s moderates.

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In one of his most famous warnings about the new Wall Street, Warren Buffett referred to derivatives as “weapons of mass destruction.” In 1998, Brooksley Born, Clinton’s chair of the Commodity Futures Trading Commission (CFTC), invited comment on whether certain swaps and derivatives needed to be regulated. Alarmed, Rubin and Summers, along with Fed Chairman Alan Greenspan, undercut Born at every turn and eventually forced her to retreat. Rubin followed up by seeing if he could reduce the CFTC’s jurisdiction, even as Gramm would initiate legislation to remove the threat once and for all. Perhaps the most telling illustration of Democrats’ role in enabling Wall Street was the merger of the banking giant Citicorp and the financial conglomerate Travelers to form Citigroup in 1998.

The Levelling: What’s Next After Globalization
by Michael O’sullivan
Published 28 May 2019

Financially, in the dulling of market sensitivities to economic and financial imbalances, to inequality, and to the numbing of the urgency for politicians to address a litany of critical issues. “You Must Have Misunderstood Me” The sense of the mystical power of central banks in the modern era effectively began with Paul Volcker (chairman of the Federal Reserve from 1979 to 1987) and continued during the long tenure of Alan Greenspan from 1987 to 2006.4 In the 1990s, investors curious to divine the future path of interest rates looked at the size of Greenspan’s briefcase.5 If it was packed with material, then the Fed chief was arming himself to persuade colleagues of the need to raise interest rates. Today, central bankers do much of the predicting for investors, releasing forecasts of the future path of rates (forecasts that have regularly been wrong) and sometimes indulging in brave and bold open communications, memorably in the case of ECB president Mario Draghi’s “do whatever it takes” comment during a speech in London in July 2012.

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Even the Federal Reserve, which has increased interest rates, remains a massive holder of government debt and is intellectually and psychologically deeply invested in quantitative easing as an ongoing policy tool. Quantitative Easing The debate on central banks and bubbles has evolved from the time of Alan Greenspan. The orthodoxy in central banking now centers on whether and how to use what are called “macroprudential” rules to guide the ebb and flow of financial activity. For instance, instead of raising interest rates to slow the rise of house prices, a central bank can require banks to make mortgage conditions (e.g., loan to property value ratios) more stringent.

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In particular, they are sowing the seeds of a more multipolar financial system where banks are less interlinked than they were before the global financial crisis and where the lion’s share of their business takes place within, as opposed to between, regions. Quantitative easing, the chief element in central banks’ response to the financial crisis, has its roots in a 2002 speech by Ben Bernanke, then a member of the Federal Reserve Board and later the successor to Alan Greenspan as its chair. Bernanke’s speech may have started as an intellectual musing on what the Fed should do if it were confronted with the enduring combination of low inflation and low growth that followed the collapse of the Japanese house-price bubble in the 1990s. Bernanke listed nine new and dramatic policy measures that could, theoretically, be enacted were the United States to be confronted by a severe financial economic shock.

The Powerful and the Damned: Private Diaries in Turbulent Times
by Lionel Barber
Published 5 Nov 2020

MONDAY, 17 DECEMBER I’ve obtained an advance draft of Howard Davies’s essay on the future of financial regulation. It’s a brilliant summary of the key questions surrounding the financial crisis and – just maybe – an audition for the post of governor of the Bank of England when Mervyn King steps down.fn11 Davies raises awkward questions about Alan Greenspan and the Federal Reserve’s role in inflating the credit bubble after the dotcom crash and the 9/11 terrorist attacks. Were other central banks ‘accessories after the fact’, he wonders? Davies also suggests that Northern Rock has highlighted flaws in the UK regulatory system, specifically the separation of banking supervision from the Bank of England.

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We knew Bear was in deep trouble, but the demise still comes as a shock. John Gapper, our chief business columnist, captures the moment. ‘The US has acquired its own version of Northern Rock.’ SUNDAY, 16 MARCH A coup to be celebrated in our drive to attract big-name contributors to the debate on the financial crisis. Alan Greenspan, former Fed chairman, offers half a mea culpa for his own role which he attributes to inadequate risk modelling. He predicts the crisis will be the most wrenching since World War II. Home prices will fall, the pace of liquidation will increase. Greenspan does not mention the Fed’s cheap-money policy but blames human nature instead: what Keynes called ‘animal spirits’ and the rest of us would call greed.

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Dimon would later acknowledge that the Bear deal was nowhere near as favourable as he first thought because the US government deemed JPMorgan liable for some of Bear’s bad bets. At the time, Dimon was looking at markets from a different angle: what he called ‘Chapter Two’, the impact of the credit crunch on the real economy. ‘The real issue is jobs,’ he told me. Alan Greenspan enjoyed near papal infallibility during his 17 years at the Federal Reserve but his legacy doesn’t look so pristine now the credit crunch has cut off funding to many banks and financial institutions. Greenspan did not just neglect the bubble, he stoked it with policies intended to boost home-equity withdrawals and consumer spending.

Manias, Panics and Crashes: A History of Financial Crises, Sixth Edition
by Kindleberger, Charles P. and Robert Z., Aliber
Published 9 Aug 2011

Moreover the government of Iceland that came to power after the collapse established an Icelandic Special Investigation Commission which produced Causes of the Collapse of the Icelandic Banks – Responsibilty, Mistakes, and Negligence; the authors were Pali Hreinsson, Tryggvie Gunnarsson, and Sigridur Benediktsdottir. The US Congress established a bi-partisan ten-member Financial Crisis Inquiry Commission, which has held extensive hearings and interviewed witnesses from the leading financial firms. Both former Chairman Alan Greenspan and former Secretary of the Treasury Robert Rubin testified before the commission. The FCIC’s report was published in December 2010 (and is available at www.fcic.gov/report). The titles and subtitles of these books express common themes – greed, the malfunctioning of markets, the corruption of Wall Street, and the capture of Washington and the regulators by the bankers.

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The domestic aspects of the crisis are reviewed in Chapter 5. One question is whether manias can be halted by official warnings – moral suasion and jawboning. The evidence suggests that they cannot, or at least that many crises followed warnings that were intended to head them off. One widely noted remark was that of Alan Greenspan, chairman of the Federal Reserve Board, who stated on 6 December 1996 that he thought that the US stock market was ‘irrationally exuberant’. The Dow Jones industrial average was 6600; subsequently the Dow peaked at 11,700. The NASDAQ had been at 1300 at the time of the Greenspan remark and peaked at more than 5000 four years later.

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Investors buy goods and securities to profit from the capital gains associated with the anticipated increases in their prices. The authorities recognize that something exceptional is happening and while they are mindful of earlier manias, ‘this time it’s different’, and they have extensive explanations for the difference. The Chairman of the US Federal Reserve, Alan Greenspan, discovered a surge in US productivity in 1997, about a year after he first became concerned that US stock prices might be too high; the increase in productivity meant that profits would increase at a more rapid rate, and the higher level of stock prices relative to corporate earnings might not seem unreasonable.

The Limits of the Market: The Pendulum Between Government and Market
by Paul de Grauwe and Anna Asbury
Published 12 Mar 2017

They may exercise control either directly or indirectly, by investing in funds or financial institutions which exercise control on their behalf. In this way no one takes so much risk that it leads to bankruptcy and complete loss of their invested capital. The financial system is self-regulating. One of the great advocates of this theory was Alan Greenspan, who was chairman of the Federal Reserve, the US central bank. His position made him one of the most powerful men in the world. He used his influence to deregulate the US financial system in the belief that the financial markets would regulate themselves, and that there was no need for government-imposed rules and regulations.

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For a thorough analysis of scenarios see the report by the Intergovernmental Panel on Climate Change, , <http://www.ipcc.ch/report/ar/wg>. . See for example <http://www.iflscience.com/environment/climatologistarctic-carbon-release-could-mean-“were-fucked”>. . Jared Diamond, Collapse: How Societies Choose to Fail or Succeed (New York: Viking, ). . See Alan Greenspan, The Age of Turbulence: Adventures in a New World (London: Allen Lane, ). . Carmen M. Reinhardt and Kenneth S. Rogoff, This Time is Different: Eight Centuries of Financial Folly (Princeton, NJ: Princeton University Press, ). . Michael J. Sandel, What Money Can’t Buy: The Moral Limits of Markets (London: Allen Lane, ). .

Profit Over People: Neoliberalism and Global Order
by Noam Chomsky
Published 6 Sep 2011

Quoting the sad observation of an administration official, the Journal reports further that “ ‘It’s hard to fight the critics’ by telling the truth—that the trade pact ‘hasn’t really done anything.’ ” Forgotten is what “the truth” was going to be when the impressive exercise in democracy was roaring full steam ahead.25 While the experts have downgraded NAFTA to “no significant effects,” dispatching the earlier “experts’ view” to the memory hole, a less than “distinctly benign economic viewpoint” comes into focus if the “national interest” is widened in scope to include the general population. Testifying before the Senate Banking Committee in February 1997, Federal Reserve Board Chair Alan Greenspan was highly optimistic about “sustainable economic expansion” thanks to “atypical restraint on compensation increases [which] appears to be mainly the consequence of greater worker insecurity”—an obvious desideratum for a just society. The February 1997 Economic Report of the President, taking pride in the administration’s achievements, refers more obliquely to “changes in labor market institutions and practices” as a factor in the “significant wage restraint” that bolsters the health of the economy.

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Financial liberalization contributes to concentration of wealth and provides powerful weapons to undermine social programs. It helps bring about the “significant wage restraint” and “atypical restraint on compensation increases [that] appears to be mainly the consequence of greater worker insecurity” that so encourage Fed chair Alan Greenspan and the Clinton administration, sustaining the “economic miracle” that arouses awe among its beneficiaries and deluded observers, particularly abroad. There are few surprises here. The designers of the post–World War II international economic system advocated freedom of trade but regulation of capital; that was the basic framework of the Bretton Woods system of 1944, including the charter of the lMF.

Makers and Takers: The Rise of Finance and the Fall of American Business
by Rana Foroohar
Published 16 May 2016

Through the 1980s, every few years saw the classic stages of boom and bust depicted by Charles Kindleberger in his famous book, Manias, Panics, and Crashes. A novel offering (be it the CD, the adjustable-rate mortgage, or a hot new IPO) would be followed by credit expansion, then speculative mania, distress, and ultimately a meltdown (usually followed by frantic government efforts to stem panic). By the time Volcker’s successor, Alan Greenspan, took over control of the Fed in 1987, the government had gotten into the habit of lowering interest rates to jump-start markets each time they weakened. It was kerosene for finance, adding both reward and risk. “What happens when you give a bunch of financiers easy money and zero interest rates is that they go out and try to make more money.

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Personal debt and business debt have grown at two and a half times the rate of Americans’ total income over the past forty years.64 We are only now beginning to grapple with the full ramifications of these shifts, as stagnant wages become a major dampener on economic recovery. The political and cultural environment has reflected the market’s rise in prestige. Bill Clinton’s lead strategist, James Carville, joked in 1993 about wanting to be reincarnated as the bond market, a nod to Alan Greenspan’s market-friendly policies. Later, George W. Bush tried to institutionalize the transition to an “ownership society” by trying to privatize Social Security (thankfully, that plan was unsuccessful) and increase home ownership by lowering lending standards, which was of course one of the factors that precipitated the housing market collapse in 2007.

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It’s all directly responsible for what I’d term ‘creative accounting,’ which has had such a devastating effect on our economy,” says Stiglitz. It was also fuel on the fire of the growing wealth gap in America. But when Stiglitz raised these issues with people like Rubin, Summers, or then–Federal Reserve chairman Alan Greenspan, they would say, “We shouldn’t interfere with the markets.”20 Such arguments are often used to justify the position that government intervention in markets destroys innovation. Yet quite the opposite appears to be true. Not only has growth in our economy been higher during times with more regulation, namely the 1950s to the 1970s, but government itself has funded the underlying resources that have allowed private firms like Apple and others to become as profitable as they are.

Stocks for the Long Run, 4th Edition: The Definitive Guide to Financial Market Returns & Long Term Investment Strategies
by Jeremy J. Siegel
Published 18 Dec 2007

Academicians were increasingly investigating this unprecedented rise in stock values. Robert Shiller of Yale University and John Campbell of Harvard wrote a scholarly paper showing that the market was significantly overvalued and presented this research to the board of governors of the Federal Reserve System in early December 1996.31 With the Dow surging past 6,400, Alan Greenspan, chairman of the Federal Reserve, issued a warning in a speech before the annual dinner for the American Enterprise Institute (AEI) in Washington on December 5, 1996. He asked, “How do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade?

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CHAPTER 7 Stocks: Sources and Measures of Market Value FIGURE 113 7–3 Plots of the Earnings Yields Based on a Five-Year Average of Past Earnings, January 1876 through December 2001, versus the Next Five Years of Real Returns The Fed Model, Earnings Yields, and Bond Yields In early 1997, in response to Federal Reserve Chairman Alan Greenspan’s increasing concern about the impact of the rising stock market on the economy, three researchers from the Federal Reserve produced a paper entitled “Earnings Forecasts and the Predictability of Stock Returns: Evidence from Trading the S&P.”26 This paper documented the remarkable correspondence between the earnings yields on stocks and the 30-year government bond rates.

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Siegel. Click here for terms of use. This page intentionally left blank 11 CHAPTER GOLD, MONETARY POLICY, AND INFLATION In the stock market, as with horse racing, money makes the mare go. Monetary conditions exert an enormous influence on stock prices. MARTIN ZWEIG, 19901 If Fed Chairman Alan Greenspan were to whisper to me what his monetary policy was going to be over the next two years, it wouldn’t change one thing I do. WA R R E N B U F F E T T, 1 9 9 4 2 On September 20, 1931, the British government announced that England was going off the gold standard. It would no longer exchange gold for an account at the Bank of England or for British currency, the pound sterling.

The Tyranny of Nostalgia: Half a Century of British Economic Decline
by Russell Jones
Published 15 Jan 2023

Brown, meanwhile, spent the next three years planning meticulously for his expected entry into Number 11 Downing Street. In so doing, he worked closely with his chief advisor Ed Balls (who was a former Financial Times leader writer) and with a number of distinguished academics and City figures, and he even sought the advice of Alan Greenspan, the revered Federal Reserve chairman. Balls, for his part, had spent time at Harvard University, where he came under the influence of future US Treasury Secretary Larry Summers and other new Keynesian cheerleaders. He also passed on to his boss a cautious approach to Europe and to a European single currency – certainly a more cautious attitude than that of Blair − together with a greater understanding of the importance to the economy and to economic policymaking of the financial sector and financial markets.

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It is now appropriate to consider the ways in which the unsustainable underlying macro forces interacted with one another in this remarkably permissive context to bring about the inescapable adjustment. the road to crisis In November 1999 a fundamental change that had long been observable in US financial framework conditions was finally recognized and formalized by the abolition of the Glass–Steagall Act. This departure from the past saw Alan Greenspan, who was Federal Reserve chairman at the time, playing an important role. The Glass–Steagall Act had both founded the Federal Deposit Insurance Company (FDIC) and separated commercial and investment banking. The latter measure was taken in an effort to eliminate conflicts of interest that arise – as they did in the 1930s – when the granting of credit-lending and the use of credit-investing were undertaken by a single entity.

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Financial crises tend to occur when innovation outpaces the ability of regulators to understand what is going on. A policymaking community brought up on, and wedded to, the basic tenets of the REH and the EMH appears to have been both complacent and ignorant. For example, like much of the economics and financial market cognoscenti, the Federal Reserve chairmen Alan Greenspan and Ben Bernanke were both in denial in the early-to-mid 2000s about the degree of excess in the US housing market and about the potential for an economy-wide housing collapse. At the same time, because they often work in silos, the regulators failed to grasp the interconnectedness of different areas of the financial system.

The Great Divergence: America's Growing Inequality Crisis and What We Can Do About It
by Timothy Noah
Published 23 Apr 2012

It lasted only four months but managed to create 4 million jobs at a cost of less than $1 billion (about $17 billion today).5 By comparison, the upper estimate on the number of jobs created by President Barack Obama’s 2009 stimulus bill as of July 2011 was 3.6 million at a cost of $221 billion in contracts, grants, and loans.6 The stimulus passed money through the states to the private sector. Putting workers directly onto the federal payroll would be much more cost-effective. Import More Skilled Labor Alan Greenspan, the conservative former Federal Reserve chairman, and Dean Baker, codirector of the liberal Center for Economic and Policy Research, seldom agree about anything. But they have both proposed reducing income inequality in the United States by removing immigration barriers for people in highly skilled professions.

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The perfect is the enemy of the good, and the good can be improved in the long term. The next step in banking reform ought to be more radical. The too-big-to-fail banks must be broken up. This is yet another left-wing-sounding idea that has been promoted (though more tentatively) by former Fed chairman Alan Greenspan. “If they’re too big to fail, they’re too big,” Greenspan said in a 2009 speech. “In 1911, we broke up Standard Oil. So what happened? The individual parts became more valuable than the whole. Maybe that’s what we need.”11 If the too-big-to-fail banks are allowed to remain as large as they are now, they will continue to pose what bankers call a “moral hazard,” a market distortion in which decisions are made with no consideration of risk because the decision-makers themselves are protected from any possible downside.

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Income Inequality Really Increased’” (Washington: Brookings Institution, 2007), at http://www.brookings.edu/~/media/Files/rc/papers/2007/0111useconomics_burtless/20070111.pdf. 11: What to Do General Sources Dean Baker, “Trade and Inequality: The Role of Economists,” paper delivered at the conference of the Association for Social Economics, New Orleans, Jan. 3, 2008. Bill Bishop, The Big Sort: Why the Clustering of Like-Minded America Is Tearing Us Apart (Boston: Houghton Mifflin, 2008). Alan Greenspan, The Age of Turbulence: Adventures in a New World (New York: Penguin, 2007). June Hopkins, Harry Hopkins: Sudden Hero, Brash Reformer (New York: Pal-grave Macmillan, 1999). Richard Kahlenberg, “Labor Organizing as a Civil Right,” American Prospect, Dec. 19, 2001, at http://prospect.org/article/labor-organizing-civil-right.

The Financial Crisis and the Free Market Cure: Why Pure Capitalism Is the World Economy's Only Hope
by John A. Allison
Published 20 Sep 2012

Of course, if they were truly intelligent, they would realize that their task is impossible and recommend a market-based monetary system. One reason for this phenomenon is that being a key decision maker in the Federal Reserve is intoxicating. After all, the Fed is one of the most powerful economic bodies in the world. Alan Greenspan is a classic example. Before he became chairman of the Fed, he argued in Capitalism: The Unknown Ideal that the Fed should be abolished and the United States should go to a gold standard. Once he became chairman, he was seduced by the office and became the maestro of Fed policy. Power corrupts.

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While we needed an economic correction, we never should have been in a position to have so massive a misallocation that it created a need for a decline of the magnitude that the U.S. economy experienced. If markets had been allowed to correct naturally, many of the problems that caused the depth of the Great Recession would have already been cured, and we would not have experienced such a drastic depreciation of wealth. Alan Greenspan’s (the Federal Reserve’s) obsession with not having an economic correction on his watch so that he could be the maestro was the foundation for massive future problems.1 On several occasions, students have said to me that if these policies created 15 good years, the pain we are having today is worth it.

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Accounting: loan loss reserves, 152–154 principles-based, 109 private accounting systems, 177–178 rules-based, 109 (See also Fair-value accounting) AEI (American Enterprise Institute), 64 Affordable housing efforts, 43, 216 Afghanistan, 198 African Americans, 43, 55 AIG: bailout, 128–130, 164 CDSs of, 126–127 TARP funds for, 168 Ally Financial, 178 Alt-A portfolios, 64 Altruism, 215–218, 222–223, 252 Ambac, 86 American Enterprise Institute (AEI), 64 Antitrust laws, 174–175 Argentina, 8 Arthur Andersen, 109 Asian Americans, 43 Assets, valuation of, 106–108 Atlas Shrugged (Ayn Rand), 225 Auction-rate municipal bond market, 85–87 Authority, of regulatory agencies, 46–47 Auto finance market, 178–180 Bank bailout (see Troubled Asset Relief Program (TARP)) Bank of America, 116, 150, 237 counterparty risk at, 124 credit decisions at, 238 funding of shadow banking system, 120 “too-big-to-fail” firms, 173 Bank runs, 75–76 Banking industry, 67–72 competition with risk-taking financial institutions, 39–40 economic role of, 67–69 and Federal Reserve, 22–23 fractional reserve banking, 69–70 in Great Depression vs. recent financial crisis, 70–72 (See also Shadow banking system) Banking industry reforms, 187–193 Dodd-Frank bill, 193 and Federal Reserve, 187–188 and gold standard, 188–189 reducing risk of economic cycles with, 189–193 Banking regulation, 133–147 in Bush administration, 133–136 effects on small businesses, 144–147 impact of, 147 and lending policies of banks, 138–146 and mathematical modeling for risk management, 136–138 reform of, 190 Bankruptcy, 8, 124 Banks: capital requirements for, 190 economic forecasting by, 28 FDIC and risk-taking by, 38–41 healthy, effects of TARP on, 172–174 lending policies of, 138–146 leverage ratios of, 70–72 misinvestment effects on, 12–14 private, 97–99, 187–188 self-insurance at, 48–52 start-up, 38–39 stress tests for, 171 (See also Investment banks) Barclays Bank, 164 Basel Accords, 51, 71, 125, 137, 151 BB&T Corporation, 23–24 and AIG bailout, 128 auditors of, 134 in auto finance market, 178 bonds of, 76, 84–85 competition with risk-taking financial institutions, 39–40, 98 conservatism of, 30 culture of, 240–241 failed bank takeover by, 38–39, 47–48 financial crisis for, 1–2 and flight to quality, 87, 105 home mortgages by, 97–98 and Lehman Brothers failure, 162–163 and liquidity crisis, 105–106 loan loss reserves of, 153–154 and mathematical modeling, 136–137 and misinvestment in residential real estate, 12–14 mortgage servicing rights, 111–112 and pick-a-payment mortgages, 91–92 post-crisis lending policies, 139–140, 142–145 racial discrimination in lending accusation, 42–45 selling of mortgages by, 113 TARP participation by, 170–172 trader principle of, 223 underwriting standards of, 141 use of derivatives, 122, 123 wellness program of, 202–203 Bear Stearns, 70, 71 bailout of, 104, 162 Cdss on bonds of, 127–128 counterparty risk at, 124 derivatives from, 123 financial “innovations” of, 101 Bernanke, Ben: and 2008 panic, 164, 167 and development of TARP, 76, 169–171 monetary policy of, 27–31, 33, 35, 40, 125, 213 response to financial crisis, 7, 70 Blair, Tony, 164 Bond insurance, 86–87 bonds: auction-rate municipal bond market, 85–87 effects of FDIC for, 40–41 fair-value accounting for, 105 subprime mortgage, 82–84 of Washington Mutual, 75–76 Borrowers: CRA, 56–57 of pick-a-payment mortgages, 90–91 post-crisis treatment of, 142–145 and racial discrimination in lending, 42–45 regulated changes in grading for, 140–141 Borrowing for consumption, 57–58 Boston Federal Reserve bank, 42 Budget, federal, 182–183 Bush, George W., and administration: action in financial panic, 161, 167 banking regulations, 133–136 economic proposals, 15 Patriot Act, 45, 46 regulation of Fannie Mae and Freddie Mac, 63 California, 21, 74, 90 CalPERS (California Public Employees’ Retirement System), 93, 116, 121, 131 Canada, 192 Capital: against GSE loans, 137 and leverage, 70–71 and loan loss reserves, 153 misinvestment of, 9–11, 14 wasting of, 159–160 Capital markets, 85–87, 101 Capital standards: for banks, 190 for loans, 51–52 and TARP, 170–171 Capitalism: crony, 6, 102, 129, 179 and freedom, 253–254 at universities, 231–233 Capitalism (Alan Greenspan), 32 Carter, Jimmy, 161, 179 Cash basis accounting, 110 Cash flows, 106–107, 115 Cato Institute, 201 CDOs (collateralized debt obligations), 124–126 CDSs (credit default swaps), 126–128 CEOs (Chief Executive Officers): behavior of, 2–3 decisions of Federal Reserve vs., 34 and rules-based accounting, 109 wage rates of, 210 China: currency standard, 77 demographics, 205 education, 230 GDP of U.S. vs., 183 government debt in, 200 manufacturing in, 10, 25–26, 161 market-based pricing in, 34 military spending in, 198 stimulus fund use, 181–182 trade with, 204–205 U.S. investment by, 29, 159 Chrysler, 130, 179–180 Citigroup: bailout of, 50, 104, 130, 177 CDOs of, 125–126 credit decisions, 238 crony capitalism, 6 funding of shadow banking system, 120 long-term debt of, 71 and panic during financial crisis, 163 pragmatism at, 217–218 reason at, 245 “too-big-to-fail” firms, 173 Clearing, 104 Clinton, Bill: lending reforms, 42–44, 56 subprime lending requirements, 58–60 Collateralized debt obligations (CDOs), 124–126 Colonial Bank, 47–48 Commercial real estate, 11, 97 Common good, 215–216 Community Reinvestment Act (CRA), 42, 55–57, 59 Compensation, 50, 83–84, 197–198 Confidence, 84–87, 184–185 Conservatives, 108 Consumer compliance, 193 Consumer Price Index (CPI), 26–27 Consumption: borrowing for, 57–58 housing as, 9–12, 54–55, 73–74 Contagion risk, 123 Corporate debt, 107 Counterparty risk, 123, 124 Countrywide: crony capitalism at, 6 and fair-value accounting change, 114, 118 and FDIC insurance, 39, 41, 46 necessary failure of, 159 pick-a-payment mortgages of, 91–93 subprime business at, 99 thrift history of, 98 CPI (see Consumer Price Index) CRA (see Community Reinvestment Act) Creativity, 7, 247 Credit default swaps (CDSs), 126–128 Credit rating agencies (see Rating agencies) Crony capitalism, 6, 102, 129, 179 Cross-guarantor insurance fund, 48–52 Cuba, 34, 247, 252 Cuomo, Andrew, 58 Currency, debasing, 22 Debt, 21–22, 107 Declaration of Independence, 220, 252 Defaults, 90–91, 126–128 Defense spending, 198–199, 227 Deflation, 22 Demand, supply and, 104, 185, 209, 210 Department of Housing and Urban Development (HUD), 15, 58 Deposits, disintermediation of, 120–121 Derivatives, 3, 120, 122–124 Disclosure requirements, 150–152 Dodd, Christopher, 7, 46, 61, 63, 64 Dodd-Frank Wall Street Reform and Consumer Protection Act: deficiencies of, 193 introduction of, 63–64, 183 as misregulation, 147 results of, 130 and TARP, 173, 174 Dollar, U.S., 77, 188, 229 Durbin amendment, 193 Earnings, operating, 103–106 East Germany, 34, 247 Eastern Europe, 34, 252 Economic cycles, 108, 189–193 Economic health, 159–161 Economic recovery, 1, 207–208 Economy, banking industry in, 67–69 Edison, Thomas, 19, 158–159 Education, 230–235, 247 Egypt, ancient, 230 Elitism, 7 Ely, Bert, 48 Employee Retirement Income Security Act (ERISA), 82, 149 Enron, 60, 109, 133, 149 Entitlement programs, reforms for, 199–204 Equal Credit Opportunity Act, 42, 55 ERISA (Employee Retirement Income Security Act), 82, 149 Ethical incentives, lending, 57–58 Euro, 189 European banking crisis, 51–52, 137 Expensing (stock options), 114–117 Experiential learners, 244–245 Fair Housing Act, 55 Fair-value accounting, 103–118 asset valuation in, 106–108 and expensing of stock options, 114–117 and losses on CDSs, 126–127 private accounting systems vs., 177–178 SEC involvement in, 151–152 for selling vs. servicing mortgages, 113–114 Fannie Mae: accounting scandal, 112–113, 149 in current environment, 251 and disintermediation of deposits, 121 failure of, 61–65, 164 and fair-value accounting, 118 in housing policy, 58–61 misallocation of resources by, 14 misleading of rating agencies by, 83 mortgage lending by, 97–101 reforms for, 190–192 selling mortgages to, 113–114 subprime lending by, 58, 99–101 FASB (see Financial Accounting Standards Board) FDIC (see Federal Deposit Insurance Corporation) FDIC insurance, 37–52 and bank liquidity, 171 and failing banks, 140 and fractional reserve banking, 68–69 and pick-a-payment mortgages, 91 reform of, 190 and S&L failures, 97 Federal Deposit Insurance Corporation (FDIC), 37–38 as external auditors, 134 and failing banks, 47–48 misallocation of resources by, 14 and pick-a-payment mortgages, 91 as regulator, 41–48, 143 take over of Washington Mutual, 75–77 Federal Housing Administration (FHA), 15, 190–192, 252 Federal Reserve, 22–23, 102, 189 antitrust policy, 174 bailouts by, 120–121, 190, 192 and banking industry reforms, 187–188 as external auditors, 134 and federal debt, 21–22 and leverage, 72 mathematical modeling by, 136 misallocation of resources by, 14, 208 misleading information from, 46, 83, 101, 125 monetary policy of, 17–20, 31–35, 96 overreaction by, 154 stimulus from, 152, 153, 208 and TARP, 165, 167–168, 171 and unemployment, 213 and Washington Mutual, 75 Federal Reserve Board, 18 Federal Reserve Open Market Committee, 31 Federal Savings and Loan Insurance Corporation (FSLIC), 37–38, 50, 96 FHA (see Federal Housing Administration) Financial Accounting Standards Board (FASB), 105, 106, 114–117 Financial crisis (2007-2009), 1–3, 251–254 banking industry in, 70–72 derivatives in, 122–124 Freddie Mac and Fannie Mae in, 65 free-market response to, 177–186 and Great Depression, 25 lessons from, 251–252 SEC role in, 154–155 Financial reporting requirements, SEC, 150–152 Financial Services Roundtable (FSR), 32, 61–62 First Horizon, 237 Fitch, John Knowles, 150 Fitch Ratings: investor confidence in, 84–87 misratings by, 82–84, 101, 125, 126 and SEC, 81–82, 149–150 Flat tax, 197 Forbes, Steve, 197 Ford, 179 Foreclosure laws, 77–80 Fractional reserve banking, 69–70 Frank, Barney, 7, 61, 63, 64 Fraud, 109–113 Freddie Mac: accounting scandal, 112–113, 149 current environment, 251 and disintermediation of deposits, 121 failure of, 61–65, 164 in housing policy, 58–61 misallocation of resources by, 14 misleading information from, 83 mortgage lending by, 97–101 reforms for, 190–192 selling mortgages to, 113–114 subprime lending by, 58, 99–101 Free markets: experimentation in, 19 justice in, 92, 177 market corrections in, 157–159 and monetary policy, 31–35 risk taking by banks in, 40–41 wage rates in, 210–211 Free trade, 204–205 Friedman, Milton, 20, 189 FSLIC (see Federal Savings and Loan Insurance Corporation) FSR (Financial Services Roundtable), 32, 61–62 GAAP accounting, 116, 117 Gates, Bill, 216 GDP, 183, 197–199 General Electric, 168, 169 General Motors (GM), 169, 178–180 General Theory of Employment, Interest and Money, The (Keynes), 181 Germany, 52 GM (General Motors), 169, 178–180 GMAC, 168, 169, 178–180 Gold standard: and deflation, 25–26 and economic future of U.S., 188–189 Greenspan’s view of, 32 Golden West, 39, 91, 92, 98, 159 Goldman Sachs, 71, 173 as AIG counterparty, 128–129 bailout of, 104, 164, 179 CDSs of, 126 counterparty risk at, 124 crony capitalism at, 6 financial “innovations” of, 101 Government policy: as cause of financial crisis, 1, 5–6, 251 and residential real estate bubble, 6 (See also Housing policy; Policy reforms) Government regulation, 5–8, 41–48, 204 Government spending, 180–183, 197–199 Government-sponsored enterprises (GSEs), 59, 64–65, 98, 137 (See also Fannie Mae; Freddie Mac) Great Depression: and avoidance of stock market, 74 banking industry in, 70–72 economic policies after, 161 and Federal Reserve, 19–20, 24, 188 and gold standard, 188 and government interference, 170 and Smoot-Hawley Tariff Act, 205 Great Recession, 1, 251–254 and Federal Reserve, 188 Freddie Mac and Fannie Mae in, 65 and interest-rate variation, 33 market corrections and depth of, 160 and monetary policy, 17 and residential real estate, 9–15 Great Society, 6, 55, 96 Greece, 51, 52, 137, 228 Greenspan, Alan, 23–30, 32, 33, 160 Gross domestic product, 183, 197–199 Hamilton, Alexander, 19 Harvard University, 43, 131 Hayek, Friedrich, 31 Health insurance, 201–202 High-net-worth shareholders, 93 Home Builders Association, 60 Home foreclosure laws, 77–80 Homeownership, 53–55 Hoover, Herbert, 24, 161, 205 Housing: as consumption, 9–12, 54–55, 73–74 government support of, 12 Housing policy, 53–65 HUD (Department of Housing and Urban Development), 15, 58 Human Action (von Mises), 238 Immigration, 19, 205–206 India, 10, 25, 205 IndyMac, 39, 75, 98 Inflation: CPI as indicator of, 26–27 and fair-value accounting, 103 and Federal Reserve, 21–22 and prices, 24–25 (See also Monetary policy) Initial public offerings, 150 Insurance: bond, 86–87 cross-guarantor, 48–52 FDIC (see FDIC insurance) health, 201–202 private deposit, 48–52 self-insurance at banks, 48–52 unemployment, 212–213 Interest rates, 26–27, 31–35 Inverted yield curves, 27–29 Investment banks: disclosure requirements for, 151 government bailout of, 162 “innovations” of, 101–102 leverage ratios of, 71–72 IPOs, 150 Iran, 198, 199, 227 Iraq, 198 Ireland, 77 Isaac, Bill, 107–108, 161–162 Italy, 51, 52 Japan, 159, 200, 205 Jefferson, Thomas, 19, 220 Johnson, Lyndon Baines, 6, 55, 96, 161, 188 JPMorgan Chase, 75 and Bear Stearns, 162 and shadow banking system, 120 as “too-big-to-fail” firm, 173 and Washington Mutual, 163 Keynes, John Maynard, 181 Labor: allocation of, 10–11, 14 minimum-wage laws, 209–212 Lehman Brothers, 71, 76, 101, 104, 129, 164 and Bear Stearns bailout, 162–163 corporate debt at, 107 counterparty risk at, 124 derivatives from, 123 Limited government, 182–183, 195, 231, 253 Liquidity: of banks, 68–69 and FDIC insurance, 171 and financial crises, 70–72 and housing prices, 74–75 and TARP, 171–172 Loan loss reserves accounting, 152–154 Loans: capital standards for, 51–52 qualified, 98 substandard, 140–141 Madoff, Bernie, 149, 225 March of Dimes, 241 Market corrections, 157–165 Federal Reserve’s prevention of, 23, 32 prevention of, 13 residential real estate, 78 and response to financial crisis, 177–180 Market discipline, 21, 38 Market-based monetary policy, 31–35 Market-clearing price, 209 Mathematical modeling: for loan loss reserves, 152–153 by ratings agencies, 82–83 for risk management, 136–138 MBIA, 86 Medicaid, 6, 55, 201 Medicare, 6, 8, 55, 201, 203 Meltdown (Michaels), 35 Merrill Lynch, 101, 124–125 Michaels, Patrick J., 35 Microsoft, 217 Military spending, 198–199, 227 Minimum-wage laws, 209–212 Mises, Ludwig von, 34, 238 Monetary policy, 17–35 of Bernanke, 27–31, 33, 35, 40, 125, 213 and federal debt, 21–22 and Federal Reserve, 17–23 of Greenspan, 23–27 market-based, 31–35 and unemployment, 208–209 Money market mutual funds, bailout of, 120–121, 192 Money supply, 21–22, 24, 189 Moody, John, 83, 150 Moody’s, 81–87 investor confidence in, 84–87 misratings by, 82–84, 101, 125, 126 and SEC, 81–82, 149–150 Morgan Stanley, 71, 101, 124, 173 Mortgage lending, 95–102 by Fannie Mae and Freddie Mac, 97–101 and investment bank innovations, 101–102 prime, 59, 97–99 by private banks, 97–99 savings and loan industry in, 95–97 subprime, 43, 56–57, 99–101 Mortgages: by BB&T Corporation, 97–98 jumbo, 62 pick-a-payment (see Pick-a-payment mortgages) selling vs. servicing, 113–114 Mozilo, Angelo, 46 Multiplier effect, 181 Naked shorting, 127–128, 151 Nationally recognized statistical rating organizations, 82 Negative real interest rates, 26–27 Neo-Keynesian response to financial crisis, 185–186 Neutral taxes, 197 New Deal, 53, 170, 232 Nixon, Richard, 96, 161, 188 North Korea, 34, 198, 227, 247, 252 NRSROs, 82 Obama administration, 142–144: and Dodd-Frank Act, 64 economic policies of, 15, 161 healthcare bill, 183, 201 and Patriot Act, 45 stimulus plan, 181–182 Office of the Comptroller of the Currency (OCC), 40, 154 Office of Thrift Supervision, 40, 41, 45–46 Operating earnings, 103–106 OTS, 40, 41, 45–46 Panics, 137–138, 161–165 Patriot Act, 45, 46, 48, 133–136, 147 Paulson, Henry: in 2008 panic, 164, 167 and AIG bailout, 128, 129 credibility of, 164 development of TARP, 76, 168–170, 172 Pick-a-payment mortgages, 89–93 borrowers using, 90–91 and FDIC, 91 and rise of Fannie Mae/Freddie Mac, 98 Policy reforms, 195–206 for entitlement programs, 199–204 and free trade, 204–205 and government regulations, 204 for government spending, 197–199 for immigration, 205–206 for political system, 206–207 and tax rate, 196–197 Politics: in banking regulation, 42–46 and crony capitalism, 129 and failure of Fannie Mae/Freddie Mac, 59–62 and Federal Reserve appointments, 18 policy reforms for, 206–207 Poor, Henry Varnum, 150 Portugal, 51 Price fixing, 31, 193 Price setting, 31–32 Prime lending, 59, 97–99 Prince, Charlie, 217 Principles-based accounting, 109 Privacy Act, 133, 135 Private accounting systems, 177–178 Private banks, 97–99, 187–188 Private deposit insurance, 48–52 Public schools, 228, 233–235 Racial discrimination (in lending), 42–45 Raines, Frank, 59 Rand, Ayn, 225, 231 Rating agencies, 81–87 investor confidence in, 84–87 mathematical modeling by, 136 and subprime mortgage bonds, 82–84 and “too-big-to-fail” firms, 173 and SEC, 81–82, 149–150 Real estate: commercial, 11, 97 residential (see Residential real estate market) Recessions, 28, 29, 160 Recovery (see Economic recovery) Reforms: banking industry (see Banking industry reforms) government policy (see Policy reforms) Regions Bank, 237 Regulation: of banking industry (see Banking regulation) by government (see Government regulation) Reporting, financial, 150–152 Reserve currency, U.S. dollar as, 77, 188, 229 Residential real estate market: economics of, 73–74 misinvestment in, 9–15 Residential real estate market bubble, 73–80 and government policy, 6 international impact of, 77 and job creation, 80 and state home foreclosure laws, 77–80 Risk: contagion, 123 counterparty, 123, 124 with derivatives, 122–124 diversification of, 67–69 and economic cycles, 189–193 and FDIC insurance, 38–41 and government regulation, 50–51 liquidity, 68–70 mathematical modeling for, 136–138 and “originate and sell” model, 100 systemic, 50–51 RMBS (residential mortgage-backed securities), 81 Roman empire, fall of, 230 Roosevelt, Franklin D., 24, 37, 103, 161 Rules-based accounting, 109 Russia, 198 Samuelson, Paul, 238 Sarbanes-Oxley Act, 133–134 and fair-value accounting, 106 and Fannie Mae/Freddie Mac, 99 misregulation by, 48, 147 and SEC, 150 violations of, 136 SARs (Suspicious Activity Reports), 136 Satchwell, Jack, 57 Savings and loan (S&L) industry, 95–97, 110, 191 Securities and Exchange Commission (SEC), 149–155 capital ratio guidelines, 71–72 and complexity of accounting rules, 116–117 and expensing of stock options, 114, 115 loan loss reserves accounting for, 152–154 misallocation of resources by, 14 and rating agencies, 81–82, 149–150 requirements for shorting stock, 127–128, 151 and rules-based accounting, 109, 110 and Sarbanes-Oxley Act, 150 Self-insurance, 48–52 Selgin, George, 189 Senate Banking Committee, 46 Shadow banking system, 119–131 and AIG bailout, 128–130 credit default swaps in, 126–128 and derivatives, 122–124 Federal Reserve’s role in, 30 losses from, 131 S&L industry, 95–97, 110, 191 Small businesses, 144–147, 183–184 Smoot-Hawley Tariff Act, 205 Social Security, 8, 199–204 South Financial, 237 South Korea, 247 Soviet Union, 34, 195–196, 252, 254 S&P (see Standard & Poor’s) Spain, 51, 52, 77 Spitzer, Eliot, 71, 134–135, 151 Stagflation, 181, 208 Standard & Poor’s (S&P), 81–87 investor confidence, 84–87 misratings by, 82–84, 101, 125, 126 and SEC, 81–82, 149–150 Standard of living, 6–7, 10, 161, 177 Start-up banks, 38–39 State home foreclosure laws, 77–80 Stimulus plan, 181–182 Stock options, expensing of, 114–117 Stocks, shorting, 127–128, 151 Stress tests, banks, 171 Subprime lending: and CRA, 56–57 by Fannie Mae and Freddie Mac, 99–101 and racial discrimination in lending study, 43 Subprime mortgage bonds, 82–87 Substandard loans, 140–141 SunTrust, 152, 237 Suspicious Activity Reports (SARs), 136 Tails (mathematical models), 137 TARP (see Troubled Asset Relief Program) Tax rate, 196–197 Tea Party Movement, 218, 231 Technology industry, 5 “Too-big-to-fail” firms, 130, 173, 193 Trader principle, 92, 223–224 Troubled Asset Relief Program (TARP), 167–175 and 2008 panic, 165 and FDIC, 37 Underwriters Laboratories, 117, 150 Unemployment, 207–213 in economic recovery, 207–208 and minimum-wage laws, 209–212 and misinvestment in residential real estate, 10–11 and monetary policy, 208–209 Unemployment insurance, 212–213 Unions, 179, 180, 212 United Auto Workers, 179, 180 United States: demographic problem in, 228 economic future of, 8, 227–230, 252–253 educational system of, 230–235 founding concepts of, 219–220 as free trade zone, 204–205 GDP of China vs., 183 mixed economy of, 5–6 public schools of, 233–235 university system of, 230–233 United Way, 224, 241 University system, 230–233 U.S.

Barometer of Fear: An Insider's Account of Rogue Trading and the Greatest Banking Scandal in History
by Alexis Stenfors
Published 14 May 2017

It is about the banks creating, selling and trading all those financial instruments, and the culture of risk taking and money making in the City and on Wall Street. Most of all, however, it is about perceptions about these markets and the people working in them. No matter how convenient they are, perceptions can be deceptive. From August 2007 onwards, everything I did as a trader came to focus on what the former Chairman of the Federal Reserve Alan Greenspan famously termed ‘the barometer of fears of bank insolvency’.9 Greenspan argued that LIBOR, when put in a specific context, was a kind of fear index related to banks. He was right. The fear was measurable. And because it was measurable, fear could also be bought and sold. Which is what I did.

…

The overnight index swap (OIS) was a derivative instrument that was indexed to the ‘risk-free’ central bank interest rate. The idea was to reduce the LIBOR–OIS spreads towards levels seen before the crisis broke out. From August 2007, the LIBOR–OIS spread became the focal point for everything we did as traders. This is also why, in 2009, the former Chairman of the Federal Reserve, Alan Greenspan, famously described the LIBOR–OIS spread as ‘the barometer of fears of bank insolvency’.5 It was precisely that: a kind of fear index relating to banks. This fear had soared since 9 August 2007. From a personal perspective, the global financial crisis also acted as a trigger point in revealing the wider implications of LIBOR.

…

When I spoke to central bankers during the financial crisis, I got the impression that they did not suspect anything was ‘wrong’ with LIBOR. In the aftermath of the LIBOR scandal, however, the tone had changed. ‘Through all of my experience, what I never contemplated was that there were bankers who would purposely misrepresent facts to banking authorities,’ Alan Greenspan said. ‘You were honour bound to report accurately, and it never entered my mind that, aside from a fringe element, it would be otherwise. I was wrong.’12 Greenspan, who had often been referred to as the world’s most powerful banker, or even one of the most powerful people in the world, was a man you listened to as a trader.

Stress Test: Reflections on Financial Crises
by Timothy F. Geithner
Published 11 May 2014

The reaction was withering. With public opinion running 80–20 against a U.S. government rescue, Republicans and Democrats accused the secretary of plotting to waste tax dollars on foreigners, bail out his Wall Street pals who had speculated in Mexico, and even line his own pockets. Federal Reserve Chairman Alan Greenspan, who was usually treated like the Oracle at Delphi on the Hill, received almost as rough a reception. It was a troubling spectacle, and I guess it showed on my face. “What’s wrong?” Rubin asked. “I’m just worried,” I said. There was a lot to worry about. Congressional leaders had initially promised President Clinton that they would back his loan request, but they were clearly running for the hills.

…

It’s understandable, considering what we did with AIG and others later, and considering the initial Washington comments; they were designed to avoid the damaging (though accurate) perception that we had been powerless to save a large and interconnected institution, but they helped feed the myth that we had chosen failure. Even some of my former colleagues at the Fed and Treasury still think we could have rescued Lehman; Alan Greenspan said so publicly. But I do not believe we could have done it without violating the legal constraints placed on the Fed, and without damaging our ability to deal credibly and effectively with the terrible challenges still ahead of us. To save Lehman, we would have needed a private company willing and able to buy most if not all of it, and we didn’t have one.

…

The proponents of nationalization inside the administration were indeed pushing to impose losses on bank creditors, arguing that otherwise we would never have enough TARP dollars to recapitalize the system. External voices were no more reassuring. Even the world’s most famous free market advocate, Alan Greenspan, declared in February that “it may be necessary to temporarily nationalize some banks in order to facilitate a swift and orderly restructuring.” As the markets started hearing rumblings that we too were talking about nationalization and haircuts—sometimes from White House officials who brain-stormed with academics and market participants—bank stocks fell and default risks increased.

Owning the Earth: The Transforming History of Land Ownership
by Andro Linklater
Published 12 Nov 2013

Outraged by the excesses and corruption of the Gilded Age, the still influential farming electorate—at the end of the century, agriculture supplied 20 percent of GNP compared to industry’s 30 percent—gave birth to the populist movement that pushed through the antitrust legislation known as the Sherman Act in 1890, and persuaded presidents Theodore Roosevelt and his successor, William Howard Taft, to use the act aggressively in the new century. The act might have helped break up some trusts, but it did nothing to solve the crisis of capitalism. And the most influential banker of the late twentieth century, Alan Greenspan, was scathing about the attempt to reintroduce the conditions of free-enterprise capitalism. The Sherman Act, he wrote, “was a projection of the nineteenth century’s fear and economic ignorance . . . it is utter nonsense in the context of today’s economic knowledge.” Monopolies and cartel agreements were necessary to control excessive production, he insisted, and as an example, he praised the monopolistic trust organized by Standard Oil in the 1890s, because it “yielded obvious gains in efficiency, through the integration of divergent refining, marketing, and pipeline operations; it also made the raising of capital easier and cheaper.”

…

That the upper-class von Mises should hold “the masses” in contempt was understandable; all the Austrians, even the maverick Schumpeter, shared a nostalgia for the old imperial form of politics. But it was less easy to see why such sneering views should have been adopted most enthusiastically in the republic that most prided itself on being democratic. The best insight, however, would come from the career of Ayn Rand’s leading disciple, Alan Greenspan. In the early 1950s Greenspan had come upon Rand’s Nietzschean philosophy which, because it equated self-realization with the discovery of an objective reality, she termed “Objectivism.” As a brilliant, geeky young economist, devoted to mathematics but with few other interests—“intellectually limited” by his own admission—Greenspan adopted its tenets “with the fervor,” he wrote in his autobiography, “of a young acolyte drawn to a whole new set of ideas.”

…

Nevertheless, encouraged by Greenspan, beginning his five-term tenure of the chairmanship of the Federal Reserve, American banks chipped away at the regulations until in 1997 Glass-Steagall was repealed. With the lifting of restrictions on derivatives dealing in 2000, the financial market had become unified. And the industrial home, driver of the consumer economy, became once more what it had been in the Roaring Twenties, a functional adjunct to Wall Street. In evidence to Congress in 2008, Alan Greenspan would later admit there was “a flaw” in his faith that “unfettered market competition” would sort out its own distortions. The flaw was the one exposed by the bankruptcy of Lehman Brothers with six hundred billion dollars of assets—that a player might be so big its collapse would destroy the market itself.

Big Debt Crises
by Ray Dalio
Published 9 Sep 2018

–New York Times September 26, 2004 Next Up on Reality TV: Flipping Real Estate, for Fun and Profit “It was only a matter of time before the Southern California real estate market turned from a hair-raising reality into a hair-raising reality television show...In most parts of the country, people buy places because they want to live in them. But in markets where prices rise every month, flipping looks like an easy way to get rich.” –New York Times October 20, 2004 Mortgage Debt Not Big Burden, Greenspan Says “Alan Greenspan on Tuesday defended one of the most tangible results of his tenure as chairman of the Federal Reserve Board: the big increase in homeowner debt. In his most detailed discussion yet on the subject, Mr. Greenspan disputed analysts who worry that home buyers have become swept up in a speculative housing bubble that the Fed is partly responsible for creating.’”

…

–BDO May 25, 2005 Steep Rise in Prices for Homes Adds to Worry About a Bubble “Home prices rose more quickly over the last year than at any point since 1980, a national group of Realtors reported yesterday, raising new questions about whether some local housing markets may be turning into bubbles destined to burst...Over all, home prices have never fallen by a significant amount, and Alan Greenspan, the chairman of the Federal Reserve, said on Friday that a national drop in price remained unlikely.” –New York Times May 31, 2005 Fed Debates Pricking the U.S. Housing ‘Bubble’ “Mr. Greenspan and other officials have long argued that it is not their job to influence the price of assets whether stock prices or real estate.

…

Encompassing everything from land surveyors to general contractors to loan officers, the sprawling sector has added 700,000 jobs to the nation’s payrolls over the last four years, according to an analysis by Economy.com, a research firm.” –New York Times August 17, 2005 Healthy Housing Market Lifted the Economy in July -New York Times August 28, 2005 Greenspan Says Housing Boom Is Nearly Over “Looking forward to the time after he steps down as chairman of the Federal Reserve, Alan Greenspan predicted here on Saturday that the nation’s frenzied housing boom—and the consumer spending that it has spurred—is near an end.” –New York Times October 4, 2005 Slowing Is Seen in Housing Prices in Hot Markets “A real estate slowdown that began in a handful of cities this summer has spread to almost every hot housing market in the country, including New York.”

The Partly Cloudy Patriot
by Sarah Vowell
Published 26 Aug 2002

As we trudge across the ramp, we glimpse our buddies ahead of us, slogging through the bloody wet, and the beach so far away In short, this is very effective theater. Which leads me to my next recommendation, Mr. Clinton. What about a similar stage set, only in your library, instead of being a soldier leaving the boat for Omaha Beach, the visitor could walk in the shoes of Fed Chairman Alan Greenspan, as he steps out of a Lincoln Town Car and into the Dirksen Senate Office Building to endorse the Clinton deficit reduction strategy before the Senate Banking Committee! A word on the people who run these libraries, Mr. President. Fortunately for you, they are very attached to their subjects, very loyal.

…

The discussion of current events would follow some historical tangent, such as whether or not the early Clinton administration should have honored the promised middle-class tax cut instead of going for deficit reduction in 1993, and we would bicker about the findings of former Labor Secretary Robert Reich and blah, blah, Alan Greenspan, and the next morning I would wake up to find that in the middle of the night my friend Stephen had called me a “deficit hawk,” which, in his vocabulary is a synonym for “Republican.” The best part about being a nerd within a community of nerds is the insularity—it’s cozy, familial, come as you are.

Understanding Asset Allocation: An Intuitive Approach to Maximizing Your Portfolio
by Victor A. Canto
Published 2 Jan 2005

Since 1981, however, bills have not been able to put together a two-year string. I have a very simple explanation for this relative performance. It has to do with the change in operating procedures at the Federal Reserve—commonly referred to as the Fed—started by Paul Volcker in the 1980s and continued by his successor, Alan Greenspan. Looking at the inflation rate’s performance during the 1970s, it is apparent the existing Fed policies were not working. After taking the chair at the Fed under President Carter, Volcker initially tried to control the quantity of the money supply, thereby controlling the underlying inflation rate.

…

But the figures distort the true change on incentives during this period as they do not take into consideration the impact of inflation on bracket creep. For example, during the 1970s—the double-digit inflation years—effective marginal tax rates were much higher than implied by the legislated rates shown in Table 4.1. The opposite was true in the 1990s. During this latter period, the Federal Reserve chairman Alan Greenspan substantially lowered the U.S. inflation rate, which produced a reduction in effective tax rates. Since the 1960s, the effective tax 72 UNDERSTANDING ASSET ALLOCATION rates on capital gains and dividends have steadily declined, thus increasing the after-tax keep-rate for investors. Since the 1980s, lower tax rates go a long way toward explaining the surge in equity values.

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The Clinton administration tax hikes were not as large as the president had hoped for, but if you weigh-in the threat of Hillary Clinton’s massive health-care plan, the small-cap effect becomes more understandable. In 1995, the Republicans took over Congress, and the gridlock that followed was good for the market as far as taxes and regulations were concerned. The small-cap effect would, for a time, expire. Then, in 1999, Federal Reserve Chairman Alan Greenspan began to worry about the ersatz Year 2000 (Y2K) 238 UNDERSTANDING ASSET ALLOCATION effect. He proceeded to flood the financial system with cash, only to abruptly pull the liquidity out of the system in 2000. Credit in this environment became tougher, and with the advent of the accounting scandals, the regulatory burden increased once again.

Brexit, No Exit: Why in the End Britain Won't Leave Europe
by Denis MacShane
Published 14 Jul 2017

No one can travel to the main cities of France, Germany, northern Italy, to Scandinavian cities within the EU or the bright new cities in Eastern Europe and say the EU is broken or bankrupt. It has been a long, hard decade since the crash of 2007/9, imported from the US financial system as fashioned by Americans like ‘Sir’ Alan Greenspan. But compared to the similar crash of 1929–31 that led to the lost decade of the 1930s and the emergence of extreme nation-first politics, the EU has now weathered the storm of global financial meltdown. Europe faces difficulties, but only in Britain is the solution seen as leaving the EU and becoming isolated from sister nations in Europe.

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‘The recent explosion of financial products based on derivatives makes it increasingly difficult for regulators and investors to evaluate risks. […] Investors have to get ready for a significant reduction in value of certain shares.’ But Trichet was not ready to campaign against the existing model of global economic relations. The dominant figure was Alan Greenspan. He was worshipped by London, and awarded an honorary knighthood on Gordon Brown’s nomination. But London was completely unprepared for the financial storm that broke as the deregulated Greenspan model opened the door to endless criminal and corrupt banking practices. The neo-conservative right in Wall Street and their fellow-travellers in Britain, in the City and in the British Treasury, doted on him and took no notice of a French banker, even if Trichet was head of the ECB, who dared to point out that Emperor Greenspan was less than fully clothed.

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The neo-conservative right in Wall Street and their fellow-travellers in Britain, in the City and in the British Treasury, doted on him and took no notice of a French banker, even if Trichet was head of the ECB, who dared to point out that Emperor Greenspan was less than fully clothed. In the 800-page award-winning biography of Alan Greenspan by the British financial journalist Sebastian Mallaby there is no index entry for Trichet, let alone his warning at Davos in January 2007 that a financial crash caused by Greenspan’s ideology lay round the corner. In their book The Euro and the Battle of Ideas, Harold James of Princeton University and his co-authors observe that ‘A great deal of the interpretation of the course of the euro crisis was shaped by the British and American press – the Financial Times, the Economist, the New York Times and the Wall Street Journal – and that outside vision has filtered through a sort of condescension about Europeans not really getting it.’

Rendezvous With Oblivion: Reports From a Sinking Society
by Thomas Frank
Published 18 Jun 2018

Attend a few Tea Party rallies around the country and you’ll inevitably be passed a platter of the novelist Ayn Rand’s spiciest hors d’oeuvres. She is hot stuff these days. True, it was her philosophy of market rationality and bankerly heroism that guided the disastrous policymaking of the conservatives who brought us to economic ruin, and it was even a former member of her inner circle, Alan Greenspan, who personally prescribed much of the snake oil, but by the curious homeopathy of American politics that merely means we need a larger dose of the same poison; it means Ms. Rand is the rightest dame who ever lived. Back in her heyday, Rand would occasionally address audiences of businessmen, exhorting them to understand that they had few moral obligations to others.

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As I was told by Josh Bivens, an economist with the left-leaning Economic Policy Institute, “If we stick at this level of unemployment for a couple of years, you will start to see some decent wage growth.” Of course, the Fed could decide somewhere down the line that wage growth implies inflation and that interest rates must be raised—incidentally, the desired course of traditional conservatives. But in the short term, that seems unlikely. Yellen, like her predecessors Alan Greenspan and Ben Bernanke, preferred to let the economic locomotive gather speed, and when Trump nominated Jerome Powell to succeed her in November, he pointedly chose a pro-growth Yellenite instead of a conventional inflation hawk. Some of the potential Trumpery I have just described might have real effects.

The End of Indexing: Six Structural Mega-Trends That Threaten Passive Investing
by Niels Jensen
Published 25 Mar 2018

Take Germany, a country with about 81 million inhabitants today. 50 years from now, the population of Germany will have dropped to about 70 million. Such a dramatic fall in numbers will have a serious impact on everything. Introduction “I guess I should warn you, if I turn out to be particularly clear, you’ve probably misunderstood what I’ve said”. — Alan Greenspan The end of indexing? Index-tracking is undoubtedly the flavour of the day. Its share of total dollar volume is now in the neighbourhood of one-third of the total US mutual fund market – a market share that continues to grow almost exponentially, and informed sources expect index-tracking mutual funds to have captured more than half of total funds under management within a handful of years.1 With that growth rate in mind, why on earth do I believe the end of indexing is nigh?

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* * * 68 In this chapter, whenever I refer to household wealth or just wealth, I refer to the sum of household wealth and wealth controlled by non-profit organisations, which is how the Federal Reserve defines and measures US household wealth. 69 The same approach can be applied to P/E ratios, and the mean value for the US equity market P/E ratio is about 15. 70 The Greenspan Put is a term used to describe the Federal Reserve’s perceived desire under Alan Greenspan’s leadership to prop up financial securities markets by lowering interest rates. 71 As of the end of Q3 2017, according to the Federal Reserve. 72 I have data going back to the early 1950s. 73 Data for the UK going back to 1850 suggests that the ratio between labour and income has been largely stable for at least 165 years.

More: The 10,000-Year Rise of the World Economy
by Philip Coggan
Published 6 Feb 2020

Central banks hired vast hordes of economists, sought out new data, interviewed businesses and consumers for evidence of their outlook, and published detailed forecasts for growth, unemployment and inflation. For a long while, this approach seemed to work perfectly. The 1990s and early 2000s were dubbed the era of the “great moderation”, with inflation low and the economy stable. Alan Greenspan, Mr Volcker’s successor, was dubbed the “maestro”, and, rather than being bullied by presidents, Greenspan’s approbation was sought by them for their policies. In Europe, the biggest development was the creation of the European Central Bank (ECB) in 1998, which was formed to take charge of the new single currency, the euro.

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Landes, The Wealth and Poverty of Nations, op. cit. 18. Timothy Mitchell, Carbon Democracy: Political Power in the Age of Oil 19. Smil, Energy and Civilization, op. cit. 20. Rhodes, Energy: A Human History, op. cit. 21. Ibid. 22. Daniel Yergin, The Prize: The Epic Quest for Oil, Money, and Power 23. Alan Greenspan and Adrian Wooldridge, Capitalism in America: A History 24. T. K. Derry and Trevor I. Williams, A Short History of Technology 25. “History of the light bulb”, https://www.bulbs.com/learning/history.aspx 26. Rhodes, Energy: A Human History, op. cit. 27. Ibid. 28. Greenspan and Wooldridge, Capitalism in America, op. cit. 29.

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The same Huskisson was to be the first-ever railway fatality. 6. Charles P. Kindleberger, A Financial History of Western Europe 7. Ahamed, Lords of Finance, op. cit. 8. Federal Reserve, https://www.federalreserve.gov/BOARDDOCS/SPEECHES/2002/20021108/ 9. Sebastian Mallaby, The Man Who Knew: The Life and Times of Alan Greenspan 10. Ibid. 11. Dietrich Domanski, Michela Scatigna and Anna Zabai, “Wealth inequality and monetary policy”, BIS, https://www.bis.org/publ/qtrpdf/r_qt1603f.htm 12. Brendan Greeley, “America has never worried about financing its priorities”, Financial Times, January 16th 2019 Chapter 14 – The second era of globalisation: the developed world, 1979–2007 1.

In Pursuit of the Perfect Portfolio: The Stories, Voices, and Key Insights of the Pioneers Who Shaped the Way We Invest
by Andrew W. Lo and Stephen R. Foerster
Published 16 Aug 2021

The variation in risk premiums is too big, according to him, to be explained by variation in risk premiums across the business cycle. He sees irrational optimism and pessimism in [investors’s] heads.” The notion of “irrational optimism” (or exuberance) would play a major part in forever tying Shiller to the Federal Reserve’s most famous chairman, Alan Greenspan. The Whisper That Moved the Markets Greenspan was sworn in as chairman of the Federal Reserve by Vice President George H. W. Bush on August 11, 1987, during a ceremony at the White House as President Ronald Reagan watched. Greenspan had big shoes to fill, both literally and figuratively, taking the reins of the Fed from the six-foot, seven-inch, Paul Volcker, who was known for his successful inflation-fighting record.

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Believers in efficient markets would say that we shouldn’t care about these opinions.… But I disagree. I think that the market is not smart about these sorts of things and that we do need leadership from people who study these questions.… One reason why the boom in the 1990s went on as long as it did is that Fed Chairman Alan Greenspan made very little of worries about the market.”40 When asked whether Greenspan deserves credit (or blame) for his policies and comments, Shiller observed, “I guess as a Fed chairman, you do have to have a little bit of a bias toward optimism. Because if you say anything vaguely pessimistic, it gets you in trouble.

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Fama observes that “bubble” rhetoric usually involves stock market bubbles bursting as the result of a correction of irrational price increases. But he notes that historical market price declines tend to be followed by rather quick price increases, wiping out most of the preceding decline, if not all of it. For example, despite Shiller’s 1996 warning to Alan Greenspan about bubbles that led to Greenspan’s famous “irrational exuberance” speech, stock market prices in March 2003, which most people would argue was after the crash of the supposed bubble, were still above those in December 1996.60 Besides these verbal sparring matches with Shiller, Fama has also had well-known debates with his Chicago colleague, the behavioral economist Richard Thaler, 2017 winner of the Nobel Prize in Economics whom Fama personally helped to hire.

Economics Rules: The Rights and Wrongs of the Dismal Science
by Dani Rodrik
Published 12 Oct 2015

Moreover, markets came to be viewed not only as inherently efficient and stable, but also as self-disciplining. If big banks and speculators engaged in shenanigans, markets would discover and punish them. Investors who made bad decisions and took inappropriate risks would be driven out; those who behaved responsibly would profit from their prudence. Federal Reserve Chairman Alan Greenspan’s mea culpa before a 2008 congressional panel would speak volumes about the prevailing state of mind: “Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included,” he confessed, “are in a state of shocked disbelief.”8 Government, meanwhile, could not be trusted.

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Government was condemned to follow one step behind. Such thinking by economists had legitimized and enabled a great wave of financial deregulation that set the stage for the crisis. And it didn’t hurt that these views were shared by some of the top economists in government, such as Larry Summers and Alan Greenspan. In sum, economists (and those who listened to them) became overconfident in their preferred models of the moment: markets are efficient, financial innovation improves the risk-return trade-off, self-regulation works best, and government intervention is ineffective and harmful. They forgot about the other models.

Little Bets: How Breakthrough Ideas Emerge From Small Discoveries
by Peter Sims
Published 18 Apr 2011

Jobs, careers, and valued skills mutate at unprecedented rates, driven by tectonic global shifts. Even mavens in Silicon Valley have trouble keeping up with the pace of technological change. Meanwhile, markets exhibit historic levels of volatility, which routinely drives investors crazy or away from investing altogether. Just as former Chairman of Federal Reserve Board Alan Greenspan acknowledged “a flaw” in his understanding of markets during the 2008 economic crisis, we cannot rely on past assumptions to predict the future. In this era, being able to create, navigate amid uncertainty, and adapt will increasingly be vital advantages. There is another way. As we have seen, General McMaster, Chris Rock, Frank Gehry, agile software developers, Pixar animators, and seasoned entrepreneurs like Amazon’s Jeff Bezos, Muhammad Yunus, and Belkin’s Chet Pipkin all do things to discover what to do.

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Howard Schultz and Starbucks: Drawn from Pour Your Heart Into It: How Starbucks Built a Company One Cup at a Time by Howard Schultz and Dori Jones Yang. Agile software: Drawn from previously mentioned agile interviews and see also: “Small Wins: Agile Psychology,” by David Churchville, which can be found at: http://www.extremeplanner.com/blog/2007/03/small-wins-agile-psychology.html. Chapter 10 Alan Greenspan: Quote taken from Congressional testimony from October. General H. R. McMaster: Drawn from interviews with General McMaster. Pete Docter: Interview with Docter. Richard Tait: Interview with Tait. Dr. Keith Sawyer: “Educating for Innovation,” by R. Keith Sawyer, Thinking Skills and Creativity, vol. 1, 41–48.

Cheap: The High Cost of Discount Culture
by Ellen Ruppel Shell
Published 2 Jul 2009

At the time, inflation was targeted—in the words of economist James Galbraith—as a “public evil” that “inspires public citizens to oppose it with an energy and perseverance devoted to few other tasks.” In 1978 the Humphrey-Hawkins Act mandated that inflation be reduced in ten years from the then-current level of 9 percent to zero. The Federal Reserve Bank under both Paul Volcker and Alan Greenspan strove tirelessly to achieve this ambitious goal by controlling employment levels through the manipulation of interest rates. Volcker and Greenspan reasoned that too great a demand for workers would lead to an increase in wages, which both economists deemed inflationary. When the unemployment rate fell below 5.5 or 6 percent, or seemed headed in that direction, the Fed raised interest rates to inhibit economic growth and by extension, hiring.

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“When a good or service is produced more cheaply abroad, it makes more sense to import it than to make or provide it domestically. This can be difficult for workers who are displaced and need to find jobs in new growing industries. But the economy overall benefits.” Mankiw’s comments echoed those made by former Federal Reserve Chairman Alan Greenspan, by which he reassured workers hurt by outsourcing by saying they “can be confident that new jobs will displace old ones as they always have.” This brand of “creative destruction,” Mankiw, Greenspan, and others have argued, will allow Americans to focus on what we do best: invention and entrepreneurship.

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Nearly sixty thousand storage facilities in the U.S. satisfy that demand, annually generating $20.1 billion in revenue. xiv key economists have endorsed this view: Paul Volcker, chairman of the Federal Reserve under Presidents Jimmy Carter and Ronald Reagan and chief economic advisor to President Barack Obama’s political campaign, worked tirelessly to keep prices in check, as did his successor, Alan Greenspan. INTRODUCTION: GRESHAM’S LAW 1 attractively packaged but inferior in content: Alan W. Watts, The Book: On the Taboo Against Knowing Who You Are (New York: Collier Books, 1996), 75. 2 family spending on basic expenses grew $4,655: See, for example, Harvard Law Professor Elizabeth Warren’s testimony before the U.S.

Austerity: The History of a Dangerous Idea
by Mark Blyth
Published 24 Apr 2013

Meanwhile, rather than simply continue to accept the continuing Keynesian counteroffensive, some of the neoliberal old guard, in both Europe and the United States, began to strike back in the public debate. The Financial Times became a kind of bulletin board for elite economic opinion. Using the paper as a platform, former Federal Reserve chairman Alan Greenspan went from saying in October 2008 that the crisis had forced him to reconsider a “flaw” in his “ideology” of markets, and in February 2009 even admitting the desirability of bank nationalization, to, by June of that same year, defending austerity and worrying, in a very German manner, about future inflation.15 Jeffrey Sachs opined that it was “time to plan for [the] post Keynesian era” since the stimulus was at best unnecessary and at worst harmful.16 By mid-2010, the Financial Times was organizing an “austerity debate” that pitted increasingly on-the-defensive Keynesians against a coterie of conservatives and neoclassicals.

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The “don’t bail them out” message taps into a strong current of populist American opinion.51 Meanwhile, the “don’t intervene/let it run its course” message found strong support in the right wing of the Republican Party and among elements of the financial community that were not too big to fail, particularly hedge funds.52 Why, then, apart from few key high-profile figures such as Glenn Beck, Peter Schiff, Ron Paul, and (the younger) Alan Greenspan, is it difficult to find mainstream economists, even in America, who publicly accept the Austrian theory of the business cycle? To see why, we need to look at the assets and liabilities side of the Austrian explanatory balance sheet. On the asset (theory) side, we find the action of central banks in producing asset bubbles with prolonged policies of too-cheap money and the epistemic hubris of managing the Great Moderation blowing up in the faces of the same central bankers who declared that they had tamed the cycle, which is not an unreasonable description of the 2000s.

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On ordoliberalism, see Brigitte Young and Willi Semmler, “Germany’s New Vision for the Eurozone: Rule-based Ordoliberalism?” unpublished manuscript (2011); and Steven J. Slivia, “Why Do German and U.S. Reactions to the Financial Crisis Differ?” German Politics and Society, 29, 4 (winter 2011): 68–77. 14. See Peter Katzenstein, A World of Regions (Ithaca, NY: Cornell University Press, 2005). 15. Alan Greenspan, “Inflation: The Real Threat to Sustained Recovery,” Financial Times, June 25, 2009, http://www.ft.com/intl/cms/s/0/e1fbc4e6–6194–11de-9e03–00144feabdc0.html#axzz1rw5D7xpm. 16. Jeffrey Sachs, “Time to Plan for Post-Keynesian Era,” Financial Times, June 7, 2010, http://www.ft.com/intl/cms/s/0/e7909286-726b-11df-9f82-00144feabdc0.html#axzz1rw5D7xpm. 17.

Tower of Basel: The Shadowy History of the Secret Bank That Runs the World
by Adam Lebor
Published 28 May 2013

Two years later, in 1996, the central banks or monetary authorities of China, India, Russia, Brazil, Hong Kong, Singapore, and Saudi Arabia joined. The BIS’s future was assured. As director of the Division of International Finance, Karen Johnson attended the governors’ meetings for nine years, from 1998 until her retirement in 2007, accompanying either Alan Greenspan, the chairman of the Federal Reserve or his successor, Ben Bernanke, or their deputies. Johnson successfully pushed for the Federal Reserve to pay attention to the BIS. “The American attitude to the BIS changed because the world changed. The BIS was expanding its membership because countries in the rest of the world now mattered in ways they hadn’t mattered before.

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The tribunal awarded the private shareholders an extra 7,977.56 Swiss francs per share, plus 5 percent interest, bringing the total extra to 9,052.90 Swiss francs—over 50 percent more than the original offer.7 The decision, noted the Central Banking Journal, was a “humiliating rebuff” for the board of directors who had signed off on the original price, including Jean-Claude Trichet, chairman of the Federal Reserve Alan Greenspan, and the governor of the Bank of England Sir Eddie George.8 The problem was not the compulsory squeeze out of private shareholders, said Charles de Vaulx, then the portfolio manager of First Eagle Funds, and now chief investment officer and portfolio manager at International Value Advisers. “I could understand that it was an accident of history that the shares happened to be listed, and the bank wanted to buy them back.

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When President Kennedy was shot in 1963, Charles Coombs, of the New York Federal Reserve, was able to take immediate, decisive action to save the dollar, knowing he would be supported by his European counterparts. The same held true after the terrorist attacks on September 11, 2001. King recalled, “We can say things to each other, knowing they won’t be leaked. You can do things without going through all the formalities. After 9/11, Alan Greenspan was out of the United States, and Roger Ferguson was in charge of the Federal Reserve. He and I were able to negotiate a swap agreement to supply liquidity in dollars for banks that needed them but could not get them at the Fed. The fact we could do that personally because we trusted each other enabled us to give confidence to our banks that they would be able to get dollars.

Making the Future: The Unipolar Imperial Moment
by Noam Chomsky
Published 15 Mar 2010

Under intense lobbyist pressure, they were reshaped as “a clear win for the largest institutions in the system . . . a way of dumping assets without having to fail or close,” as described by James G. Rickards, who negotiated the federal bailout for the hedge fund Long Term Capital Management in 1998, reminding us that we are treading familiar turf. The immediate origins of the current meltdown lie in the collapse of the housing bubble supervised by Federal Reserve Chairman Alan Greenspan, which sustained the struggling economy through the Bush years by debt-based consumer spending along with borrowing from abroad. But the roots are deeper. In part they lie in the triumph of financial liberalization in the past thirty years—that is, freeing the markets as much as possible from government regulation.

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The rise of an American precariat was proudly hailed as a primary factor in the Great Moderation that brought slower economic growth, virtual stagnation of real income for the majority of the population, and wealth beyond the dreams of avarice for a tiny sector, mostly the agents of this historical transformation. The high priest of this magnificent economy was Alan Greenspan, described by the business press as “saintly” for his brilliant stewardship. Glorying in his achievements, he testified before Congress that they relied in part on “atypical restraint on compensation increases [which] appears to be mainly the consequence of greater worker insecurity.” The disaster of the Great Moderation was salvaged by heroic government efforts to reward the perpetrators.

Think Twice: Harnessing the Power of Counterintuition
by Michael J. Mauboussin
Published 6 Nov 2012

The main reason is that the amount surgeons are paid for the newer and more complicated procedure is typically several times what they’d receive for the older procedure.28 Incentives also played a central role in the financial crisis of 2007–2009. Take the subprime mortgage market, which was “undeniably the original source of crisis,” according to Alan Greenspan, former chairman of the Federal Reserve. People unable to meet prime credit standards because of a poor or limited credit history were able to borrow unprecedented amounts of money, often at low initial interest rates. Subprime mortgages went from about 10 percent of new mortgages in the late 1990s to 20 percent by 2006, and unregulated lenders represented the bulk of that volume.

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Shiller, Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism (Princeton, NJ: Princeton University Press, 2009), 36–37; and Whitney Tilson and Glenn Tongue, More Mortgage Meltdown: 6 Ways to Profit in These Bad Times (New York: John Wiley & Sons, 2009), 29–47. 30. Alan Greenspan, “Testimony to the Committee of Government Oversight and Reform,” October 23, 2008. 31. Max H. Bazerman, George Loewenstein, and Don A. Moore, “Why Good Accountants Do Bad Audits,” Harvard Business Review, November 2002, 97–102; and Don A. Moore, Philip E. Tetlock, Lloyd Tanlu, and Max H. Bazerman, “Conflicts of Interest and the Case of Auditor Independence: Moral Seduction and Strategic Issue Cycling,” Academy of Management Review 31, no. 1 (2006): 10–29. 32.

The Great Economists Ten Economists whose thinking changed the way we live-FT Publishing International (2014)
by Phil Thornton
Published 7 May 2014

They pointed to imperfect information and advocated limited government intervention to cover the period when markets fail to reduce unemployment. The master returns The revival of Keynes can tentatively be dated to 23 October 2008. Giving evidence to the US Congress, the former Federal Reserve chairman Alan Greenspan said he had ‘found a flaw’ in freemarket economic theory. He said: ‘I made a mistake in presuming that the self interests of organisations, specifically banks and 112 The Great Economists others, were such that they were best capable of protecting their own shareholders and their equity in the firms when a massive earthquake reduced the financial world to rubble.’

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Chapter 10 • Daniel Kahneman235 Verdict: credits and debits Kahneman’s findings have laid the foundations for the rapidly expanding discipline of behavioural economics, which is being increasingly used by financial policymakers such as finance ministries as well as other government departments and in central banks. Kahneman himself has cited the admission in 2008 by former US Federal Reserve chairman Alan Greenspan that he had been wrong in relying on the self-interest of banks to ensure that the financial markets corrected themselves in time as a major event in the development of behavioural economics.5 Kahneman acts as the bridge between the first ideas set out 250 years by Adam Smith, who opened this book, and the present day.

Survival of the Richest: Escape Fantasies of the Tech Billionaires
by Douglas Rushkoff
Published 7 Sep 2022

AOL founder Steve Case was cashing in his chips, exchanging his speculative dotcom paper assets for a majority stake in a real company with real assets. Moreover, if he was choosing to do it now, it meant he believed that his AOL stock had hit its all-time high. To me, AOL’s purchase of Time Warner suggested that what then-Fed chair Alan Greenspan had called the “irrational exuberance” surrounding technology stocks had climaxed: the dotcom boom was ending. So I wrote all this down and sent it to the editor by the 3 pm deadline. An hour later, the phone rang. “We can’t run this!” he said. “Everybody is saying the deal is a great thing, and you’re trying to argue that it’s going to fail ?

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The digital revolution would take place on an abstracted plane above and beyond the constrained world of people, places, and things, allowing businesses to grow simply by going meta. This is when Wired ran its “Long Boom” cover story, arguing that thanks to the potential for infinite scalability, the global economy would now grow exponentially, forever. Even Fed chair Alan Greenspan signed on, admitting that the normal rules of economics no longer applied and that we were in a “new paradigm ”—a dimensional leap in the behavior of capital itself. Money was another form of data, and data another form of money. AOL and the other dotcom casualties appeared to disprove the new thesis.

House of Cards: A Tale of Hubris and Wretched Excess on Wall Street
by William D. Cohan
Published 15 Nov 2009

But the Fed rose to Bear's rescue anyway, fearing that the collapse of a major investment bank would cause panic in the markets and wreak havoc with the wider economy. Fed officials knew that they were doing a bad thing, but believed the alternative would be even worse. As Bear goes, so will go the rest of the financial system.” Alan Greenspan, the former chairman of the Federal Reserve Board whom many blamed for lowering interest rates too far too fast after September 11 and thus inflating the credit bubble that burst in the conflagration that consumed Bear Stearns, weighed in with his own thoughts on the financial crisis in an opinion piece in the Financial Times.

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At that time, Greenberg was between marriages—he would marry Kathryn Olson, a lawyer, in 1987—and had been dating regularly but was growing increasingly concerned about the risk of contracting AIDS. “He decides he's going to get married,” Cayne says. “And he's one of the guys that's dating Barbara Walters. She's dating the schvartze from Massachusetts [Ed Brooke, the first black U.S. senator and later a special limited partner at Bear Stearns]. She's dating Alan Greenspan. She's dating him. He says to me, ‘I've decided I'm going to marry Barbara Walters.'… The very next day in the papers: She's engaged to Merv Adelson. I never said a word. Now, normally, you know, if it was one of my buddies, I'd say, you know, ‘Pretty good call there, pal. You're marrying her, except for that she's marrying somebody else.

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(Lehman Brothers contributed only $100 million, creating, some have argued, almost as much resentment against it as existed for Bear Stearns.) But the consortium of banks had put their collective finger in the dike and prevented the collapse of the financial system. (A few years later, Meriwether resurfaced with a new hedge fund, which again got hammered during the credit crisis of 2007 and 2008.) Alan Greenspan, the chairman of the Federal Reserve at the time, defended the Fed-orchestrated bailout. “Had the failure of LTCM triggered the seizing up of the markets,” he told the House Banking Committee on October 1, “substantial damage could have been inflicted on many market participants and could have potentially impaired the economies of many nations, including our own.”

The Unwinding: An Inner History of the New America
by George Packer
Published 4 Mar 2014

At some point in late 2005 or early 2006, with the housing market at its dizzying mid-decade height, speculators suddenly lost confidence, the faith that kept Florida aloft gave way, and the economy plummeted like a Looney Tunes character who, suspended in midair, looks down. Prices did what borrowers, lenders, flippers, Wall Street traders betting long, credit default swap desks, Fannie Mae, Asian bankers looking for 8 percent, antic boosters on CNBC, and Alan Greenspan somehow never imagined possible: they started to decline. It took a year or two for the effects to be seen across the landscape of boomburgs, brokers’ offices, construction sites, and retail malls. In early 2007, an official of Allied Van Lines reported to the Florida Chamber of Commerce in Tallahassee that the company was moving more people out of the state than in.

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During a one-hour meeting at Treasury, Rubin was angrier than his colleagues had ever seen him (Brooksley Born was too strident, he felt, she didn’t defer enough), and he lectured her to stay out of derivatives—she should listen to the banks’ lawyers, not the government lawyers at her agency. He teamed up with Larry Summers, his deputy, and Alan Greenspan, the Fed chairman—called “the Committee to Save the World” on the cover of Time—and persuaded the Republican Congress to block Brooksley Born. (Not that Rubin wasn’t worried about derivatives. In fact, he had always been worried about the size of Goldman’s derivatives book, though he reluctantly agreed whenever traders wanted to make it bigger.

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He refused almost all interview requests, and on the few occasions when he spoke publicly, he brushed aside any blame. “I don’t feel responsible, in light of the facts as I knew them in my role,” he said. “Clearly, there were things wrong. But I don’t know of anyone who foresaw a perfect storm.” Even Alan Greenspan admitted that he had been wrong, but the pride that had always been masked by humility would not allow Rubin to do it. In January 2009, having earned $126 million for his decade of advice, doubling his net worth, Rubin resigned his position at Citigroup. In April 2010, he was called to testify before the Financial Crisis Inquiry Commission in Washington.

The World's Banker: A Story of Failed States, Financial Crises, and the Wealth and Poverty of Nations
by Sebastian Mallaby
Published 24 Apr 2006

In Bangkok and Jakarta and Seoul, IMF missions were designing huge bailouts, treating the Bank’s experts as research assistants; and then Larry Summers would call Wolfensohn from the U.S. Treasury at all hours of the day and night, demanding that the Bank contribute billions to these IMF-designed rescues. Summers was consulting the IMF’s Stan Fischer, and Summers was consulting the Federal Reserve’s Alan Greenspan, and Summers and Fischer and Greenspan were all saving the world together, and they were treating Wolfensohn like an ATM machine. The World Bank—Wolfensohn’s Bank—was not going to take this quietly. Wolfensohn could hardly refuse to contribute to the bailouts. The IMF clearly lacked the resources to stem investor panic by itself, and the World Bank was needed to provide reinforcement.

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Wolfensohn had pulled off this sort of end run a hundred times in business, and he had pulled it off when he had won the World Bank presidency despite the misgivings of the Clinton Treasury; he wasn’t going to be cowed now by O’Neill and his simplistic hectoring. Bit by bit, Wolfensohn forged ties with other Bush administration figures—notably the national security adviser, Condoleezza Rice, and Secretary of State Colin Powell. He capitalized on his relationship with Alan Greenspan, the Fed chairman and a confidante of the Bush team, who stayed on Wolfensohn’s estate in Jackson Hole each year in August. And he made the most of his multitude of foreign contacts, who served as his last line of defense.15 After all, if the United States were to unseat a World Bank president in midterm, it would set a precedent that the Europeans would regret.

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The passengers proceeded in their tuxedos and furs up the steps of the Carnegie entrance, past paramilitary policemen holding stubby automatic guns, past the footmen in red livery who awaited them inside, and into a room filled with conversation and champagne and a busybody photographer. There, in that reception room, stood figures from Jim Wolfensohn’s full life: Paul Volcker and Alan Greenspan, who between them had run the Fed for the past twenty-four years; Barbara Walters and Peter Jennings; Queen Beatrix of Holland and Queen Noor of Jordan. There, too, was Vernon Jordan, the old friend of Bill Clinton who had helped Wolfensohn get the World Bank job. Sandy Berger and Strobe Talbott, Clinton’s national security adviser and deputy secretary of state, were exchanging views about Taiwan; Joe Stiglitz the Nobel laureate was holding court; Al Gore smiled a politician’s smile; then Talbott was introduced to a small man with large guards, who turned out to be the president of the Kirgiz Republic.

The Asylum: The Renegades Who Hijacked the World's Oil Market
by Leah McGrath Goodman
Published 15 Feb 2011

Marks went back to the drawing board, hoping that somewhere in his heap of Nymex contracts he’d find his winning lottery ticket. Mocking the Nymex traders in their impoverished state were the Comex traders, the market kingpins of the 1970s, who were betting on and winning big in the skyrocketing metals markets. Even Alan Greenspan, who later became the U.S. Federal Reserve chief, was seen roaming the metals futures pits. “It’s true, I saw Alan down there sometimes,” a trader says. “It’s weird now, isn’t it? He had a Comex membership. But we were all a lot younger back then.” In 1977, Nymex, along with Comex, the Coffee and Sugar Exchange, and the New York Cotton Exchange, decided to move their trading pits onto one common trading floor offering the traders more up-to-date technology.

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One colleague went so far as to say her regulatory style approached scorched-earth, which had made her enemies. “Brooksley made a cottage industry of always saying, ‘I am right and everybody else is wrong,’ ” he says. “So much so that when she was right, nobody listened.” This was true when Born famously took on Federal Reserve chairman Alan Greenspan in the 1990s, warning of the stark dangers of unregulated financial derivatives in the dark market, which had started long ago with commodities and had since branched out into complex debt instruments. Of course, she’d been right. Less than two decades later, in 2008, she was branded a market Cassandra during the 360-degree disemboweling that shredded banking citadels Bear Stearns, Lehman Brothers, and Merrill Lynch, as unregulated credit-default swaps—bets on the creditworthiness of a company or product, such as mortgages—hurled the global financial system into its death spiral.

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(The credit-default swap, as it happened, was perfected by a group of J.P. Morgan bankers in 1994 on the exact site where the Nymex traders met every year for their wine-soaked futures conferences—the Boca Raton Resort & Club.) Gramm had initially wanted looser regulation, which would have opened up additional loopholes, causing Alan Greenspan and even Enron itself to object. They urged Gramm to settle for something less radical, lest the “modernization” act not pass at all. The result had been the Enron loophole, the Pandora’s box that unleashed the 2008 credit crisis and recession that shook the world. “Which idiot in Congress decided not to regulate credit-default swaps?”

Nerds on Wall Street: Math, Machines and Wired Markets
by David J. Leinweber
Published 31 Dec 2008

With that self-assurance, the company announced in 2000 that it would buy $2 trillion in loans from low-income, minority and risky borrowers by 2010.14 As it turned out, if this was a divining rod, it was held by a suicide bomber. Fannie (and others) built an edifice of enormous complexity and then fed it garbage. Noted systems analyst Alan Greenspan elucidated the old garbage in, garbage out maxim for a congressional committee, to share the blame with the monster models of Fannie Mae: It was the failure to properly price such risky assets that precipitated the crisis. . . . In recent decades, a vast risk management and pricing system has evolved, combining the best insights of mathematicians and finance experts supported by major advances in computer and communications technology.

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When I first tried to get some traction on understanding these issues, I hoped that this would turn out to be an unforeseeable, unavoidable confluence of independent events. It wasn’t. If Apollo 11 had ended up a pile of wreckage in the Sea of Tranquility, we might attribute it to a random accident or a bad component. If the same thing happened to Apollo 12, 13, 14, 15, 16, and 17, that conclusion would be unsupportable. Alan Greenspan and a few others are to be commended, if not applauded, for acknowledging their errors. This chapter is essentially an educated lay outsider’s viewpoint. Believe it or not, based on comments from insiders, I have tried to moderate and qualify the harsher judgments here, but as a society we must not let this happen again.

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See the “Top 10 Worst Engineering Disasters” at http://listverse. com/science/top-10-worst-engineering-disasters/. 13. Chairman’s Letter, 2002 Berkshire Hathaway Annual Report, pp. 13–15, www .berkshirehathaway.com/2002ar/2002ar.pdf . 14. Charles Duhigg, “Pressured to Take More Risk, Fannie Reached a Tipping Point,” New York Times, October 4, 2008. 15. Alan Greenspan, October 24, 2008, hearing, House Committee on Oversight and Government Reform, http://oversight.house.gov/story.asp?id=2256. Chapter 13 Structural Ideas for the Economic Rescue Fractional Homes and New Banks M om used to say, “If you don’t have something nice to say, don’t say anything at all.”

A Mathematician Plays the Stock Market
by John Allen Paulos
Published 1 Jan 2003

Of course not, but I acted as if I did, and “averaging down” continued to seem like an irresistible opportunity. I believed in the company, but greed and fear were already doing their usual two-step in my head and, in the process, stepping all over my critical faculties. Emotional Overreactions and Homo Economicus Investors can become (to borrow a phrase Alan Greenspan and Robert Shiller made famous) irrationally exuberant, or, changing the arithmetical sign, irrationally despairing. Some of the biggest daily point gains and declines in Nasdaq’s history occurred in a single month in early 2000, and the pattern has continued unabated in 2001 and 2002, the biggest point gain since 1987 occurring on July 24, 2002.

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(“Oh my, don’t get a mortgage. You’ll end up paying four times as much.”) Also common are lottery players who insist that the worth of their possible winnings is really the advertised one million dollars. (“In only 20 years, I’ll have that million.”) And there are many investors who doubt that the opaque pronouncements of Alan Greenspan have anything to do with the stock or bond markets. These and similar beliefs stem from misconceptions about compound interest, the bedrock of mathematical finance, which is in turn the foundation of fundamental analysis. e is the Root of All Money Speaking of bedrocks and foundations, I claim that e is the root of all money.

Retirementology: Rethinking the American Dream in a New Economy
by Gregory Brandon Salsbury
Published 15 Mar 2010

The New McFear When some of the world’s largest companies and banks essentially vaporize or are forced to sell themselves in a matter of months, and the global economy appears to be sinking with record speed and harmony,6 even the worst-conceived plans and the best-laid expectations can turn to fear, and suddenly no fear, for some of us, may seem irrational. In October 2008, Alan Greenspan, the former chairman of the U.S. Federal Reserve, confessed to Congress that he was “shocked” when the markets did not operate according to his lifelong expectations.7 When things are tight and negative, economic news fills the headlines; people may tend to hold back on spending, pull money out of long-term investments, and potentially exacerbate the problem by holding onto their nest eggs for dear life.

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In the ’90s, they believed it was tech stocks; in the late 2000s, it seems to have been target date funds and home equity. CNBC’s two-part special House of Cards, which aired in January of 2009 and detailed the financial meltdown that was triggered by the bursting of the real estate bubble, featured an interview with Alan Greenspan. During the interview, Greenspan stated that all the people who’d invested heavily in real estate or subprime mortgage-backed securities thought they would get out of those positions ahead of everyone else. But many of these people—among them some of the brightest minds on Wall Street—did not get out ahead of the others and, in fact, they were holding worthless paper when the meltdown happened.

The Wrecking Crew: How Conservatives Rule
by Thomas Frank
Published 5 Aug 2008

Bill Clinton turned out to be the most pro-business Democratic president since Grover Cleveland, and his triumph over more liberal Democrats was a development corporate types wanted to encourage. They were happy to support a Democrat who took their side on NAFTA, welfare, and banking deregulation; who eliminated the federal deficit; who retained Alan Greenspan at the Federal Reserve; and who made the chairman of Goldman Sachs his treasury secretary. For deeply dyed conservatives like Norquist, though, it was a standing outrage that the true believers in the free-market way did not receive 100 percent of the funds and the K Street employment opportunities that corporate America had to offer.

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When President Reagan took over in 1981, he inherited an annual deficit of $59 billion and a national debt of $914 billion; by the time he and his successor George Bush I had finished their work, they had quintupled the deficit and pumped the debt up to $4 trillion.13 Act 2: Enter Bill Clinton, who had built his reputation as something of a populist, promising in 1992 to “put people first” and to ensure that economic growth was shared equally by rich and poor alike. As President Clinton, however, he quickly became a very different creature. This, too, is a familiar story, with the Arkansas man of the people morphing magically into Alan Greenspan’s favorite president of them all. What is remembered less vividly is the role the enormous Reagan deficit played in Clinton’s transformation. Bill and Hillary called it “Stockman’s Revenge,” and from the first few gatherings of the new administration’s economic team, it dominated all other topics.

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The consequences would be borne down the line by the suckers who bought mortgage-backed securities—and, of course, by the shareholders.3 The capture of the state by conservatives, meanwhile, ensured that no one would interfere. The Federal Reserve, which regulates banks in addition to setting interest rates, declined to intervene despite an explicit warning about risky mortgage lending practices received in 2000 by its chairman, the famous libertarian Alan Greenspan. In 2003, the Office of the Comptroller of the Currency, a different federal bank regulator, actually overruled action against lenders by state-level agencies.4 Scan the rest of the federal agencies assigned to regulate banks and you can see the movement’s entire arsenal of sabotage weapons deployed to devastating effect.

Hedgehogging
by Barton Biggs
Published 3 Jan 2005

As a graduate student in sociology at Columbia, he had published a paper with the elaborate title Life, Liberty and Property: A Story of Conflict and Measurement of Conflicting Rights. In the 1940s Jones had been a staff writer for Time and Fortune. By the mid-1960s Alfred Jones (no one dared to call him Al, just as no one would dream of referring to Alan Greenspan as just plain Al Greenspan) was a wealthy, snobbish, pretentious man, but he was no dummy. He conceived the idea of the modern hedge fund: a private fund that uses leverage to go both long and short on stocks, actively manages its net long exposure, and charges a performance fee. There were plenty of leveraged long pooled funds in New York before the Crash, but my father told me that none of them systematically controlled risk by hedging with shorts.

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THERE IS NO SUCH THING AS A COLLECTIVE BRAIN Speaking of groupstink and of how rooms full of smart people usually get it wrong, The Economist had a piece in its 2003 year-end issue about a dinner the magazine sponsors at the Federal Reserve’s annual symposium in Jackson Hole.This is the most prestigious gathering of economists in the world, and it is a prized invitation that goes only to the cream of the economist crop.Alan Greenspan and the chairmen of most of the major central banks in the world are there to give arcane speeches and hobnob with each other. The story relates wryly how each year the editors of The Economist host a dinner to which they invite the conference’s elite, otherwise known as The Jackson Hole Gang.

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Traditional valuation methods had predicted trouble throughout the last years of the bull market and had been wrong, Glassman emphasized, and, therefore, his methodology was better.The professionals, particularly the older ones (like me, he gently implied, to laughter) with their slavish adherence to outdated valuation methods, have been too bearish. (Alan Greenspan spoke of “irrational exuberance” in 1996, but the public has been right to be “rationally exuberant.” The people instinctively understand that the risks of investing in stocks, “never so great as imagined, really have declined.”) THE CROWD HOOTED My reply to Glassman was that although it is true that, over very long periods, equities have delivered vastly superior returns to bonds or cash, it is also a fact that for short periods of 5, 10, or even 15 years, stocks have underperformed dramatically.

Crapshoot Investing: How Tech-Savvy Traders and Clueless Regulators Turned the Stock Market Into a Casino
by Jim McTague
Published 1 Mar 2011

The day of the Flash Crash, Clara Vega, an economist with Federal Reserve Board, was at the SEC at the behest of Hu presenting a seminar on her paper, “Rise of the Machines: Algorithmic Trading in the Foreign Exchange Market.” The paper found that high-frequency traders reduce market volatility and provide liquidity to the marker in times of stress. Back in the 1990s, Gensler, a former Goldman Sachs trader, had been one of a cadre of good old boys that included Alan Greenspan and former Treasury Secretary Robert Rubin that had kept the CFTC under Brooksley Born from regulating derivatives despite her repeated warnings that these instruments posed a systemic risk to the financial markets. They treated her disdainfully, as if she were a meddling do-gooder who didn’t understand the workings of the financial markets.

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William Dunkelberg’s analysis of small business conditions is an important market bellwether. He posts his analysis on the site of the National Federation of Independent Business. And the Association of American Railroads posts to the Web on a monthly basis its “Rail Time Indicators” report, which is perused by Buffet and Alan Greenspan and other financial experts for clues about the direction of the economy. Yahoo! Finance lists the star analysts for each company. I use a service that gives me access to their research. In addition to important news, both Barron’s and The Wall Street Journal have excellent online tools to aid investors in conducting their fundamental research, like a basic version of StockGrader.

Broken Markets: A User's Guide to the Post-Finance Economy
by Kevin Mellyn
Published 18 Jun 2012

As Asian exports to the United States exploded in volume, the dollar earnings of China and the rest got invested in United States government bonds, including those of the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac, which both guaranteed trillions of dollars in consumer mortgages but bought huge amounts of securitized mortgages.These purchases held down interest rates, making consumer debt more affordable. This allowed China, of course, to export more stuff and buy more bonds. Low and stable long-term interest rates allowed housing prices to rise and more people to afford houses. None of this was due to the genius of policymakers, though a reputed “maestro,” Alan Greenspan, occupied the chairmanship of the Board of Governors of the Federal Reserve System for 17 of the 25 years of the Great Moderation. Where the central bank and US Treasury policy was decisive during the Great Moderation was in protecting the financial economy from its own mistakes and excesses. On one level, this made sense, because the sheer scale of the financial economy relative to the real economy made the consequences of a market panic too scary to contemplate in terms of damage to real output and production.

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People resented paying for access to their own money, the same reason ATM fees are unpopular. Banks will not restore trust until they develop simple, comprehensible, no-surprise tariffs for their services from which customers can explicitly pick and choose or buy as a package. Prudence The maestro of the Great Moderation, Federal Reserve Board Chairman Alan Greenspan, has fallen from his pedestal but remains admirably true to his faith in market capitalism. His greatest error of judgment might have been his assumption that bankers were prudent people who understood the risks they were taking with other people’s money. Writing in the Financial Times on January 26, 2012, he says, “I was particularly distressed by the extent to which bankers, previously pillars of capitalist prudence, had allowed their equity buffers to dwindle dangerously as the financial crisis approached.

With Liberty and Justice for Some: How the Law Is Used to Destroy Equality and Protect the Powerful
by Glenn Greenwald
Published 11 Nov 2011

Now, it isn’t just Jefferson County, but pretty much every big-name financial firm is involved in multiple cases of stuffing local governments and their pension funds, with derivatives that had all sorts of tricks and traps or toxic CDOs, sometimes with the liberal applications of bribes, sometimes merely with fast talk and omission of key details. Often, these government entities hired “experts” who simply sold them out for fat fees. Perhaps the most notable argument for clear-cut lawbreaking as the cause of the financial crisis came from a very unlikely source: the longtime Federal Reserve chairman Alan Greenspan, who spent much of his career demanding fewer and fewer regulatory restraints on Wall Street. In the wake of the economic collapse, Greenspan admitted that he had been wrong to oppose increased regulations, telling a House committee, “Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief,” and acknowledging that the crisis had exposed a “flaw” in his free-market ideology.

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A lot of the problems which we had in the independent issuers of subprime and other such mortgages, the basic problem there is that, if you don’t have enforcement, and a lot of that stuff was just plain fraud, you’re not coming to grips with the issue. When even a longtime Wall Street servant such as Alan Greenspan admits that a substantial cause of the financial crisis was “just plain fraud,” the almost complete absence of criminal consequences is clearly an extraordinary injustice. In December 2010, ProPublic reporter Jesse Eisinger—who covered the financial crisis from the start—protested the lack of prosecutions in the New York Times, noting that even on Wall Street, “everyone is wondering: Where are the investigations related to the financial crisis?”

Wall Street Meat
by Andy Kessler
Published 17 Mar 2003

The whole damn thing is rigged by these lockups. But lockups are what Wall Street bankers insist on to create an orderly market for IPO shares when none existed the night before. Tough. Wall Street doesn’t need to rig the market like this. You can blame the bubble on greedy bankers, venture capitals, fund investors, or even Alan Greenspan for overpumping the money supply. Fine. But lockups are the structural problem that kept the right amount of food from satiating the ducks and instead pumped a lot of hot air into the bubble, and no one wants to admit it. · · · In 1999, Fred and I had the fourth best hedge fund in the U.S. Better lucky than smart, I suppose, because timing is everything.

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Jack paid a $15 million fine and is now barred for life from the securities business. My guess is that is a relief to him. As a boxer, he knows how to get up from a knockout punch. · · · There are plenty of smoking guns to blame for the Internet and Telecom and Technology Bubble. None are very satisfying. Fed Chairman Alan Greenspan pumped the money supply to stave off a banking crisis based on Y2K computer problems and the excess money went into the stock market. Or how about excessive stock options led greedy management to fudge earnings numbers to pump up their stock. Yeah, maybe. It was structural problems on Wall Street that created the bubble, though excess money supply and corrupt management certainly contributed lots of the hot air.

Revolution at Point Zero: Housework, Reproduction, and Feminist Struggle
by Silvia Federici
Published 4 Oct 2012

The dominant refrain is the obsessive complaint that a more vital and energetic elderly population, stubbornly insisting on living on, is making even the provision of state-funded pensions unsustainable. It was possibly with in mind the millions of Americans determined on living past eighty, that Alan Greenspan in his memoirs confessed that he was frightened when realizing that the Clinton Administration had actually accumulated a financial surplus!40 Even before the crisis, however, for years policy makers had been orchestrating a generational war, incessantly warning that that the growth of the sixty-five-plus population would bankrupt the Social Security system, leaving a heavy mortgage on the shoulders of the younger generations.

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On this question see Mariarosa Dalla Costa, “Women’s Autonomy and Remuneration for Carework in the New Emergencies,” The Commoner 15 (Winter 2012), http://www.thecommoner.org. 39. Nancy Folbre, Lois B. Shaw, and Agneta Stark, eds., Warm Hands in Cold Age: Gender and Aging (New York: Routledge, 2007), 164. 40. Alan Greenspan, The Age of Turbulence: Adventures in a New World (New York: Penguin Press, 2007), 217. 41. Elizabeth A. Watson and Jane Mears, Women, Work and Care of the Elderly (Burlington VT: Ashgate, 1999), 193. 42. The organization of “communities of care” is the project of a number of DIY, anarchist collectives on both coasts of the United States, who believe it is the precondition for the construction of “self-reproducing” movements.

Dead Companies Walking
by Scott Fearon
Published 10 Nov 2014

We studied their proposal and right away we knew there was no way they would turn a profit in a million years. None. It was obvious. I don’t know what kind of math people are using anymore, but it’s not the math I learned in school.” This is what happens in manias. People willfully forget inconvenient facts like arithmetic. Alan Greenspan famously called this phenomenon irrational exuberance, but that was a major understatement. Remember when I said that Costco’s multiple (the ratio of its share price to its earnings per share) scared me away from buying the stock? It was in the thirties. Dotcoms like Webvan and Women.com had infinitely higher multiples than that because they had no earnings.

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At the time, the housing market was just starting to transition from a temporary correction to an epic meltdown, and Building Materials Holding Corporation was starting to look like a major reclamation project because of it. After producing record profits in 2006 at the peak of the boom, its business had eroded faster than Alan Greenspan’s reputation. Year over year, the number of building permits taken out for single-family homes had dropped roughly 30 percent, and BMHC’s profits were falling more than twice as fast. Its net income for the first six months of 2007 was roughly $14.5 million. On paper, that’s not a terrible number, until you compared it to the $62 million the company made in the same period the previous year.

Street Fighters: The Last 72 Hours of Bear Stearns, the Toughest Firm on Wall Street
by Kate Kelly
Published 14 Apr 2009

The Treasury, he thought, was another story. Its officials weren’t above politics. And if Hank Paulson had an agenda here, it wouldn’t surprise him. Tese remembered an experience he’d had in 1985, when as banking superintendent he faced the likely failure of the Bowery Savings Bank in New York City. Alan Greenspan, later the Federal Reserve chairman, had been on the board of Bowery at the time. The bank had been operating at a loss and wanted a government rescue. Unsure what its future held, Tese issued his own ultimatum: Either close or we’ll sell you. The market couldn’t afford for Bowery Savings to languish in uncertainty, and it was sold to a consortium of private investors in short order.

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BIBLIOGRAPHY I am grateful to have had access to the following works, which aided my research and writing: Bill Bamber and Andrew Spencer. Bear Trap: The Fall of Bear Stearns and the Panic of 2008. New York: Brick Tower Press, 2008. Bryan Burrough and John Helyar. Barbarians at the Gate: The Fall of RJR Nabisco. New York: HarperCollins, 1990. Alan C. Greenberg. Memos from the Chairman. New York: Workman Publishing, 1996. Alan Greenspan. The Age of Turbulence: Adventures in a New World. New York: Penguin, 2007. David M. Kennedy. Freedom from Fear: The American People in Depression and War, 1929-1945. New York: Oxford University Press, 2005. Paul Krugman. The Return of Depression Economics and the Crisis of 2008. New York: W.

Fed Up!: Success, Excess and Crisis Through the Eyes of a Hedge Fund Macro Trader
by Colin Lancaster
Published 3 May 2021

It ended with massive bailouts and something called quantitative easing (QE). We will get to QE. That’s the biggest thing going. The bubble all started in the late 1980s but really ramped in the 2000s, when the world moved away from rational thinking, away from Markowitz and modern portfolio theory to Pets.com. Alan Greenspan, the top guy at the Fed in those days, was there to drive the bubble even bigger. That’s when the central banks changed. At the time, it looked innocent enough. Greenspan gave us low interest rates. They dubbed it “lower for longer.” But this was really just lighter fluid on a fire. It told people to get greedy.

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The minute the short sellers think that they have the market by the balls, central bankers and politicians go into deus ex machina mode and they run them over. Makes you think you’re going crazy ‘cause it’s all so out of line with the fundamentals. But you gotta play the game.” They called Alan Greenspan the maestro. He was chair of the Fed from ’87 to 2006. He had a cool background. Born to Hungarian and Romanian Jews, he went to Juilliard to study music and then to NYU for economics. He wrote his dissertation on a housing bubble. He changed the narrative. He didn’t want any more recessions.

Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives
by Satyajit Das
Published 15 Nov 2006

The Indonesian Central Bank managed the currency within a fixed range. It had been trading at around rupiah 2,000 per dollar. It fell sharply and found its level – rupiah 8,000 per dollar. It stabilized, then went into free fall to rupiah 12,000 before rallying to 10,000. OCM were finished. The crisis had caused Alan Greenspan, Chairman of the Board of Governors of the Federal Reserve, to cut interest rates to support the financial system. The fall in dollar interest rates and the collapse of the rupiah signa-lled the beginning of the end at OCM. DAS_C01.QXD 5/3/07 10 11:45 PM Page 10 Tr a d e r s , G u n s & M o n e y The dealer had triggered the option to double the value of the swap.

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I have been around derivatives all my working life and was unaware that I had been handling WMDs. The Indonesians probably agreed with this description of derivatives: they should have worn their hazardous materials suits when handling their trades. The debate was between two giants of American capitalism – Warren Buffet and Alan Greenspan. Warren Buffet is ostensibly the chairman of Berkshire Hathaway, basically an investment company, and his fame relates primarily to his legendary stock picking skills. But it is a tendency for folksy wisdom that has turned Buffet into an iconic figure – an American ‘original’. Buffet’s well-known statements include: ‘We eat what we cook’, ‘Only when the tide goes out will we know who is swimming naked’, and ‘The view through the rear window is much clearer than the one through the windshield.’

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The catchy line and the fact that it was from Buffet ensured immediate airplay. Buffet’s assault rattled the derivative dealers who feared that others, especially regulators, would take notice. What if new regulations were to be imposed on derivatives trading? The derivative lobby went into overdrive but they needn’t have bothered. The major defender of derivatives was Alan Greenspan, Chairman of the Federal Reserve Bank of New York, effectively America’s central bank. Its responsibilities include ensuring the integrity of the financial system and the stability of banks. The head of the central bank’s role as cheerleader for the derivatives lobby was curious. Greenspan had succeeded Paul Volcker in the late 1980s.

The Frackers: The Outrageous Inside Story of the New Billionaire Wildcatters
by Gregory Zuckerman
Published 5 Nov 2013

ExxonMobil’s corporate headquarters are directly above a huge shale formation, but the oil giant disregarded the area, even as George Mitchell worked on coaxing historic amounts of gas from rock in the region. Why did a new age of energy emerge from the depths of the Great Recession, even as Federal Reserve chairman Alan Greenspan warned of dwindling U.S. supplies, investors Warren Buffett and Henry Kravis bet on a dearth of natural gas, and Vladimir Putin predicted a Russian gas monopoly? Why did private enterprise revitalize the nation’s energy outlook with a focus on fossil fuels, of all things, even as governments funneled $2 trillion toward cleaner, alternative energy?

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During the first half of 2003, members of Congress had become worried that rising natural gas prices would weigh on voters. The previous winter had been especially cold, and concern grew that another cold season would send energy prices higher. The politicians turned to Federal Reserve Board chairman Alan Greenspan, who had earned the nickname of “the Maestro” for conducting U.S. monetary policy, for advice. Testifying on June 10, 2003, before the House Committee on Energy and Commerce, Greenspan said the country’s situation was dire. The Fed chairman lamented the “seeming inability of increased gas well drilling to significantly augment net marketed production,” and he bemoaned the spike in natural gas prices, which by then were at $5.28 per thousand cubic feet, up from $3.65 a year earlier and just $2.55 in July 2000.

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The country then could get its hands on cheaper natural gas being produced around the world. Then Greenspan uttered words that could have come out of Charif Souki’s own mouth: “Access to world natural gas supplies will require a major expansion of LNG terminal import capacity,” he said. Alan Greenspan’s speech changed everything for Souki. It was a seal of approval, out of the blue, as if Martin Scorsese had pointed to a struggling actor, ready to give up on Hollywood, as the next Marlon Brando. Within weeks, investors and potential customers gained confidence in Souki’s strategy, helping Cheniere’s stock jump to six dollars a share.

The Death of Money: The Coming Collapse of the International Monetary System
by James Rickards
Published 7 Apr 2014

Initially the United States imported this deflation from China in the form of cheap goods produced by abundant labor there, aided by an undervalued currency that caused U.S. dollar prices for Chinese goods to be lower than economic fundamentals dictated. This deflationary bias became pronounced in 2001, when annual U.S. inflation dipped to 1.6 percent, perilously close to outright deflation. It was this deflation scare that prompted then Fed chairman Alan Greenspan to sharply lower interest rates. In 2002 the average Federal Funds effective rate was 1.67 percent, then the lowest in forty-four years. In 2003 the average Federal Funds rate was even lower, 1.13 percent, and it remained low through 2004, averaging 1.35 percent for the year. The extraordinarily low interest-rate policy during this three-year period was designed to fend off deflation, and it worked.

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His low-rate policy led directly to an asset bubble in housing, which crashed with devastating impact in late 2007, marking the start of a new depression. Within a year, declining asset values, evaporating liquidity, and lost confidence produced the Panic of 2008, in which tens of trillions of dollars in paper wealth disappeared seemingly overnight. The Federal Reserve chairmanship passed from Alan Greenspan to Ben Bernanke in February 2006, just as the housing calamity was starting to unfold. Bernanke inherited Greenspan’s deflation problem, which had never really gone away but had been masked by the 2002–4 easy-money policies. The consumer price index reached an interim peak in July 2008, then fell sharply for the remainder of that year.

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Since inflation favors the government and deflation favors the worker, governments always favor inflation. In summary, the Federal Reserve prefers inflation because it erases government debt, reduces the debt-to-GDP ratio, props up the banks, and can be taxed. Deflation may help consumers and workers, but it hurts the Treasury and the banks and is firmly opposed by the Fed. This explains Alan Greenspan’s extraordinary low-interest-rate policies in 2002 and Ben Bernanke’s zero-rate policy beginning in 2008. From the Fed’s perspective, aiding the economy and reducing unemployment are incidental by-products of the drive to inflate. The consequence of these deflationary dynamics is that the government must have inflation, and the Fed must cause it.

The Euro: How a Common Currency Threatens the Future of Europe
by Joseph E. Stiglitz and Alex Hyde-White
Published 24 Oct 2016

Politics seemingly did not allow the construction of an effective fiscal surplus, putting the burden on monetary policy; and the United States resorted to the favorite instrument, lowering interest rates. The Bush administration was enthralled with deregulation, and the combination of low interest rates and deregulation was a toxic cocktail. Ben Bernanke and Alan Greenspan, both former chairs of the Federal Reserve, may have been pleased at the scorecard by which central bank governors are usually judged: inflation was low (largely the result of China’s low and competitive prices along with its exchange-rate policy of stable and slow appreciation) and the economy was near full employment.

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But for our purposes in this particular discussion, the effect is similar: the value of money was tied to the oscillations of gold’s value, and not to policy that government could tweak. 7 The act also created the Council of Economic Advisers, to advise government on how to achieve those goals. I served as chairman of that council under President Clinton. 8 See Charles P. Kindleberger, Manias, Panics, and Crashes: A History of Financial Crises (New York: John Wiley & Sons, 1978). 9 A term used by Alan Greenspan in a famous speech delivered in Washington at the American Enterprise Institute on December 5, 1996, titled “The Challenge of Central Banking in a Democratic Society.” I was there when he delivered the speech, and was interested in the reaction of the audience and the media to it. They were reading the speech to see what it portended for short-run monetary policy (and as he explained to me, he was aware that that was what they would be looking at).

…

Some central banks proscribe those from the financial sector from even serving on their board, recognizing the conflicts of interest and the dangers of “cognitive capture.” 34 In the United States and in many other countries, the massive bailouts, as the banks virtually demanded government money, revealed that the battles they had been fighting to get government out of the way were not about principles but about money. They demanded, too, that the government suspend the normal rules of capitalism, where shareholders and bondholders are responsible for the losses of a firm. 35 In the case of the United States, at least Alan Greenspan, the chairman of the Fed in the run-up to the crisis, made a mea culpa, as he admitted to the flaw in his reasoning, his belief in self-regulation. “I have found a flaw,” he told Congress in October 2008. “I don’t know how significant or permanent it is. But I have been very distressed by that fact.”

Adam Smith: Father of Economics
by Jesse Norman
Published 30 Jun 2018

Tracing the roots of her political beliefs to the works of Smith, Ferguson and Hume, she laid out a view of a world in which ‘wealth would be generated and spread ever more widely’ and ‘wise Government [stood by to] harness the efforts of individuals to improve the well-being of the whole community.’ On the other side of the political divide, the former British Prime Minister Gordon Brown went one better, often associating himself personally with Smith through the accident of their shared birthplace in Kirkcaldy, Fife. As Chancellor of the Exchequer, he invited Alan Greenspan, then the Chairman of the US Federal Reserve and later one of his economic advisers, to give the Adam Smith lecture in Kirkcaldy in 2005, and was rewarded when Greenspan pondered in his speech ‘to what extent the Chancellor’s renowned economic and financial skills are the result of exposure to the subliminal intellect-enhancing emanations of this area’.

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Peter Laslett, Cambridge University Press [1689] 1967 Losurdo, Domenico, Liberalism: A Counter-History, Verso 2011 McCloskey, Deirdre N., Bourgeois Dignity, University of Chicago Press 2010 McCloskey, Deirdre N., Bourgeois Equality: How Ideas, Not Capital or Institutions, Enriched the World, University of Chicago Press 2016 MacGilvray, Eric, The Invention of Market Freedom, Cambridge University Press 2011 McLean, Iain, Adam Smith, Radical and Egalitarian, Edinburgh University Press 2006 Maddison, Angus, Contours of the World Economy 1–2030 AD, Oxford University Press 2007 Mallaby, Sebastian, The Man Who Knew: The Life and Times of Alan Greenspan, Bloomsbury 2016 Marçal, Katrin, Who Cooked Adam Smith’s Dinner?, Pegasus Books 2016 Marglin, Stephen, The Dismal Science: How Thinking Like an Economist Undermines Community, Harvard University Press 2008 Marshall, Alex, The Surprising Design of Market Economies, University of Texas Press 2012 Martin, Felix, Money, Bodley Head 2013 Marx, Karl, Capital: Critique of Political Economy, Penguin [1867–83] 2004 Marx, Karl, A Contribution to the Critique of Political Economy, ed.

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What is striking from the present perspective is that Capitalism in the Twenty-First Century is far more successful as an aggregate historical analysis than in its claim to diagnose in Marxist fashion the ‘central contradictions’ of capitalism 2008 crisis: It has sometimes been suggested that Alan Greenspan set Federal Reserve policy as though a full set of Arrow Securities in fact existed Lack of UK independent review into the 2008 crash: by contrast, the US Congress established the Financial Crisis Inquiry Commission, which reviewed millions of pages of documents, interviewed more than 700 witnesses and held nineteen hearings across the country before publishing its report in January 2011.

Vulture Capitalism: Corporate Crimes, Backdoor Bailouts, and the Death of Freedom
by Grace Blakeley
Published 11 Mar 2024

William Fleckenstein with Frederick Sheehan, Greenspan’s Bubbles: The Age of Ignorance at the Federal Reserve (New York: McGraw-Hill, 2008). 90. Durand, Fictitious Capital. 91. Fleckenstein and Sheehan, Greenspan’s Bubbles; Jeannine Aversa, “Alan Greenspan enjoys rock star renown,” Associated Press, March 5, 2005, https://www.chron.com/business/article/alan-greenspan-enjoys-rock-star-renown-1914177.php. 92. Streek, Buying Time. 93. Richard C. Koo, The Other Half of Macroeconomics and the Fate of Globalization (Hoboken, NJ: John Wiley & Sons, 2018). 94. Durand, Fictitious Capital. 95. Ibid. 96. Ibid. 97.

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The most powerful and nimble investors made vast sums of money during the boom and were then insulated from the effects of the bust. It was smaller retail investors and overindebted homeowners who ended up paying the price. The Fed’s response to the crash was referred to as the “Greenspan put,” after its then-chairman, Alan Greenspan.90 A put option is a bit like an insurance policy—it’s a one-way bet in which the buyer has the right, but no obligation, to sell a security back to the owner at a particular price. Greenspan, darling of the neoliberal economists and sometimes referred to as the “rock star” of the Fed, was effectively providing a state-backed insurance policy to the big banks, telling them that even if they took huge risks during the upswing of the financial cycle, the state would always be there to bail them out when things got hard.91 This was merely the start in a long chain of “crisis responses” that laid the foundation for future crises.92 Investors quickly learned how to play the game Greenspan had set up for them.

Basic Economics
by Thomas Sowell
Published 1 Jan 2000

Given such drastic repercussions, which can affect financial markets around the world, Federal Reserve Board chairmen over the years have learned to speak in highly guarded and Delphic terms that often leave listeners puzzled as to what they really mean. What BusinessWeek magazine said of Federal Reserve chairman Alan Greenspan could have been said of many of his predecessors in that position: “Wall Street and Washington expend megawatts of energy trying to decipher the delphic pronouncements of Alan Greenspan.”{601} In 2004, the following news item appeared in the business section of the San Francisco Chronicle: Alan Greenspan sneezed Wednesday, and Wall Street caught a chill. The Federal Reserve chairman and his colleagues on the central bank’s policy-making committee left short-term interest costs unchanged, but issued a statement that didn’t repeat the mantra of recent meetings about keeping rates low for a “considerable period.”

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Stunned traders took the omission as a signal to unload stocks and bonds.{602} The Dow Jones average, Nasdaq, and the Standard & Poor’s Index all dropped sharply, as did the price of treasury bonds{603}—all because of what was not said. This scrutiny of obscure statements by the Federal Reserve Board was not peculiar to Alan Greenspan’s tenure as chairman of that board. Under his successor as chairman, Ben Bernanke, the Federal Reserve was purchasing large amounts of U.S. government bonds, thereby pouring new money into the American economy. But when Chairman Bernanke said in May 2013 that, if the economy improved, the Federal Reserve Board “could in the next few meetings take a step down in our pace of purchases,” the reaction was swift and far reaching.

…

Merely estimating the changing dimensions of the problem is not easy. Federal Reserve forecasts of inflation during the 1960s and 1970s under-estimated how much inflation was developing, under the chairmanship of both William McChesney Martin and Arthur F. Burns. But during the subsequent chairmanships of Paul Volcker and Alan Greenspan, the Federal Reserve over-estimated what the rate of inflation would be.{709} Even a successful monetary policy is enveloped in uncertainties. Inflation, for example, was reduced from a dangerous 13 percent per year in 1979 to a negligible 2 percent by 2003, but this was done through a series of trial-and-error monetary actions, some of which proved to be effective, some ineffective—and all with painful repercussions on the viability of businesses and on unemployment among workers.

The End of Growth
by Jeff Rubin
Published 2 Sep 2013

To fully understand the precarious state of the global economy, the financial world needs to wake up to the idea that the last recession was much like a concussion: it hurt a lot, but it’s not the real issue. In Why Your World Is About to Get a Whole Lot Smaller, I argued that the US housing market wasn’t responsible for blowing up the global economy. It was a symptom, not the cause. Federal Reserve chairman Alan Greenspan was spurred to hike interest rates by soaring oil prices, which were stirring inflation. Higher interest rates pricked the housing bubble, and the rest of the world was dragged down when the bubble burst. The Fed’s new chairman, Ben Bernanke, appears to be undeterred by the policy failures of his predecessor.

…

The boom in the financial services industry, like all things, can’t last forever. Government-sponsored bailouts of unregulated capital markets could be the final straw that leads to voters demanding change. The policy pendulum is already swinging from the self-regulatory extremes prescribed by free-market ideologues such as Alan Greenspan back toward a system of increased oversight that will rein in the reach and power of the financial sector. In Europe, regulators are considering new rules that will restrict the leverage allowed in the banking system, as well as the imposition of a tax on financial market transactions. In the United States, changing the current system will not be as easy.

How Capitalism Saved America: The Untold History of Our Country, From the Pilgrims to the Present
by Thomas J. Dilorenzo
Published 9 Aug 2004

It is a world in which actions designed to limit competition are branded as criminal when taken by businessmen, yet praised as “enlightened” when initiated by the government. It is a world in which the law is so vague that businessmen have no way of knowing whether specific actions will be declared illegal until they hear the judge’s verdict—after the fact. —Alan Greenspan, “Antitrust” (1962) ANYONE WHO has studied American business history is probably aware of the following story: in the late nineteenth century, with the birth of big business, corporations merged or formed “trusts” that served the same purpose—combining several corporations to act as one. Soon enough, these trusts evolved into monopolies, to the point that a small number of cartels dominated the American economy and gouged consumers while in some cases delivering inferior or dangerous products.

…

Rand, Ayn. Atlas Shrugged. New York: Random House, 1957. Rand’s spectacularly successful novel is one of the most influential arguments ever made in defense of individualism, capitalism, and freedom. ———, ed. Capitalism: The Unknown Ideal. New York: Signet, 1967. A collection of articles by Rand, Alan Greenspan, Robert Hessen, and Nathaniel Brandon that explains and defends many aspects of capitalism, from the gold standard to private property to patents and copyrights. The anticapitalist mentality is also scrutinized. Reisman, George. Capitalism: A Treatise on Economics. Ottawa, IL: Jameson Books, 1996.

Losing Control: The Emerging Threats to Western Prosperity
by Stephen D. King
Published 14 Jun 2010

In the first few years of the twenty-first century, emerging economies’ success contributed to rising commodity prices: in the last decade of the twentieth century, their failure contributed to collapsing commodity prices, primarily as the result of the Asian crisis beginning in 1997 and its broader ramifications for emerging economies more generally. These waves of influence are hardly trivial. In the late 1990s, both central bankers (notably Alan Greenspan, the then Chairman of the Federal Reserve) and economic commentators argued in favour of the so-called new economy, a view that undoubtedly contributed to large – and ultimately unsustainable – increases in equity prices, as observed in Chapter 4. The new economy was being driven, apparently, by sweeping productivity gains that would lead to both elevated economic growth and ever higher stock prices.

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Second, while technology innovations can improve productivity growth and, hence, allow an economy to grow more quickly without bumping into an inflationary constraint, commodity-price declines create a very similar effect, at least for commodity-consuming nations. It’s easy to be seduced by the idea that economic success comes from technological improvements or wise policy decisions. As perceptions about the new economy began to pick up in the late 1990s, Alan Greenspan, who had famously warned of ‘irrational exuberance’ in 1996,12 seemed happy to jump on the new economy bandwagon later in the decade. His case was helped by the improving split between growth and inflation. But was he right? When the Asian crisis struck in 1997, triggered by a collapse in the value of the Thai baht, many argued that the end of the economic world was nigh.

The People's Platform: Taking Back Power and Culture in the Digital Age
by Astra Taylor
Published 4 Mar 2014

When the rare backward glance is cast, the period is usually dismissed as an anomaly, an embarrassing by-product of irrational exuberance and excess, an aberrational event that gets chalked up to collective folly (the crazy business schemes, the utopian bombast, the stock market fever), but “never as something emerging from the innards of American economic machinery,” to use Henwood’s phrase.2 At the time of the boom, however, the prevailing myth was that the machinery had been forever changed. “Technological innovation,” Alan Greenspan marveled, had instigated a new phase of productivity and growth that was “not just a cyclical phenomenon or a statistical aberration, but … a more deep-seated, still developing, shift in our economic landscape.” Everyone would be getting richer, forever. (Income polarization was actually increasing at the time, the already affluent becoming ever more so while wages for most U.S. workers stagnated at levels below 1970s standards.)3 The wonders of computing meant skyrocketing productivity, plentiful jobs, and the end of recessions.

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Rebecca Solnit wrote movingly of the negative consequences of the first dot-com boom on San Francisco in her book Hollow City: Gentrification and the Eviction of Urban Culture (New York: Verso, 2001) and has written similarly astute observations on the effects of the latest boom on the community. Rebecca Solnit, “Google Invades,” London Review of Books 35, no. 3 (February 7, 2013). 2. Doug Henwood, After the New Economy (New York: The New Press, 2003), 1. 3. Alan Greenspan, “The American Economy in a World Context,” 35th Annual Conference on Bank Structure and Competition of the Federal Reserve Bank of Chicago, Chicago, May 16, 1999; Henwood, After the New Economy, 79 and 86. 4. Ibid., 201 and 217. 5. Tom Rosenstiel, “Five Myths About the Future of Journalism,” Washington Post, April 7, 2011. 6.

The Economics of Belonging: A Radical Plan to Win Back the Left Behind and Achieve Prosperity for All
by Martin Sandbu
Published 15 Jun 2020

Between 1999 and 2008, the balance sheets of banks exploded—from €14 trillion to more than €30 trillion in the eurozone, from £2 trillion to £7 trillion in the United Kingdom, and from $5 trillion to $11 trillion in the United States.18 Raghuram Rajan, formerly the chief economist at the International Monetary Fund, was one of very few to warn against the financial excesses of the 2000s. In 2006, he used a speech at the annual Jackson Hole conference for the world’s top central bankers to warn against the risk of financial instability, striking a sour note in what was otherwise a celebration of the supposedly masterful tenure of Alan Greenspan as Federal Reserve chair. Like Cassandra, he was both prescient and scorned; Lawrence Summers, the Harvard economist and former US Treasury secretary on whose watch the 1999 deregulatory measures were adopted, called his warning “Luddite,” the term for someone opposed to progress and clinging to inefficient traditions.

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This is an approach to macroeconomic policy that aims to keep aggregate demand at a high level at all times, and that stimulates it aggressively and persistently whenever a flagging desire to spend among households and businesses threatens to send the economy into reverse. This is not what we have had in the West since the 1980s. The closest was in the 1990s, when Federal Reserve chair Alan Greenspan decided to ignore fears of overheating and presided over a productivity boom and demand growth that temporarily reversed the forces that were undermining the economy of belonging in the United States. That episode turned out to be an exception that confirmed standard policy practice. Even after the global financial crisis, macroeconomic policy was marred by nervousness about going too far.

23 Things They Don't Tell You About Capitalism
by Ha-Joon Chang
Published 1 Jan 2010

Merton and Scholes did not know what they were doing. When Nobel Prize-winners in economics, especially those who got the prize for their work on asset pricing, cannot read the financial market, how can we run the world according to an economic principle that assumes people always know what they are doing and therefore should be left alone? As Alan Greenspan, former chairman of the Federal Reserve Board, had to admit in a Congressional hearing, it was a ‘mistake’ to ‘presume that the self-interest of organisations, specifically banks, is such that they were best capable of protecting shareholders and equity in the firms’. Self-interest will protect people only when they know what is going on and how to deal with it.

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During the last couple of decades, we were repeatedly told by all those highly qualified experts – from Nobel Prize-winning economists through world-class financial regulators to frighteningly bright young investment bankers with economics degrees from the world’s top universities – that all was well with the world economy. We were told that economists had finally found the magic formula that allowed our economies to grow rapidly with low inflation. People talked of the ‘Goldilocks’ economy, in which things are just right – not too hot, not too cold. Alan Greenspan, the former chairman of the Federal Reserve Board, who presided over the world’s biggest and (financially and ideologically) most influential economy for two decades, was hailed as a ‘maestro’, as the title of the book on him by the journalist Bob Woodward of Watergate fame had it. His successor, Ben Bernanke, talked of a ‘great moderation’, which came with the taming of inflation and disappearance of violent economic cycles (see Thing 6).

Bootstrapped: Liberating Ourselves From the American Dream
by Alissa Quart
Published 14 Mar 2023

Rand also seeped into the bootstrapping attitude of total freedom held by some who work in private equity. Roark Capital Group, an Atlanta-based private equity fund, for instance, is named after a Rand protagonist and as of this writing had $33 billion in assets. Rand’s influence applied not just to the boys and moneymen of today but also of the past. She enthralled Alan Greenspan, the American economist who served five terms as the thirteenth chair of the Federal Reserve, overseeing a great recession. (Greenspan worshiped Rand and even wrote essays for her Objectivist newsletter and was a contributor to her book Capitalism: The Unknown Ideal.) In a 1966 letter, Ronald Reagan wrote, “Am an admirer of Ayn Rand . . .”

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Wright, 92 The Mindful Cranks (TV show), 93 “The Mindful Revolution” (2014, Time magazine), 86 mindfulness, 85–99, 247–48n, 250n minimum wage, 11, 22, 133, 139, 147, 180 Fight for $15, 134–35 The Mismeasure of Women (Tavris), 30 misogyny, 72, 252n MomsRising, 131 Moon, Michael, 42 Moore, Michael, 40 moral injury, xi, 15, 59, 85, 104–5, 223, 245n, 262n moral judgments, 7, 35, 55, 67–68, 125, 162, 171, 209, 251n Mothers (Rose), 121 Murphree, Nimrod, 5–6, 239n Murray, Patty, 132 Musk, Elon, 59–60, 243n mutual aid, 8, 180–90, 215–17, 224, 229–31 networks of, 109, 141, 165–77, 193–95, 206, 256n, 258n Mutual Aid: A Force for Evolution (Kropotkin), 170–74 Nackenoff, Carol, 41, 240n Nassetta, Christopher, 57 National Business Products, 53–55 National Call for Moral Revival, 251n National Young Farmers Coalition, 223 Neel, Alice, 221–22, 260n Nembhard, Jessica Gordon, 184–90 networks, 16, 156, 206, 219, 248n of mutuality, 11, 109, 141, 166–67, 175, 186, 193–95, 258n New Deal, 28, 48, 186, 240n Newfield, Christopher, 19 New Mindful Deal, 97, 250n New York City, 43 Nixon, Richard, 125 nonprofits, 175, 180, 206, 221–22, 259 author experience of, vii, 154, 189, 200, 220, 227–31 Beta-Local, 221 Gig Workers Collective, 141 Occupy Wall Street, 211 Patriotic Millionaires, 55, 155–62 Positive and Adverse Childhood Experiences (PACE), 191 Search Inside Yourself Leadership Institute (SIYLI), 92 US Federation of Worker Cooperatives, 180 Norton, Michael I., 57, 242n Obama, Barack, 9, 74, 109, 242n Ocasio-Cortez, Alexandria, 9, 167, 171, 181, 218 Occupational Safety and Health Administration (OSHA), 44, 104 Occupy Wall Street, 176, 211 O’Connor, Frank, 47 Ohanian, Alexis, 141 Olasky, Marvin, 125, 252n Oppen, George, 7 Orfalea, Paul, 56 Organisation for Economic Co-operation and Development (OECD), 126, 254n Osage Diminished Reserve, 33 Oscar Mayer, 153–54 Out of Sheer Rage (Dyer), 24 ownership, 33–34, 37, 90, 179–82, 184, 187, 211 and homeownership, 153–56, 247n PACEs (Positive and Adverse Childhood Experiences), 191–95 paid family leave, 11, 106, 132, 151n Pandemic Book of World Records, 57 pandemic effects on American Rescue Plan, 219–20 on billionaires, 57–60, 243n, 254n, 260n on business/employment, 73–74, 88, 104, 106–7, 137–40, 143–48, 227–30, 260n on caregiving, xii, 117–23, 127, 130–33, 176–77 on community-mindedness, xi, 5, 9, 167–70, 174, 183–86, 206–8, 222–25, 228–30, 257n on COVID pay, 140–41 on essential workers, xi, 95, 106, 120, 138–39, 147–48, 167 on Go Fund Me, 8, 103–15, 250–51n on healthcare workers, 205–9 on healthcare/Medicaid, 36, 105, 108–9, 114–15, 200, 224 on housing, 184–86, 260n on mindfulness industry, 88, 94–95, 98, 249n on mutual aid collectives, 9–13, 165–70, 217–18, 220–24 on personal protective equipment (PPE), xi, 72, 138, 146, 168, 205–8 on politics, xii, 80, 112–15, 218–21 on psychotherapy, 196–200 on Stimulus Bill, 132–34 on students, 110–11, 251n on tax reform, 158–61 on volunteerism, 205–15 on women, 63, 120–23, 128–30, 251–52n on worker cooperatives, 180–84, 189–90 on worker health and safety risks, 138–40, 147–48, 182, 189, 193, 199, 201 Zoom and, 86, 106, 123, 182, 202, 229 Pandemic Impact on Development—Early Childhood Project, 121, 252n pandemic profits, 57–59, 146, 243n, 253n, 255n, 260n Papa John’s, 58, 242n ParentsTogether, 131 Parrington, Vernon, 34 Participatory Budgeting (PB), 206, 210–15 Patel, Vikram, 199, 259n Patient Advocate Foundation, 105 Patriotic Millionaires, 55, 155–62, 254n Paul the Peddler (Alger), 40 Payne, Erica, 158 PB (Participatory Budgeting), 206, 210–15 Peale, Norman Vincent, 44 People Powered, 211–12 personal protective equipment (PPE), xi, 72, 138, 146, 168, 205–8 Get Us PPE (Chicago), 208 philanthropy, 8, 14, 158, 160–63, 210–15, 220–22, 254n Piff, Paul, 67 Piketty, Thomas, 57, 242n pioneer spirit, 14, 198, 238n “pluck,” 29, 39, 95, 198, 240n Poor People’s Campaign, 114 Poor Richard’s Almanack, 43 Positive and Adverse Childhood Experiences (PACEs), 191–95 Postmates, 146 The Power of Positive Thinking (Peale), 75 Prairie Fires: The American Dreams of Laura Ingalls Wilder (Fraser), 33 Prince, Stephen, 53–56, 68–69 The Privatized State (Cordelli), 241n privilege, 33, 40, 54–58, 67, 72, 76, 129–30, 230 and Forbes 400, 61 silence of, 157 The Problem with Work (Weeks), 130 progressive policy, 9, 11–12, 80, 167, 220, 255n Prout, Katie, 200 Pryor, Eva, 47 Pugh, Allison, 126 Pull (Laird), 9 Purser, Ron, 92–94, 249n Racine Advocate, 6 racism, 32, 64, 68, 82, 143–44, 156 as built-in bias, 124, 185–88, 206, 237n and racial justice, 156, 182, 247n Radical Happiness: Moments of Collective Joy (Segal), 98 Ragged Dick (Alger), 39–41, 240n rags-to-riches stories, 40, 44, 168 Rand, Ayn, 45–50 Alan Greenspan and, 47 Atlas Shrugged, 45–46 Capitalism: The Unknown Ideal, 47 The Fountainhead, 45, 49, 241n Mean Girl: Ayn Rand and the Culture of Greed (Duggan), 46, 50, 241n Roark Capital Group, 47 Rosenbaum, Alisa Zinovyevna (birth name), 48 Rapid Assessment of Pandemic Impact on Development—Early Childhood Project (RAPID-EC), 120–21, 133, 252n Read, James, 19–20, 237n Reagan, Ronald, 7, 19, 35, 44, 47, 68–69, 218, 236n Reddit, 140–41, 166 Reich, Robert, 58, 218 “relational autonomy,” 230, 261n rent, 58, 107–8, 118–20, 166, 221, 260n and antirent protest, 33, 224, 256n reporters, xii, 27, 73, 93, 166, 221, 239n, 250n Republicanism, x, 11, 44, 58, 74–77, 79, 109, 125, 160, 241n, 245n See also Reagan; Trump resilience, 96, 192–94, 201 Resource Generation, 155–56 responsibility, viii–ix, 4, 81–82, 121, 128, 260n Rich, Adrienne, 117 Richison, Chad, 57 Ridgeway, Cecilia, 67 right wing, 50, 54, 83 risk, 138–40, 147–48, 182, 189, 193, 199, 201, 206–7 Roark Capital Group, 47 Romanticism, 13, 15–16, 36, 199, 239n Roosevelt, Franklin Delano, 28 Roosevelt Institute, 34 Rose, Jacqueline, 121 Ross, Kristin, 176–77, 257n Rowe-Finkbeiner, Kristin, 131 Rowson, Susanna, 22–23, 238n Roy, Katica, 120, 252n “rugged individualism,” 14, 27–29, 32, 238n Rugged Individualism and Collective (In)action During the COVID-19 Pandemic (2020, Bazzi), 36 Rural Manhood, 236n Russell Sage Foundation, 260n Russian Revolution, 48 Sandberg, Sheryl, 46, 61, 127–28, 245 Sandefur, Timothy, 83 Sanders, Bernie, 11, 60–61, 97, 112–13, 237n Saujani, Reshma, 131 school lunches, 23, 78, 108–11, 114–15, 224 Schulz, Kathryn, 19 Schwartz, Tony, 40 Scott, MacKenzie, 162 Search Inside Yourself Leadership Institute (SIYLI), 92 security, 62, 126, 130, 147–48, 254n as Social Security, 47–48, 105, 108–9, 130–32, 222, 254n Segal, Lynne, 98, 261n Self-Evaluation and Psychotherapy in the Market System (Glantz and Bernhard), 198, 259n Self-Help Cooperative Movement, 187 self-made man, 3–7, 11, 14, 21, 40, 72–78, 104, 129, 236n Frederick Douglass: Self-Made Man (Sandefur), 83–84, 247n Horatio Alger and the Closeting of the Self-Made Man (Martel), 42–45 and women, 61–64 “Self-Made Men” (Douglass, lecture), 83–84 The Self-Made Myth: And the Truth About How Government Helps Individuals and Businesses Succeed (Miller and Lapham), 75–76 self-reliance, 4, 19, 30, 58–60, 194, 248n in Alger, 42, 48 author experience of, 20–24 in Ayn Rand, 46–48 in Darwin, 173–74 in Emerson, 13–22 impossibility of, vii–xii Limits of Self-Reliance, The (Read), 19, 237n Seligman, Martin, 91, 251n Sen, Rinku, 168, 256n service.

Occupy
by Noam Chomsky
Published 2 Jan 1994

These days they’re sometimes called the “precariat”—people who live a precarious existence at the periphery of society. It’s not the periphery anymore. It’s becoming a very substantial part of the society in the United States, and indeed elsewhere. And this is considered a good thing. So, for example, Alan Greenspan, at the time when he was still “Saint Alan”—hailed by the economics profession as one of the greatest economists of all time (this was before the crash for which he was substantially responsible)—was testifying to Congress in the Clinton years, and he explained the wonders of the great economy that he was supervising.

Superclass: The Global Power Elite and the World They Are Making
by David Rothkopf
Published 18 Mar 2008

They have been symbols, examples, empowerers, and beneficiaries of a new system that appeared to concentrate more economic power in the hands of relatively fewer people and that, in the eyes of many, exacerbated the great chasm that separates the haves of this world from the have-nots. And in the year following the hardcover publication of Superclass in the United States, no group was more in the headlines as the financial elites were buffeted by what former U.S. Federal Reserve chairman Alan Greenspan called a “once-in-a-century” financial meltdown. As once powerful financial institutions such as Lehman Brothers, Merrill Lynch,Bear Stearns, AIG, and U.S. mortgage lenders Fannie Mae and Freddie Mac were wiped away, rendered unrecognizable or brought under the wing of the U.S. government, much was revealed not only about the deep flaws in the global financial system but about this important segment of the superclass…and by extension about the nature, power, and importance of the superclass as a whole.

…

General Jim Jones, former supreme allied commander in Europe and former commandant of the U.S. Marine Corps, was receiving an award for military achievement. And for government service, the award went to a man who has sat near the apex of the pyramid, a member of the superclass within the superclass, Alan Greenspan, who for roughly two decades served as the inscrutable Yoda of global financial markets in his role as chairman of the U.S. Federal Reserve. Even after his retirement, Greenspan has proved he can move markets with a well-turned phrase. Introduced by former secretary of state Colin Powell, who received an adoring reception from the tuxedoed audience, each of the award recipients settled into a chair to participate in a question-and-answer session with a past award winner, former two-time U.S. national security adviser, General Brent Scowcroft.

…

The trend toward global integration is not consistent throughout Jum’ah’s management of Saudi Aramco; he has been able to direct and in some cases mitigate the forces of globalization so as to maximize profit margins and minimize disruptions. Jum’ah’s predecessor at Aramco, Ali I. Al-Naimi, has been called the “Greenspan of oil,” after former U.S. Federal Reserve Bank chairman Alan Greenspan. As Saudi Arabia’s oil minister, he is one of the industry’s most long-standing and influential players, and when Dan Yergin, Pulitzer Prize-winning author of The Prize and chairman and CEO of Cambridge Energy Research Associates, is asked which individuals comprise the energy cluster of the superclass, Naimi is one of the first names he mentions.

Endless Money: The Moral Hazards of Socialism
by William Baker and Addison Wiggin
Published 2 Nov 2009

In 1955, the Senate Banking Committee investigated the stock market, issuing a report concluding there was too much speculation, even though dividend yields on stocks were about 40 percent above those available in the bond market, indicating continued public wariness of equities caused by memory of the Great Depression. (Currently dividend yields are 60 percent lower than bond yields, and bond yields themselves are near record lows). Federal Reserve Chairman Alan Greenspan thought the stock market was giddy with “irrational exuberance” in December 1996, only to find it would ascend more rapidly than ever, by 27.6 percent annually from the beginning of 1997 through the end of 1999.8 There is a long list of others who have bucked the conventional wisdom by being bearish.

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Considering that blaming gold for transmitting the depression globally is in vogue today, particularly among important central planners at the Fed, might not their explanation have been defended in order to take some of the heat off holding their predecessors accountable for mishaps as well as from those of more recent vintage, such as Alan Greenspan, once heralded as “the maestro?” Perhaps more importantly, wouldn’t it also obstruct consideration of taking away some of the Fed’s powers through adopting decentralized or gold-based approaches to managing the money supply? The panic of 2008 is challenging the very assumptions that belie the antigold thesis, for the financial world crumbled after having been freed from the barbarous relic for 37 years.

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Part 4 of this book begins by recapping the plight of the government sponsored agencies and their role in the crisis, which inevitably leads us into the politics of their role from their humble beginnings in the 1930s to the expansion of the Community Reinvestment Act in the Clinton years that set the stage for the boom and bust that began under Fed Chairman Alan Greenspan. Politics play a sweeping role in the drama that would unfold from the Depression forward. In the chapter “A Return to Malaise” the focus is upon the latter half of the 20th century, wherein the pattern of rising government spending and continuous printing of fiat currency combined to unify both political parties behind the buying of votes with the provision of entitlements.

The Finance Curse: How Global Finance Is Making Us All Poorer
by Nicholas Shaxson
Published 10 Oct 2018

Such revolutionary ideas percolated slowly at first, but cheerleaders and corporate funders weren’t hard to find. One of the earliest enthusiasts was a partner at a Wall Street consulting firm who was already a manic devotee of the anti-government novelist and libertarian guru Ayn Rand. His name was Alan Greenspan, and he would later become chairman of the US Federal Reserve. ‘The entire structure of antitrust statutes in this country is a jumble of economic irrationality and ignorance … confusion, contradictions and legalistic hairsplitting,’ he thundered in 1961. ‘The world of antitrust is reminiscent of Alice in Wonderland.’

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The US financial system is overseen by a patchwork of regulators, each the fruit of some past financial crisis, and ‘regulator shopping’ was all the rage, encouraging a ‘competitive’ race between US regulators to degrade standards in order to attract clients. An ideological shift was well under way too. The hard man of American finance, Paul Volcker, had long ago stepped down as chair of the US Federal Reserve, the top regulator, and been replaced by Alan Greenspan, an extremist libertarian who had once called the welfare state ‘nothing more than a mechanism by which governments confiscate the wealth of more productive members of society’. He had also said, channelling the wisdom of British tax havens, that he didn’t believe there should be laws against fraud because it wasn’t necessary: people would simply stop doing business with bad actors, he opined, and they’d be driven from the market.27 Greenspan joined deregulatory forces with President Bill Clinton’s treasury secretary, the former Goldman Sachs banker Robert Rubin, and Rubin’s deputy Lawrence Summers, and this Third-Wayish trio cheer-led the frenzy of financial innovation now exploding across US trading rooms.

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The list of attendees at Director’s dinner is not available but the group recalled George Stigler, Milton Friedman, Aaron Director, John McGee, Gregg Louis, Reuben Kessel, Lloyd Mintz, Al Harberger and Martin Bailey as being present. 4. Ibid. The Holy Grail quote is from Lynn Parramore, ‘Meet the Economist Behind the One Percent’s Stealth Takeover of America’, INET, 30 May 2018, referencing Nancy MacLean’s book Democracy in Chains, Viking, 2017. 5. Alan Greenspan, Antitrust, Nathaniel Branden Institute, New York, 1962. This was based on a paper given at the Antitrust Seminar of the National Association of Business Economists, Cleveland, 25 September 1961. The ideas began moving out of academia and into policy when Stigler led a government task force in 1969 whose final report was a flimsy document slamming antitrust regulators and citing ‘nebulous fears’ about corporate size and power, a report which one expert said, ‘felt no need to cite either data or scholarly literature’.

Radical Uncertainty: Decision-Making for an Unknowable Future
by Mervyn King and John Kay
Published 5 Mar 2020

So it is always possible to attribute apparent falsification to failure, not of the alleged law, but of the assumptions needed to illustrate the application of the universal law; in this particular case, the real world is plainly not a vacuum, although it is sufficiently close to a vacuum for Newton’s equations to give good answers most of the time. After the crisis of 2007–08, there were many explanations of why it was inevitable even though it was anticipated by few. Former Federal Reserve chairman Alan Greenspan was almost alone in observing that ‘I discovered a flaw in the model that I perceived is the critical functioning structure that defines how the world works’; 24 most people discovered that the crisis confirmed what they had been saying all the time. On many economic issues there will always be an explanation of why the anticipated outcome failed to materialise, and no means of disputing the explanation other than derision.

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In 2005, Raghuram Rajan, then the chief economist of the IMF and later Governor of the Reserve Bank of India, argued that financial deregulation and the rise of new financial instruments had increased the incentive for investors to take greater risks which they did not fully understand. 14 The warning was prescient, but not well received; most of those present were inclined to agree, some in vigorous language, with an earlier judgement of chairman Alan Greenspan that ‘A major contributor to the dispersion of risk in recent decades has been the wide-ranging development of markets in securitized bank loans, credit card receivables, and commercial and residential mortgages. These markets have tailored the risks associated with holding such assets to fit the preferences of a broader spectrum of investors.’ 15 Referring to derivative instruments, Greenspan said, ‘These increasingly complex financial instruments have been especial contributors, particularly over the past couple of stressful years, to the development of a far more flexible, efficient, and resilient financial system than existed just a quarter-century ago.’ 16 The dominant and widely shared narrative was that efficient markets ensured that risks were being dispersed to those who best understood them and were best able to bear them.

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These markets have tailored the risks associated with holding such assets to fit the preferences of a broader spectrum of investors.’ 15 Referring to derivative instruments, Greenspan said, ‘These increasingly complex financial instruments have been especial contributors, particularly over the past couple of stressful years, to the development of a far more flexible, efficient, and resilient financial system than existed just a quarter-century ago.’ 16 The dominant and widely shared narrative was that efficient markets ensured that risks were being dispersed to those who best understood them and were best able to bear them. That narrative did not survive the shock of events in 2008. The 2005 Jackson Hole meeting was a special occasion to say farewell to Alan Greenspan, who was about to retire from the Federal Reserve after eighteen years as chairman. Much unfair opprobrium has been directed towards Mr Greenspan since the financial crisis began just two years later; in his farewell address, Greenspan did warn that ‘History has not dealt kindly with the aftermath of protracted periods of low risk premiums’. 17 In that, he was certainly correct.

Walk Away
by Douglas E. French
Published 1 Mar 2011

At the time when homeownership was hitting its peak, the conventional wisdom was that housing prices never go down. Mortgage lenders evidently believed that because required down payments went to zero in some cases and negative amortizing loan structures required continued increases in home prices. In 2002, then Federal Reserve Chairman Alan Greenspan pooh-poohed the notion of a nationwide bubble in home prices. The ongoing strength in the housing market has raised concerns about the possible emergence of a bubble in home prices. However, the analogy often made to the building and bursting of a stock price bubble is imperfect. First, unlike in the stock market, sales in the real estate market incur substantial transactions costs and, when most homes are sold, the seller must physically move out.

Throwing Rocks at the Google Bus: How Growth Became the Enemy of Prosperity
by Douglas Rushkoff
Published 1 Mar 2016

Those unwilling to participate were researched by psychologists, then subjected to techniques of “behavioral finance” until they got with the program.16 To many of us, the whole system seemed to be working. Regular people began taking mortgages out on their homes every time real estate values went up, as a way of generating more capital for themselves. Even Alan Greenspan thought the triumph of capital and credit meant we had embarked on a new era of riskless investing. As the former chairman of the Federal Reserve remarked in 2000: “I believe that the general growth in large [financial] institutions has occurred in the context of an underlying structure of markets in which many of the larger risks are dramatically—I should say, fully—hedged.”17 That is, right up until the crash of 2007, when there turned out not to be enough real economic activity to support the overcrowded field of moneylending.

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Thomas Piketty, Capital in the Twenty-First Century, trans. Arthur Goldhammer (Cambridge, Mass.: Belknap Press, 2014). 15. Robert Slater, Jack Welch and the GE Way (New York: McGraw-Hill, 1998). 16. Ben Steverman, “Manipulate Me: The Booming Business in Behavioral Finance,” bloomberg.com, April 7, 2014. 17. Morgan House, “5 Alan Greenspan Quotes That Make You Wonder,” fool.com, October 15, 2008. 18. Michael Lewis, The Big Short: Inside the Doomsday Machine (New York, London: W. W. Norton, 2011). 19. Naomi Klein, This Changes Everything: Capitalism vs. the Climate (New York: Simon and Schuster, 2014). 20. John Stuart Mill, Principles of Political Economy with Some of Their Applications to Social Philosophy (London: Longmans, Green and Co., 1909), IV.6.2. 21.

Capitalism Without Capital: The Rise of the Intangible Economy
by Jonathan Haskel and Stian Westlake
Published 7 Nov 2017

Perhaps, economists concluded, software ought to be treated like an investment. The problem was that there was no place for software on the frequent investment surveys that statistical agencies asked firms to fill out. Those surveys asked for spending on computers, machinery, vehicles, and buildings—but not software. So the position echoed a fear voiced by Alan Greenspan, the then Chair of the US Federal Reserve, that there was a New Economy out there, and statistical agencies were not capturing it. In 1999 the US BEA introduced software as an investment into the calculation of US GDP (Moulton, Parker, and Seskin 1999). They estimated investment by US firms in software by a mix of methods: information on their purchases of software, obtained from decennial surveys, and investment in-house, based on a multiple of wages of software workers.

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Chapter 3: How to Measure Intangible Investment 1. A very helpful guide to measuring investment and GDP, packed with data, is from Eurostat: http://ec.europa.eu/eurostat/statistics-explained/index.php/National_accounts_and_GDP. 2. Smith, The Wealth of Nations, book 2, chapter 3. 3. Hence, we have Alan Greenspan’s remarks in 2000 on the challenges faced by the US Bureau of Economic Analysis in defining and calculating GDP: “It’s become evident that there has been an increasing technological change within our system, which has muddied the distinction between what we call capital investment and current expense.

The Power of Passive Investing: More Wealth With Less Work
by Richard A. Ferri
Published 4 Nov 2010

The top 10 funds finished 458 out of 552 in 2009, underperforming the category average by 9.8 percent. The #1 fund in 2008 finished dead last in 2009. Buying recent past performance is a tough-love way to seek alpha. Investors’ love affair with last year’s top funds often turns into a messy divorce just a few years later. Former Federal Reserve chairman Alan Greenspan addressed manager persistence during testimony to Congress in 1998 in his Fed Speak way. Greenspan made this comment over the demise of Long-Term Capital Management, a failed hedge fund that threatened the entire financial system: This decade is strewn with examples of bright people who thought they had built a better mousetrap that could consistently extract an abnormal return from financial markets.

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French, “Luck versus Skill in the Cross Section of Mutual Fund Returns,” The Journal of Finance 65, no. 5 (October 2010): 1915–1947. 7. Jeroen Derwall and Joop Huij, “‘Hot Hands’ in Bond Funds,” ERIM Research Paper Series (April 16, 2007). 8. Marlena Lee, “Is There Skill among Bond Managers?” (working paper, Dimensional Fund Advisors, Austin, Texas, 2009). 9. Alan Greenspan, Private-Sector Refinancing of the Large Hedge Fund, Long-Term Capital Management, Testimony before the Committee on Banking and Financial Services, U.S. House of Representatives, October 1, 1998). 10. Mark M. Carhart, “On Persistence in Mutual Fund Performance,” The Journal of Finance 52, no. 1 (March 1997): 80. 11.

Running Money
by Andy Kessler
Published 4 Jun 2007

“You see, the dollar is the new gold, and we export IP and import finished goods, and the difference ends up in our stock market and—” “You are forgetting the J-curve.” “The what?” “Oh, you rookies always forget the important stuff. The J-curve just snapped you in the ass.” I received an invitation via e-mail to attend the Annual Monterey Conference on the future of the euro. Alan Greenspan was scheduled to speak. So were the heads of the IMF, World Bank and the central bank of most European countries. I’d never been to the Monterey conference on currencies, so I thought it might be a great place to test my theory out on those that did attend the conference. Plus Monterey is only 45 minutes from my home.

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Similarly cre- 273 274 Running Money ated digital networks now deliver phone calls, and other systems deliver e-mail cheaper every year. Looked at another way, foreigners made us $4 trillion of stuff, in exchange for a piece of paper with Ben Franklin’s mug on it. But we get it all back. Charity? Nah. They buy a piece of debt signed by Alan Greenspan, promising to pay them interest and their principal back in 10 years. Or maybe a colorful stock certificate. So, either foreigners are suckers or there is some economic reason for these deficits. We got most or all of the 4 trill back, chasing our profits. Do they now own the U.S.? Nah. The entire U.S. bond market is $19 trillion, stocks another $15 trillion and growing.

The End of Accounting and the Path Forward for Investors and Managers (Wiley Finance)
by Feng Gu
Published 26 Jun 2016

Revolutionary changes, shifting economies and business enterprises from the industrial to the information age, started to profoundly affect the business models, operations, and values of companies in the 1980s, yet, amazingly, triggered no change in accounting. Entire industries, which are largely intangible (conceptual industries, as Alan Greenspan called them), including software, biotech, and Internet services, came into being during the 1980s and 1990s. And for all other businesses, the major value drivers shifted from property, plant, machinery, and inventories, to patents, brands, information technology, and human resources. The latter set, all missing from companies’ balance sheets because accountants treat intangible investments like regular expenses (wages, or interest), thereby distorts both the balance sheet and income statement.

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US private sector investment in tangible and intangible capital (relative to gross value added), 1977–2014 16% Intangible investment rate 14% 12% 10% Tangible investment rate 8% 6% Intangible investment rate 4% 1977 1982 1987 1992 Tangible investment rate 1997 2002 2007 2012 FIGURE 8.1 The Intangibles Revolution Source: We are grateful to Professors Carol Corrado and Charles Hulten for providing us with this figure. The rate of investment in what many people still think of as the real assets—physical capital—fell by 35 percent over the period, whereas the rate of investment in intangibles—what Alan Greenspan called conceptual assets—increased by almost 60 percent, and keeps rising. Note, in particular, the continuously widening gap between the rising investment in intangibles and the declining spending on tangible assets, starting in the mid-1990s. And not only in America. “While German companies pulled back on machinery investment during the crisis, R&D spending continued to rise.”1 The reason for this dramatic shift in the productive resources of the business sector is compelling: Corporate value and growth are increasingly driven by intangible assets, whereas physical capital (like factories, machines, or inventory) is just an enabler—a commodity—equally available to all competitors and hence a marginal creator of value and competitive advantage.

The Weightless World: Strategies for Managing the Digital Economy
by Diane Coyle
Published 29 Oct 1998

Explaining it, she said: ‘Where people once wanted bigger cars and bigger offices, now they want smaller, tinier things. The aesthetic of the small is very interesting: the tiniest chip, the smallest watch or car phone.’1 Miniaturised desires are characteristic of the weightless world. The credit for first characterising the economy as increasingly weightless goes to Alan Greenspan, the chairman of the United States Federal Reserve The Weightless World viii Board. Mr Greenspan is perhaps most famous for having remarked: ‘If I’ve made myself clear you must have misunderstood me’. A banker’s irony. In a characteristically lucid speech in October 1996, he pointed out that economic output used to consist of big, physical things — steel, huge cars, heavy wooden furniture and so on.

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For me, the proof that new technologies are finally being implemented throughout the economy lies in the now well-known factoid that the microchip in a musical greetings card contains more computer power than we had on the entire planet in 1945. After electrification, computerisation. Profound technological change always involves economic upheaval. It also has always meant very rapid growth in living standards in the past. Unfortunately, the gain follows the pain by some distance. Alan Greenspan said in his speech: ‘Radical transformations in what we produce in the way of goods and services and how we produce them occur perhaps once or twice a century, at most’. He went on to explore the implications of increasingly weightless growth for measuring prices and productivity, both of particular concern to a central banker charged with keeping inflation low and employment high.

The Unknowers: How Strategic Ignorance Rules the World
by Linsey McGoey
Published 14 Sep 2019

Symons promised BP and Shell that she would lobby on their behalf and ‘report back’ to the companies about her efforts within two months. These covert discussions took place in 2002. One year later, Tony Blair called it ‘absurd’ that oil exploitation could be a factor leading to war, but his minister’s earlier meetings with oil companies suggest otherwise.14 Even former chairman of the US Federal Reserve, Alan Greenspan, admitted that oil was an impetus for the invasion, writing in his memoir: ‘I am saddened that it is politically inconvenient to acknowledge what everyone knows: the Iraq war is largely about oil.’15 The point I’m making is simple: the belief that the EU vote was characterized by a rare case of deception is troubling in light of the many historical examples that provide evidence otherwise.

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Mainstream economists and regulators, especially those influenced by Schwartz and Milton Friedman’s school of monetary policy, pooh-poohed their warnings. The avalanche of mispriced derivatives that Schwartz berates did not materialize as recently as she implies. The derivatives boom gained momentum over the two decades prior, a period when Alan Greenspan, a strong adherent of Schwartz and Friedman’s monetary ideas, was head of the Federal Reserve for 19 years. If warnings from Buffett and others were acted upon, the financial crisis might not have reached the devastating proportions that it did. Lives, jobs and homes could have been saved, and the Wall Street executives who were ultimately responsible for the mispricing of assets might have faced more scrutiny before it was too late, as well as jail time after the crisis hit.

Magic Internet Money: A Book About Bitcoin
by Jesse Berger
Published 14 Sep 2020

It faithfully adheres to the characteristics demanded of sound money and, as will be discussed further in the next chapter, it can efficiently allocate resources and curtail waste by promoting shrewd decision-making, acting as an engine for growth. Chapter 4 Growth 4.1 The Root of All Growth “The use of a single medium is highly advantageous for the same reasons that a money economy is superior to a barter economy: it makes exchanges possible on an incalculably wider scale.” Alan Greenspan, Former US Federal Reserve Chair Bitcoin’s price has unwittingly become a focal point of its existence. Due to its relative nascence, the breadth of its exchangeability and depth of its liquidity are still experiencing growth spurts, leading to its famous price volatility. This ancillary effect of its real-world utility draws both ire and awe from financial markets, who, like everyone else, simply want to find out how and if Bitcoin can benefit them.

Currency Wars: The Making of the Next Gobal Crisis
by James Rickards
Published 10 Nov 2011

It is genuinely helpful to U.S. national security when so many experts, with varied perspectives and some from distant locations, gather under one roof to exchange ideas and give the military new ways of understanding potential threats. When the Treasury and Fed did scenarios, they usually thought about bursting bubbles and market crashes, not state-sponsored financial wars. Former Fed chairman Alan Greenspan liked to say that the Fed had no expertise in stopping bubbles and that its resources were better utilized cleaning up the mess after a bubble had burst. That Greenspan view works only for messes of a certain size. For the really big messes—those involving civil unrest, food riots, looting, refugees and general collapse—the Fed has no answer and societies inevitably turn to the military for solutions.

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-China relations get back on track. Despite almost twenty-five years of significant economic progress by China, beginning in 1976, it was only in 2002 that U.S.-China bilateral trade and investment codependence kicked into high gear. That year, 2002, also marked the beginning of Fed chairman Alan Greenspan’s experiment with sustained ultralow interest rates. Greenspan had started to cut rates in the summer of 2000 following the tech bubble collapse. The resulting decline of over 4.75 percent in the fed funds rate from July 2000 to July 2002 could be viewed as a normal cyclical easing designed to help the economy out of a rut.

All About Asset Allocation, Second Edition
by Richard Ferri
Published 11 Jul 2010

In aggregate, these advisors are the market, and after advisor fees, fund expenses, and trading costs, advisors’ clients must perform below the market. It can be no other way. During 1998 congressional testimony concerning the economic crisis caused by the collapse of Long Term Capital Management, Federal Reserve Chairman Alan Greenspan cautioned against buying into any new concept designed to outperform the markets. The following statement was given before the Committee on Banking and Financial Services of the U.S. House of Representatives: Planning for Investment Success 15 This decade is strewn with examples of bright people who thought they had built a better mousetrap that could consistently extract an abnormal return from financial markets.

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Develop a good asset allocation plan, implement the plan, maintain the plan, and make adjustments as your needs change. Asset allocation is not an exciting investment strategy, but when it comes to making money, boring can be very profitable. NOTES 1 “Private-Sector Refinancing of the Large Hedge Fund, Long-Term Capital Management,” testimony of Chairman Alan Greenspan before the Committee on Banking and Financial Services, U.S. House of Representatives, October 1, 1998. 2 Roger G. Ibbotson and Paul D. Kaplan, “Does Asset Allocation Policy Explain 40, 90 or 100 Percent of Performance?” Financial Analysts Journal, January/February 2000, pp. 26–33. 3 Gary P. Brinson, L.

The Theft of a Decade: How the Baby Boomers Stole the Millennials' Economic Future
by Joseph C. Sternberg
Published 13 May 2019

The core of Rubinomics was to cut government spending a little bit and raise taxes a fair bit, especially on wealthier taxpayers, to restore confidence in America’s ability to manage its finances. Interest rates would then fall, and the general boost in consumer and business sentiment would fuel an investment-and-jobs boom using the cheap financial capital. “Responsible” fiscal policy following a tax increase in 1993 allowed the Federal Reserve, now led by Alan Greenspan, to keep the federal funds rate, the key interest rate set by the Fed at its meetings eight times a year, at around 5 percent for years at a time, a virtually unprecedented level of stability. The economy boomed. But Washington was still focused on maintaining unusually low interest rates as the best (and maybe only) way to stimulate productive investment.

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In 1989, only 1 in 230 buyers made a down payment of 3 percent or less. By 2003, it was 1 in 7 and on the eve of the crisis in 2007, it was just less than 1 in 3.34 Those pro-debt policies lit a fire under the housing market, and the Federal Reserve poured on the accelerant. The 1990s was the era of Rubinomics and unusually low interest rates from the Alan Greenspan–run Federal Reserve—a policy that was supposed to stimulate more business investment to bolster the Boomer job market. But the short-term rate the Fed sets is intended to serve as a benchmark for all other interest rates, and sure enough the low federal funds rate in this era filtered through to the housing market one way or another.

Uncharted: How to Map the Future
by Margaret Heffernan
Published 20 Feb 2020

Paul Krugman, who won the Nobel Prize for economics at least in part due to the beauty of his models, once quipped that he thought the data left out of his models might be more important than the data that went in.7 It’s an explosive and challenging remark that reveals the intrinsic difficulty of models: they will always be subjective and incomplete representations of complex reality. The second problem lay in agendas. However much the early forecasters believed themselves to be men of pure, scientific enquiry, they all held cherished, implicit beliefs about how the world worked, about what mattered and what did not. Alan Greenspan later called these beliefs ideologies. Testifying before Congress following his failure to foresee the banking crisis of 2008, he said, ‘Ideology is a conceptual framework with the way people deal with reality, everyone has one. You have to.’8 Between 1994 and 2008, his own belief – that deregulated markets are safe – had caused him to ignore a whole series of failures in the unregulated derivatives market, right up to the crash in 2008.

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But, for the most part, we don’t check. But Tetlock did, crunching twenty years of data. And he concluded that big names were held hostage by their ‘big ideas’, driven to see consistency where it didn’t exist. Tom Friedman, Paul Krugman and Niall Ferguson may once have started as objective truth seekers but, over time, just like Alan Greenspan, they have developed their own ideologies: mental models of how the world works. They cleave to what they know and are loyal to the grandeur and power of their big ideas – sticking to them often in the face of overwhelming evidence. In a crowded, noisy, competitive market, their followers and personal brands lock them into conceptual boxes where they remain captive to consistency.

Rockonomics: A Backstage Tour of What the Music Industry Can Teach Us About Economics and Life
by Alan B. Krueger
Published 3 Jun 2019

Third, those who listen to music on unlawful file-sharing sites could inform others in their network about the music, and those others might purchase it. The evidence overwhelmingly points to the dominance of the substitution effect: why buy music if you could obtain it for free? Music has always been subject to illegal copying. Before he was chairman of the Federal Reserve Board, Alan Greenspan conducted research for the Recording Industry Association of American that concluded, “From the available data, it appears that roughly half of the taping from borrowed records or tapes would have generated record or tape purchases had home audio taping not been possible….This represents lost sales of approximately 32 percent of the total volume of record sales in 1982.”9 Even discounting the interest of the sponsor, this suggests a lot of illegal copying.

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Paul Goldstein, Copyright’s Highway: The Law and Lore of Copyright from Gutenberg to the Celestial Jukebox (New York: Hill and Wang, 1995), 4. 8. For an excellent overview of the economics of copyright, see Stan Liebowitz and Richard Watt, “How to Best Ensure Remuneration for Creators in the Market for Music? Copyright and Its Alternatives,” Journal of Economic Surveys 20, no. 4 (2006): 513–45. 9. Alan Greenspan, “Statement re S. 31 Before the Subcommittee on Patents, Copyrights and Trademarks, Senate Committee on the Judiciary,” Oct. 25, 1983. 10. Nilay Patel, “Metallica Sued Napster 15 Years Ago Today,” The Verge, Apr. 13, 2015. 11. Todd Bishop, “Rhapsody Will Rebrand as Napster, Creating ‘One Global Brand’ for Longtime Music Service,” GeekWire, Jun. 14, 2016. 12.

The Centrist Manifesto
by Charles Wheelan
Published 18 Apr 2013

As a result, economists across the political spectrum have embraced pollution taxes, such as a carbon tax, as a better way to raise government revenue than taxing productive activities like work, savings, and investment. Gary Becker—a Nobel Prize winner from the University of Chicago, a disciple of Milton Friedman, and one of the most articulate contemporary proponents of free markets—is on record as favoring a carbon tax. So is former Federal Reserve chairman Alan Greenspan (who was a close friend of Ayn Rand while she was alive). Another persistent and persuasive advocate for some kind of carbon tax is Harvard economist Gregory Mankiw, who is the author of one of the most popular economics textbooks in America. More important in this context, Mankiw was the chair of the Council of Economic Advisers under George W.

The Art of Execution: How the World's Best Investors Get It Wrong and Still Make Millions
by Lee Freeman-Shor
Published 8 Sep 2015

Robert Shiller’s findings from research he conducted in 1981 suggest that stock prices are driven more by speculators than by company fundamentals.50 He showed that stock market prices move well beyond what would be predicted by a rational investment model. Quite simply, stock index returns are too volatile relative to aggregate dividends. Indeed, consider the fact that in December 2006, Alan Greenspan, when he was the chairman of the Federal Reserve, publicly declared that markets were being driven higher due to “irrational exuberance”. That statement did not stop the stock market going higher for another three years before the bubble eventually popped. Of course, caution is still required: winners may not win forever.

Private Empire: ExxonMobil and American Power
by Steve Coll
Published 30 Apr 2012

In the United States, in 2003, gas supplied about a quarter of the country’s energy supply, to generate electricity, heat water and homes, and fuel industrial processes.5 ExxonMobil supported a National Petroleum Council study in 2003 that made recommendations to the Bush administration to expand the industry.6 Raymond had developed a friendship with Federal Reserve chairman Alan Greenspan. The men had gotten to know each other while serving together briefly on the J.P. Morgan board of directors, and then stayed in touch. Raymond impressed his analysis about natural gas on the Federal Reserve chairman: The American economy needed planning to build the facilities to import and reconvert liquefied natural gas in the future.

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Still, ExxonMobil and other majors fiddled around some in these American gas fields over the years—they took leases and they drilled wells, but they did not invest at anything like the scale of their overseas L.N.G. and gas liquids projects. Lee Raymond had declared in 2003 that American natural gas production had probably peaked. The Energy Department predicted that the United States might run out of domestic gas supplies, which were used mainly for heating and electric power generation, in just two decades. Alan Greenspan, educated by private conversations with Lee Raymond, urged Congress to consider fast-tracking the construction of liquefied natural gas import terminals around the United States to address this coming, widely predicted gas shortfall. As it turned out, Lee Raymond had been wrong. Within a few years of his declaration, because of the emergence of unconventional gas drilling techniques that proved cost effective, the Energy Department revised its forecasts and now predicted that the United States had about a century’s worth of natural gas reserves.

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Other factors would include the pace of demand for natural gas in electricity generation, particularly as a substitute for coal; the future of carbon pricing and greenhouse gas regulation; the trajectory of natural gas prices; and the pace of technical innovation. The idea that the United States truly had enough of its own gas to last a century seemed optimistic, but equally, the forecast in 2003 by Alan Greenspan that America might have only two decades of domestic supply remaining, and that “we are not apt to return to earlier periods of relative abundance and low prices” had clearly been proved incorrect.12 ExxonMobil reentered American unconventional gas exploration and production on a modest scale after prices rose enough to meet the Management Committee’s rigorous return-on-capital guidelines.

Nuclear War and Environmental Catastrophe
by Noam Chomsky and Laray Polk
Published 29 Apr 2013

Today the small start-ups are in genetic engineering, biotechnology, etc., and the campus is surrounded by major installations of pharmaceutical firms and the like.26 The same dynamics have been duplicated elsewhere. The Pentagon itself gains little if anything from this, not even prestige. In fact, few even know how the system works. To illustrate, I once wrote an article about a speech to newspaper editors by Alan Greenspan—called “St. Alan” during his day in the sun, and heralded as one of the great economists of all time. He was hailing the marvels of our economy, based on entrepreneurial initiative and consumer choice, the usual oration. He made the mistake, however, of giving examples, each of them textbook illustrations of what I have just described: the role of the dynamic state sector of the economy during the hard part of research and development (along with government procurement and other devices of what amounts to a kind of industrial policy).

Layered Money: From Gold and Dollars to Bitcoin and Central Bank Digital Currencies
by Nik Bhatia
Published 18 Jan 2021

That a hedge fund took oversized risk and went insolvent wasn’t anything new, rather a typical cycle of boom, hype, and bust. The riveting revelation from LTCM’s collapse was also the smoking gun that indicated the events of 2007 and beyond were inevitable. Shortly after the Federal Reserve bailed out LTCM’s investment bank counterparties and the unwind of the infamous hedge fund itself, Federal Reserve chairman Alan Greenspan characterized the bailout as of necessity due to the prospect of a systemic collapse of the entire financial system in a testimony to U.S. Congress: The issue was, in all of our judgments, that the probability [of systemic collapse] was sufficiently large to make us very uncomfortable about doing nothing . . .

Were You Born on the Wrong Continent?
by Thomas Geoghegan
Published 20 Sep 2011

And as I got sicker that winter, I felt all the worse because Summers was up on stage with the world business leaders at Davos not just as a Democrat but as the Democrat setting the economic policies of—well, the party of the left, or really the center left. By helping junk the Glass-Steagall Act and blessing all sorts of deregulation, Phil Gramm, Robert Rubin, Alan Greenspan, and Summers made London and New York the places where all the big go-go global finance was happening, while over in Frankfurt, cut out of the action, the Europeans could pound sand. In the U.S. and the UK, we were coming up with new financial products, while the poor Germans were still making things like widgets; it seemed shameful to defend a country where people still made things with their hands.

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And besides, the very fact that they had “problems” that one had to take “seriously” was, in a paradoxical way, the very appeal of the place. By that I mean, at least they try. I mean that the social market economy is a human creation, and not an impersonal machine, inhuman, cold, barking out commands, the way Americans such as Alan Greenspan conceive of it. The very constitutions of these countries, like the German Basic Law, make clear the purpose of the state is to protect people from the “excesses of capitalism.” Law professors actually state this in their lectures. In the Basic Law there is literally a provision to protect the family, and yes, it’s right wing and Catholic, but they’re serious about protecting the family against laissez-faire capitalism.

The Wisdom of Crowds
by James Surowiecki
Published 1 Jan 2004

We are willing to believe Ernst and Young when it says this because its entire business seems to depend on its credibility. If Underwriters Laboratory started affixing its UL mark to lamps that electrocuted people, pretty soon it wouldn’t have a business. In the same way, if Ernst and Young tells us to trust a company that turns out to be cooking the books, people should stop working with Ernst and Young. As Alan Greenspan has said of accountants, “The market value of their companies rest[s] on the integrity of their operations.” So accountants don’t have to be saints to be useful. In theory, self-interest alone will compel them to do a good job of separating the white hats from the black. But this theory only works if the firms that don’t do a good job are actually punished for their failure.

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And it’s why legendary business thinker Peter Drucker has said, “The smart CEOs methodically build a management team around them.” The lesson of Richard Larrick and Jack Soll’s work applies to business as much as it does to other fields: chasing the expert is a mistake. The Federal Reserve’s decisions, after all, aren’t made by Alan Greenspan. They’re made by the board as a whole. In the face of uncertainty, the collective judgment of a group of executives will trump that of even the smartest executive. Think about John Craven’s work in finding the Scorpion. A relatively small group of diversely informed individuals making guesses about the likelihood of uncertain events produced, when their judgments had been aggregated, an essentially perfect decision.

Dark Pools: The Rise of the Machine Traders and the Rigging of the U.S. Stock Market
by Scott Patterson
Published 11 Jun 2012

Later that night, they’d be treated to a speech by the Right Honorable Gordon Brown, former prime minister of the United Kingdom. Ex–Clinton aide James Carville would address the group the following morning. (It was nothing unusual. Past keynote speakers at the conference had included luminaries such as former Federal Reserve chairman Alan Greenspan, former secretary of state Colin Powell, and the onetime junk-bond king Michael Milken.) Mathisson hit the button, calling up a chart showing that cash had flowed out of mutual funds every single month through 2010, following the Flash Crash. Legions of regular investors had become fed up, convinced the market had become either far too dangerous to entrust with their retirement savings, or just outright rigged to the benefit of an elite technorati.

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A former sheep farmer and commodities broker, Nicoll was the first person in history to gain admittance to Yale Law School without a college degree. Two years after graduating from Yale in 1997, he landed at Datek Online, hoping to get in on the boom in online trading. Nicoll moved fast to consolidate his power. A believer, along with Federal Reserve chairman Alan Greenspan and many other financiers on Wall Street, in the free-market philosophy of the novelist Ayn Rand, he was a cool operator who quickly realized he’d stumbled on a gold mine at Datek. Even with a team blessed with zero business background at the helm, Datek Online was proving to be hugely successful.

The Verdict: Did Labour Change Britain?
by Polly Toynbee and David Walker
Published 6 Oct 2011

Brown strode into the Treasury in 1997, a Moses stern enough to soothe bondholders’ century-old fears about the Left, his tablets commanding prudence and public-spending constraint. But this upstanding prophet fawned on financial power. This Labour chancellor would petition Her Majesty to confer a knighthood on Alan Greenspan, a devotee of the cult of the capitalist superwoman Ayn Rand. Capital will be safe with Labour, Brown had told the boardrooms in the City and Canary Wharf. And so it proved to be. Corporate taxation was kept low – it was second lowest among the G7 in 2009. Profits beckoned, as the state divested itself of air-traffic control and defence research, pushed contracting in health and IT, guaranteed returns for the companies owning water, nuclear and train companies and (though this changed later) soft-pedalled on competition inquiries in defence, communications and energy.

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The crash showed the extent to which nobody, especially economists, had a clue what went on under the bonnet. The Bank’s vaunted success in keeping prices down turned out to be a local version of a worldwide trend. During the bubble, the Bank governor Mervyn King shared the serene conviction of his American counterpart Alan Greenspan that the wisdom of the markets would always prevail. In critical months during 2008 the Bank miscalculated the risk register between inflation and systemic failure. ‘The origins of the crisis,’ King asserted (Guardian, 20 January 2010), ‘lay in our inability to cope with the consequences of the entry into the world trading system of countries such as China, India, and the former Soviet empire – in a word globalization.

The Industries of the Future
by Alec Ross
Published 2 Feb 2016

However, much of that same establishment now sees blockchain technology as a technological solution to many high-cost transactions. Economists from the left and right, investment bankers, and government officials questioned its value and often its legality. From the right, former Federal Reserve chairman Alan Greenspan dismissed Bitcoin as a bubble, pointing out that currency “has to have intrinsic value.” He went on to say, “You have to really stretch your imagination to infer what the intrinsic value of Bitcoin is. I haven’t been able to do it.” From the left, Paul Krugman, the Princeton economist and New York Times columnist, has been even more brutal in his take on Bitcoin.

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One Bitcoin enthusiast: Cyrus Farivar, “Man Has NFC Chips Injected into His Hands to Store Cold Bitcoin Wallet,” Ars Technica, November 15, 2014, http://arstechnica.com/business/2014/11/man-has-nfc-chips-injected-into-his-hands-to-store-cold-bitcoin-wallet/. The servers are guarded using: Xapo—About, https://xapo.com/vault/. From the right, former Federal Reserve chairman Alan Greenspan: Jeff Kearns, “Greenspan Says Bitcoin a Bubble without Intrinsic Currency Value,” Bloomberg, December 4, 2013, http://www.bloomberg.com/news/2013-12-04/greenspan-says-bitcoin-a-bubble-without-intrinsic-currency-value.html. They have included: Paul Krugman, “Bitcoin Is Evil,” New York Times, December 28, 2013, http://krugman.blogs.nytimes.com/2013/12/28/bitcoin-is-evil/?

Modernising Money: Why Our Monetary System Is Broken and How It Can Be Fixed
by Andrew Jackson (economist) and Ben Dyson (economist)
Published 15 Nov 2012

This is mainly as a result of the growth of the British banking industry relative to the size of the economy – currently in the UK the ratio of domestic banking assets to GDP is the highest it has been at any comparable time in history (from 50% of GDP in the 1950s to 550% of GDP in 2010). 9. A recent example of such behaviour was the ‘Greenspan put’, which was the name given by financial markets participants to the belief that when financial markets unravel the chairman of the Federal Reserve (Alan Greenspan), would come to the rescue. Nobel Laureate in Economics Joseph Stiglitz cited the ‘Greenspan put’ as one of the causes of the speculative bubble which led to the financial crisis. (Stiglitz, 2010) 10. Moral hazard is when the provision of insurance changes the behaviour of those who receive the insurance in an undesirable way.

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As the reforms would make the UK a fundamentally stronger economy, with less household debt, less exposure to banking crises, and a currency that will not be debased by the profit-seeking lending activities of commercial banks, there is no reason why any fall in the currency (as a result of panic) would be permanent. 10.4 Impacts on the payment system National security The stability and resilience of the payments system is a matter of national security. The former Chairman of the Federal Reserve Board, Alan Greenspan, has commented that: “We’d always thought that if you wanted to cripple the US economy, you’d take out the payment systems. Banks would be forced to fall back on inefficient physical transfers of money. Businesses would resort to barter and IOUs; the level of economic activity across the country would drop like a rock.”

A Pelican Introduction Economics: A User's Guide
by Ha-Joon Chang
Published 26 May 2014

Inflation remained low. Economists – including Ben Bernanke, the chairman of the Federal Reserve Board between February 2006 and January 2014 – talked of the ‘Great Moderation’, in which the science of economics had finally conquered boom and bust (or the economy going up and down by large margins). Alan Greenspan, the chairman of the Federal Reserve Board between August 1987 and January 2006, was revered as the ‘Maestro’ (as immortalized in the title of his biography by Bob Woodward of Watergate fame) who had a near-alchemical skill in managing a permanent economic boom without stoking inflation or courting financial trouble.

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.* One of those ‘sophisticates’ – a certain Joe Cassano, who was then the chief financial officer of AIG, the American insurance company bailed out by the US government in the fall of 2008 – said only six months before the collapse of his company, ‘It is hard for us, without being flippant, to even see a scenario within any kind of realm of reason that would see us losing one dollar in any of the [CDS] transactions.’ This belief in the infallibility of the market was shared by the regulators. At the height of the housing bubble in the US, key policy-makers kept denying that there was a bubble. In June 2005, while admitting that there are ‘signs of froth in some local markets’, Alan Greenspan, the then Fed chairman, assured the members of the US Congress that ‘a “bubble” in home prices for the nation as a whole does not appear likely’. A few months later, in October 2005, Ben Bernanke – the then chairman of the Council of Economic Advisers to the President (George W. Bush) and the Fed chairman between February 2006 and January 2014 – stated in his Congressional testimony that the 25 per cent increase in home prices that the US had seen in the previous two years ‘largely reflect strong economic fundamentals’.

Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond: The Innovative Investor's Guide to Bitcoin and Beyond
by Chris Burniske and Jack Tatar
Published 19 Oct 2017

When a cryptoasset is skyrocketing, it can be hard to resist the urge to jump in and ride the rocket. However, the timing can be precarious, and spotting the end of a bubble is not easy. By the time the bubble is popping and the speculation of crowds has turned on itself, it’s often too late. Alan Greenspan encapsulated the idea nicely: “You can spot a bubble. They’re obvious in every respect. But it is impossible for the majority of participants in the market to call the date when it blows. Every bubble by definition deflates.”27 “THIS TIME IS DIFFERENT” When asset markets are taken over by mass speculation and prices reach nosebleed territory, a common refrain can often be heard: “This time is different.”

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Recall that a coinbase transaction is the transaction that pays the miner with newly minted units of a cryptoasset in exchange for the miner having appended a new block to the blockchain. 23. https://cryptohustle.com/zcash-launch-breaks-records. 24. http://www.coindesk.com/bitcoin-breaks-700-zcash-steals-show/. 25. https://www.cryptocompare.com/coins/zec/charts/BTC?p=ALL. 26. http://www.zerohedge.com/news/2015-05-29/robert-shiller-unlike-1929-time-everything-stocks-bonds-and-housing-overvalued. 27. https://hbr.org/2014/01/what-alan-greenspan-has-learned-since-2008. 28. Edward Chancellor, Devil Take the Hindmost. 29. http://query.nytimes.com/gst/abstract.html?res=9806E6DF1639E03ABC4E52DFB6678382639EDE&legacy=true. 30. http://time.com/3207128/stock-market-high-1929/. 31. Edward Chancellor, Devil Take the Hindmost. 32. Ibid. Chapter 11 1.

The Bitcoin Standard: The Decentralized Alternative to Central Banking
by Saifedean Ammous
Published 23 Mar 2018

Access to its monetary role, however, has been restricted to central banks, while individuals have been directed toward using government money. Central banks' large reserves of gold can be used as an emergency supply to sell or lease on the gold market to prevent the price of gold from rising during periods of increased demand, to protect the monopoly role of government money. As Alan Greenspan once explained: “Central banks stand ready to lease gold in increasing quantities should the price rise.”22 (See Figure 4.23) As technology has progressed to allow for ever‐more‐sophisticated forms of money, including paper money that is easy to carry around, a new problem of salability has been introduced, and that is the ability of the seller to sell her good without the intervention of any third parties that might place restraints on the salability of that money.

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Those who benefit from it most are the ones with the best access to government credit, and the ones who are hurt the most are those on fixed incomes or minimum wages. 20 “Dollar or Dinar?” Mises Daily. Available at https://mises.org/library/dollar‐or‐dinar 21 J. P. Koning, “Orphaned Currency: Odd Case of Somali Shillings.” Available at https://jpkoning.blogspot.ca/2013/03/orphaned‐currency‐odd‐case‐of‐somali.html?m=1 22 “Regulation of OTC Derivatives.” Testimony of Chairman Alan Greenspan before the Committee on Banking and Financial Services, U.S. House of Representatives, July 24, 1998. 23 Source: World Gold Council, Reserve Statistics. Available at: https://www.gold.org/data/gold‐reserves 24 Ludwig von Mises, The Theory of Money and Credit, 2nd ed. (Irvington‐on‐Hudson, NY: Foundation for Economic Education, 1971), pp. 414–416. 25 Excerpt from a video interview conducted in 1984 with James U.

Licence to be Bad
by Jonathan Aldred
Published 5 Jun 2019

The biggest contemporary beneficiaries of this legal largesse are corporations which hold monopoly rights over products that are hard to avoid – Apple, Microsoft, Pfizer, Glaxo, and so on. And the Posnerian belief that wealth maximization beats corporate justice lay behind the opposition to the suggestion that banks should be punished for their role in bringing about the global financial crisis which began in 2007. A Posnerian echo could be heard in the objection from Alan Greenspan (former Chairman of the US Federal Reserve) that while punishing the banks might be ‘soul satisfying’, it ‘is rarely economically productive’.12 Posner’s support for big corporations came not just through his scholarship. In 1977 he co-founded the consulting firm Lexecon. It has grown enormously (it is now Compass Lexecon, following a merger) and has provided many big corporations with law-and-economics ammunition to protect their interests.

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And there is clear evidence that expert decision-makers are reluctant to abandon another narrative – the optimistic orthodoxy about decision-making under uncertainty described in this chapter, the one beginning with von Neumann’s jottings on the back of an envelope, then proceeding via Savage through a series of improvements and applications leading to Nobel prizes and other glory. Here is celebrated former Chairman of the US Federal Reserve Alan Greenspan in testimony to the US Congress in October 2008 after the financial crisis had hit: In recent decades, a vast risk-management and pricing system has evolved … A Nobel Prize was awarded … This modern risk-management paradigm held sway for decades. The whole intellectual edifice, however, collapsed in the summer of last year … So far so good

Bean Counters: The Triumph of the Accountants and How They Broke Capitalism
by Richard Brooks
Published 23 Apr 2018

The relationship was particularly close at the firms’ UK arms. PwC, for example, was now earning 30% of its revenues from financial services. It paid the bean counters to think like the cheerleaders of the new financial order. The star turn at KPMG’s 2007 conference on the world economy at London’s swanky Claridges hotel was Alan Greenspan, the just-retired Federal Reserve chairman who bore no small responsibility for the freewheeling economic conditions that were so conducive to the subprime bubble. In 2003, he had claimed that ‘the use of a growing array of derivatives and the related application of more sophisticated methods for measuring and managing risk are key factors underpinning the enhanced resilience of our largest financial intermediaries’.19 He’d inflated the world economy after the dot.com slump and fiercely opposed moves to regulate trading in financial derivatives like the credit default swaps that cranked up the subprime system.

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Discussed in Sikka and Mitchell, The Pinstripe Mafia. Re PwC ‘kickbacks’, see US Department of Justice press release, 16 August 2007. 27. Levitt. 28. Levitt speech to American Institute of Certified Public Accountants, 10 December 1996, cited by Brewster. The speech was made a few days after Federal Reserve chairman Alan Greenspan’s famously unheeded ‘irrational exuberance’ warning. 29. Stephen Labaton, ‘Enron’s Collapse: The Lobbying – Auditing Firms Exercise Power In Washington’, New York Times, 19 January 2002. 30. Levitt. 31. Ibid., note 22. 32. Shown in the film of The Smartest Guys in the Room, directed by Alex Gibney, produced by 2929 Entertainment and HDNet Films, 2005. 33.

Adaptive Markets: Financial Evolution at the Speed of Thought
by Andrew W. Lo
Published 3 Apr 2017

If you believe that people are rational and markets are efficient, this will largely determine your views on gun control (unnecessary), consumer protection laws (caveat emptor), welfare programs (too many unintended consequences), derivatives regulation (let a thousand flowers bloom), whether you should invest in passive index funds or hyperactive hedge funds (index funds only), the causes of financial crises (too much government intervention in housing and mortgage markets), and how the government should or shouldn’t respond to them (the primary financial role for government should be producing and verifying information so that it can be incorporated into market prices). The financial crisis became a battleground in a greater ideological war. One of the first casualties was the former Federal Reserve chairman Alan Greenspan, the man who journalist Bob Woodward called the “Maestro” in his biography of that name published in 2000. As the chairman of the Federal Reserve Bank from 1987 to 2006, Greenspan was one of the most respected central bankers in history, serving an unprecedented five consecutive terms, strongly supported by Democratic and Republican presidents alike.

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CHAPTER 9 Fear, Greed, and Financial Crisis ECOSYSTEM ECOLOGY No new theory of financial markets should be taken seriously unless it has something useful to say about the financial crisis of 2008, and this includes the Adaptive Markets Hypothesis. In fact, prior to the crisis, the Adaptive Markets Hypothesis seemed much less practical than it does now. Alan Greenspan’s “shocked disbelief ” at the failure of enlightened self-interest underscores the inability of the Efficient Markets Hypothesis to explain the crisis, much less show us how to avoid future crises. After all, the near-collapse of the global financial system hardly looks rational or efficient. On the other hand, the behavioral perspective can’t fully explain the lengthy period of economic growth leading up to the crisis, made possible by highly efficient financial markets and seemingly rational financial innovation.

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Let’s turn to the University of Chicago’s Raghuram Rajan, and his experiences at the influential Jackson Hole Economic Policy Symposium. Every August, the Federal Reserve Bank of Kansas City sponsors this symposium, giving it a special theme. In 2005, the Jackson Hole conference was held in honor of Alan Greenspan’s retirement as the “maestro” of the American economy. Rajan wasn’t intimidated by the symposium’s majestic setting, and with Greenspan himself in the audience, he gave his provocatively titled presentation, “Has Financial Development Made the World Riskier?” His answer: the nature of financial risk has been changed by the new developments in the financial environment.

Money and Government: The Past and Future of Economics
by Robert Skidelsky
Published 13 Nov 2018

Therefore, efficient markets actually depend on participants believing that the market is inefficient and trying to outperform it.14 Secondly, if shares are always correctly priced, bubbles and crises cannot be generated by the market. Systematic market failure – e.g. Alan Greenspan’s ex post explanation of the crash as ‘under-pricing of risk worldwide’ – cannot happen. As Eugene Fama himself put it: ‘I don’t know what a credit bubble means. I don’t even know what a bubble means. These words have become popular. I don’t think they have any meaning.’15 This attitude leached into policy: ‘government officials, starting with Alan Greenspan, were unwilling to burst the bubble precisely because they were unwilling to even judge that it was a bubble’.16 The EMH made the identification of bubbles impossible because it ruled them out a priori.

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Its great advantage was that it bypassed the interminable debates about whether money was exogenous or endogenous, whether one should try to control narrow money or broad money, what the transmission mechanism was from money to prices, etc. All one had to do was deploy old-fashioned bank rate policy plus new-fangled management of expectations. In 1993, Alan Greenspan, Volcker’s successor as Fed Chairman, announced that all monetary targets were to be dropped. The Fed then used openmarket operations to influence the federal funds rate, announcing a desired target for inflation and instituting rule-type behaviours to provide consistent signals to markets. (This became standard practice until 2012, when it adopted an explicit inflation target under Ben Bernanke.)37 The European Central Bank, established in 1997, was also given an inflation target, to be achieved by varying short-term interest rates.

Palo Alto: A History of California, Capitalism, and the World
by Malcolm Harris
Published 14 Feb 2023

Some presidential advisers were surprised to find out just how empty a suit Reagan was, but Anderson and his clique had been with the campaign since the 1976 primary; they weren’t confused about the president because his employers were also their employers. It was Anderson who set up an important meeting at the Palo Alto home of former secretary of labor (and Treasury) George Shultz, who was at that point, in 1978, a Bechtel executive. The group included Hoover economists, future Reagan cabinet member Ed Meese, the one and only Alan Greenspan, and the Bechtels themselves.9 At dinner, Reagan began winning over this group of Nixonites, who didn’t foam at the mouth the way his Goldwatery lead supporters in the Stanford milieu did. They weren’t part of the loser silent majority; these men were more interested in what they had to gain than worried about what they had to lose.

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In the late 1970s, between Reagan presidential campaigns, he initiated a project at Hoover to devise a program for the next decade. The brick-size text was called The United States in the 1980s, and it contained contributions on particular policy subjects written mostly by Hoover area experts, leading with essays on economics by Milton and Rose Friedman (economic freedom) and Alan Greenspan (risk of inflation). Citing anti-government feeling following defeat in Vietnam, the group saw an opportunity to put its spin on the prevailing mood. The whole Reagan agenda is in there: reducing taxes and government spending; cutting regulations, entitlements, and foreign aid; opposing affirmative action; fighting wage pressure from organized labor; increasing market competition in health care; getting tough with the Soviets; letting the CIA off the leash.

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For start-ups like HoTMaiL—bought within 18 months of launch, for an undisclosed amount, reportedly $400–500 million—an acquisition could be just as good as an IPO.48 Investors were happy to finance the feeding frenzy by bidding stock prices up. Microsoft went from under $7 in ’95 to $58 by the end of the decade, keeping Trey Gates the wealthiest man in the world. Yahoo! skyrocketed over $110, a classic example of what the Federal Reserve chair, Alan Greenspan, famously called “irrational exuberance.” Greenspan’s speech came at the end of 1996, during an annual dinner put on by his friends at the American Enterprise Institute. David Packard died earlier that year, but before then he invested heavily in the AEI, leading fundraising for the institution and establishing it as an important part of the right-wing intellectual circuit.49 It was a natural place for Greenspan to address some concerns to the financial elite.

Why Wall Street Matters
by William D. Cohan
Published 27 Feb 2017

Understandably, the Federal Reserve doesn’t want that to happen again, hence the new rules about money-market funds that took effect last year. The problem, as usual, is not the honorable goal of trying to prevent a money-market fund from ever again breaking the buck; the problem is the unintended consequences of trying to make sure that doesn’t happen. Once upon a time, Alan Greenspan, another former Federal Reserve Board chairman, spoke about the Fed’s being an organization that set monetary policy with a minor regulatory function attached to it. Today, the Fed’s monetary function is the minor appendage to its growing regulatory juggernaut. One man, Daniel Tarullo, has become the embodiment of the Fed’s new focus; in the process, he has become the most feared and powerful Washington banking regulator.

A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing
by Burton G. Malkiel
Published 10 Jan 2011

As corporations increasingly used stock options to compensate executives, buying back stock to increase stock prices rather than increasing cash dividends became a more preferred method of providing cash to shareholders. The stock-option holder does not benefit from cash dividends but gains only if the price of the stock goes up. In late 1996, John Campbell and Robert Shiller presented a paper to then Chairman Alan Greenspan of the Federal Reserve Board of Governors showing that the P/E ratio of the market was an excellent predictor of future returns (as was shown in Future Ten-Year Returns at Alternative Initial Price-to-Earnings (P/E) Multiples, 1926–2009). The P/E for the market was about 30 at that time, and the paper suggested that market valuations were dangerously high and that future returns could be negative.

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It is only in retrospect that we know that it was during 1999 and early 2000 when stock prices were “too high.” Again it is true that many observers did recognize that a bubble in real estate prices was inflating during 2006. But such worries were expressed much earlier in the decade, and there were numbers of observers, including Alan Greenspan and Ben Bernanke, former and current chairmen of the Board of Governors of the Federal Reserve System, who vigorously denied that a bubble existed. The issue is not whether prices turned out to be incorrect—they often do. Markets are based on expectations, and prices often turn out to be “incorrect.”

How Will Capitalism End?
by Wolfgang Streeck
Published 8 Nov 2016

These dynamics accelerated after 2001, when the Federal Reserve switched to very low interest rates to prevent an economic slump and the return of high unemployment this implied. In addition to unprecedented profits in the financial sector, privatized Keynesianism sustained a booming economy that became the envy not least of European labour movements. In fact, Alan Greenspan’s policy of easy money supporting the rapidly growing indebtedness of American society was held up as a model by European trade-union leaders, who noted with great excitement that, unlike the European Central Bank, the Federal Reserve was bound by law not just to provide monetary stability but also high levels of employment.

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For an interesting assessment of the applicability of underconsumption theory to post-2008 capitalism, see John Bellamy Foster and Fred Magdoff, The Great Financial Crisis: Causes and Consequences, New York: Monthly Review Press 2009. 33Presumably also because he would have had to declare the substantial income he received from Wall Street firms after his resignation from the Obama administration at the end of 2010. See ‘The Fed, Lawrence Summers, and Money’, New York Times, 11 August 2013. 34The same idea had been put forward in 2005 when Ben Bernanke, soon to follow Alan Greenspan at the Fed, invoked a ‘savings glut’ to account for the failure of the Fed’s ‘flooding the markets with liquidity’ to stimulate investment. Today Summers casually subscribes to the view of Left stagnation theorists that the ‘boom’ of the 1990s and early 2000s was a chimera: ‘Too easy money, too much borrowing, too much wealth.

Planet Ponzi
by Mitch Feierstein
Published 2 Feb 2012

One of the eye-watering aspects of the current crisis is encapsulated in a few simple statistics:23 Number of bankers in jail in the US 0 Number of bankers in jail in the UK 0 Number of bankers in jail elsewhere in Europe 0 Number of bankers in jail in Japan 0 Total number of bankers in jail 0 These data don’t include the imprisonment of Bernie Madoff, because his fraud had no direct connection with the financial crisis (except inasmuch as the failure to catch and jail him earlier reveals extensive flaws in Wall Street’s culture and supervision). And the simple truth‌—‌so howlingly obvious it should hardly need spelling out‌—‌is that very many more bankers should have been jailed for their role in the catastrophe. Don’t take my word for it. Former chairman of the Federal Reserve Alan Greenspan is on the record as saying: There are two fundamental reforms that we need. [One], to get adequate levels of capital [in the banking system] and two, to get far higher levels of enforcement of fraud statutes‌—‌the existing ones, I’m not even talking about new ones. Things were being done which were certainly illegal and clearly criminal in certain cases … Fraud creates very considerable instability in competitive markets.

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JP Morgan, as Madoff’s primary banker, was central to the fraud and “complicit” in it, he said.’31 Let me repeat, I am categorically not alleging that all, or even any, of these suits and claims and settlements revolve around criminality. Nor am I suggesting that any of the fine (and litigious) firms named above have a systemic problem with criminality. What I do say, however, is that the sheer volume of legal activity indicates something crucially significant about the culture that has come into being on Wall Street. Like Alan Greenspan, I consider it inconceivable that the credit crisis of 2008–9 arose without there being extensive deception and criminality. Naturally it’s important that federal regulators, and authorities such as the FHFA, do all they can to recover money where they believe they have the legal scope to do so.

Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money
by Nathaniel Popper
Published 18 May 2015

Fed officials are endowed with a level of power and independence given to almost no other government leaders, and the task of protecting the nation’s currency is entrusted to a specially created agency, the Secret Service, that was only later given the additional responsibility of protecting the life of the president. Perhaps the most famous, if flawed, oracle of the Federal Reserve, former chairman Alan Greenspan, knew that money was something that not only central bankers could create. In a speech in 1996, just as the Cypherpunks were pushing forward with their experiments, Greenspan said that he imagined that the technological revolution could bring back the potential for private money and that it might actually be a good thing: “We could envisage proposals in the near future for issuers of electronic payment obligations, such as stored-value cards or ‘digital cash,’ to set up specialized issuing corporations with strong balance sheets and public credit ratings.”

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But Tor generally routes users to nodes in the same geographic area, suggesting that the other user on Bitcoin’s first day was probably in California. 5He said he’d been testing it heavily: I have elected to use the pronoun “he” to refer to Satoshi, but Satoshi could also be she or they. 6now recorded next to one of his Bitcoin addresses: The address in question was 1AiBYt8XbsdyPAELFpcSwRpu45eb2bArMf. 12Chaum’s effort would rub Hal and others the wrong way: Hal Finney to CYPH, August 22, 1993. 12DigiCash went down with it: Tim Clark, “DigiCash Files Chapter 11,” CNET, November 4, 1998, http://news.cnet.com/2100-1001-217527 .html. 13Hal would calculate the maximum bill: This anecdote was recounted by Hal’s college roommate and later colleague, Yin Shih. 13“The work we are doing here, broadly speaking”: Hal Finney to CYPH, November 15, 1992. CHAPTER 2 16As sociologist Nigel Dodd put it: Nigel Dodd, The Social Life of Money (Princeton, NJ: Princeton University Press, 2014). 17“We could envisage proposals in the near future”: Alan Greenspan, Conference on Electric Money and Banking, United States Treasury, September 19, 1996, http://www.federalreserve.gov/boarddocs/speeches/19960919.htm. 17a British researcher named Adam Back released his plan: Adam Back to CYPH, March 28, 1997. 18a concept called bit gold, was invented by Nick Szabo: Nick Szabo, “Bit Gold,” Unenumerated, December 2005, http://unenumerated.blogspot .co.uk/2005/12/bit-gold.html. 19Another, known as b-money, came from an American named Wei Dai: Wei Dai to CYPH, 1998. 19Hal created his own variant, with a decidedly less sexy name: Hal Finney to CYPH, August 15, 2004. 20The nine-page PDF attached to the e-mail: the current version is available at https://bitcoin.org/bitcoin.pdf. 22modeled after the contest that Adam Back: While this process was modeled on Back’s program, it also relied on the innovations of several other cryptographers and mathematicians, including Ralph Merkle, Stuart Haber, and W.

The Boom: How Fracking Ignited the American Energy Revolution and Changed the World
by Russell Gold
Published 7 Apr 2014

OPEC, the supplier of one in three barrels of oil consumed around the world, said in a report posted on its website in April 2013 that the shale-driven oil boom in the United States was “threatening to drastically reduce America’s oil-import needs.” In 2014 China is expected to pass the United States as the world’s largest importer. In late 2005 the chairman of the Federal Reserve, Alan Greenspan, told Congress that America was running dangerously short of domestic natural gas and warned that rising prices would threaten economic growth. His tutor on the subject was Lee Raymond, then the chairman and chief executive of Exxon Mobil. As it turned out, natural gas prices had a profound impact on the US economy, but not the way that Greenspan predicted.

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For a broad discussion of the macroeconomic and geopolitical implications of rising US crude oil production, please see the Morse publication cited below as well as Michael Levi’s book, especially chapter 3. The OPEC quote about the impact of the shale boom on US imports comes from the Wall Street Journal article “Beijing is Set to Overtake the U.S. as World’s Largest Importer of Oil,” by Benoît Faucon in the April 4, 2013, edition. Alan Greenspan provided testimony to the Congressional Joint Economic Committee on November 3, 2005. Steve Coll, in Private Empire, cited above, provides evidence that Lee Raymond was Greenspan’s tutor. Details on the Nucor upgrader is from an article I wrote in the February 8, 2012, Wall Street Journal titled “Oil and Gas Boom Lifts U.S.

The Age of Entitlement: America Since the Sixties
by Christopher Caldwell
Published 21 Jan 2020

He, too, was an individual brave enough to stand up against the system. For at least two generations, Rand’s thinking would win the loyalty of conservatives, intellectual ones disproportionately. William F. Buckley, Jr., the founder and editor of National Review, was impressed with Rand, but he described future Treasury secretary Alan Greenspan as having been “absolutely bewitched” by her in the early 1950s, when he attended her salons at 36 East 36th Street in New York. Decades later, the future Republican speaker of the House, Paul Ryan, was similarly smitten as a high school student in Wisconsin. “I give out Atlas Shrugged as Christmas presents, and I make all my interns read it,” he would later say.

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They were mostly corporate executives, like Lee Iacocca and Jack Welch. One was a New York real estate developer who described his calling as “the art of the deal.” And some were bankers. Time magazine ran a notorious cover in February 1999 describing Treasury secretary Robert Rubin, his assistant, Lawrence Summers, and Federal Reserve chairman Alan Greenspan as the “Committee to Save the World.” Society took on a Roman aspect. The very rich were held to be cool (Steve Jobs), prophetic (George Soros), or saintly (Warren Buffett). Wealth has never been without its appeal and its power. But it was striking that, more than any generation for a century, and in sharp contrast to its own declared youthful values, the Baby Boom generation revered wealth.

System Error: Where Big Tech Went Wrong and How We Can Reboot
by Rob Reich , Mehran Sahami and Jeremy M. Weinstein
Published 6 Sep 2021

With assurances from the leading federal regulatory agency that its mission was dedicated to private competition and deregulation, a Wild West–style gold rush in Silicon Valley was on. As one measure of just how quickly the private market kicked into gear, it was only ten months after the Telecommunications Act was signed that Federal Reserve Chairman Alan Greenspan first warned about “irrational exuberance” in the stock market. The decision to allow internet innovators to operate outside the public utility regulatory framework that governed telephone companies was the accelerant that sped up our arrival at the present moment. Telephone services, cable, and data are often bundled, and the distinctions among them are no longer relevant.

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From Stiglitz’s perspective, business leaders would prefer to do anything other than “fundamentally question the rules of the game—or even alter their own behavior to reduce the harm of the existing distorted, inefficient, and unfair rules.” The evidence of the failures of self-regulation is all around us. The enthusiasm for deregulation in the financial sector, which began in the 1970s, brought us the Great Recession of 2009. Even one of the world’s greatest enthusiasts for deregulation, former Federal Reserve chairman Alan Greenspan, has admitted the error of his ways. A naive belief in the self-healing power of markets stopped regulators from intervening even as complex financial innovations and greater market concentration created ever-increasing systemic risk—until it was too late. If we want to effectively govern new technologies, we must demand more than corporate CEOs seeing the light and pledging better behavior.

Loonshots: How to Nurture the Crazy Ideas That Win Wars, Cure Diseases, and Transform Industries
by Safi Bahcall
Published 19 Mar 2019

All people are different. All teams are different. Yet some rules that describe what happens when many people come together to accomplish tasks seem to work pretty well. The rules of efficient markets, invisible hands, and so on. Those have been established and tested beyond any doubt, right? Well, sort of. This is Alan Greenspan, the economist who chaired the US Federal Reserve for nineteen years, writing in the Financial Times in 2011: Today’s competitive markets, whether we seek to recognise it or not, are driven by an international version of Adam Smith’s “invisible hand” that is unredeemably opaque. With notably rare exceptions (2008, for example), the global “invisible hand” has created relatively stable exchange rates, interest rates, prices, and wage rates.

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INTERLUDE both emergent properties: In The Self-Organizing Economy, which describes connections between economics and the science of emergence, Paul Krugman, a Nobel laureate in economics, noted, “When Adam Smith wrote of the way that markets lead their participants, ‘as if by an invisible hand,’ to outcomes that nobody intended, what was he describing but an emergent property?” Reacting to Greenspan’s comment, Krugman wrote in the New York Times that he was “left speechless” by Greenspan’s lack of self-awareness of his role in causing the crisis. “Alan Greenspan continues his efforts to cement his reputation as the worst ex-Fed chairman in history” (March 30, 2011). explode into a wildfire: The story of why markets will always crash is a little more complicated, but it involves the same underlying principle of two competing forces. prized his work on ethics: Smith wrote, “All for ourselves and nothing for other people is a vile maxim” (cited in McLean, ix).

The Code: Silicon Valley and the Remaking of America
by Margaret O'Mara
Published 8 Jul 2019

“In this new economy, the strategic resources are no longer just the ones that come out of the ground, like oil and wheat and coal, but they are ideas and information that come out of our mind.”31 One month later, Sculley found himself sitting at the right hand of Hillary Clinton at the new President’s first State of the Union address. Sitting on her left was another former Republican, Fed chief Alan Greenspan. The choice spoke volumes about the new economic order and the Clintons’ aspirations to reinvent the business-government relationship: Silicon Valley on one side, Wall Street on the other, and an extraordinarily powerful First Lady in between. Only days after John Sculley enjoyed the best seat in the house at the 1993 State of the Union, Clinton and Gore flew west to bask in Silicon Valley midwinter sunshine and engage in some heady talk about high technology.

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The early 1990s recession ended; the pain of post–Cold War defense cuts faded. The Clinton economic program cut government spending and hacked away at the deficit, recapitalizing banks. Telecom deregulation and NAFTA opened new markets and lowered labor costs, increasing corporate profits. Bucking tradition and economic laws of gravity, Fed Chair Alan Greenspan kept interest rates low, creating incentives for investors and individuals alike to borrow, borrow, borrow. While money sloshed around the markets, the Valley’s PR mavens filled the business pages with stories about Internet companies and the whiz kids who ran them. As they read about the latest generation of endearing geeks—Andreessen, Yang, AOL’s Steve Case, and others—Wall Street investors got Internet fever.

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Michael McCarthy, “Brand Innovators: Virtual Reality,” Adweek, June 14, 1999, https://www.adweek.com/brand-marketing/brand-innovators-virtual-reality-31935/, archived at https://perma.cc/JC4A-6Z2W. 24. Bart Ziegler, “Internet Bulls Get On Line for Performance Systems,” The Wall Street Journal, March 28, 1995, C1; Joseph E. Stiglitz, “The Roaring Nineties,” The Atlantic 290, no. 3 (October 2002): 75–89; Sebastian Mallaby, The Man Who Knew: The Life and Times of Alan Greenspan (New York: Bloomsbury, 2016). 25. David Einstein, “Netscape Mania Sends Stock Soaring,” The San Francisco Chronicle, August 10, 1995, D1; Lewis, The New New Thing, 85. 26. Rory J. O’Connor, “Microsoft Previews On-Line Service,” San Jose Mercury News, November 15, 1994, D1. 27. Saul Hansell, “Flights of Fancy in Internet Stocks,” The New York Times, November 22, 1998, B7; Patrick McGeehan, “Research Redux: Morgan Prints a Sleeper,” The Wall Street Journal, March 20, 1996, C1. 28.

Days of Fire: Bush and Cheney in the White House
by Peter Baker
Published 21 Oct 2013

“Actually,” Rumsfeld interjected, “before we were interrupted, I was going to suggest you as SecDef.” Cheney did not seem surprised. “The president-elect had the same idea,” he said, attributing the idea to Bush. But Rumsfeld was the choice. To some around Washington, it seemed as if the old gang was getting back together. Alan Greenspan, the chairman of the Federal Reserve, thought it was like the second coming of the Ford administration, where he had worked along with Cheney, Rumsfeld, and O’Neill. Prince Bandar bin Sultan, the longtime ambassador from Saudi Arabia and man-about-town in Washington, thought it was more like the return of the first Bush administration, when he worked with Cheney and Powell to organize the Gulf War.

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They’ve taken control of my food supply. So I’m trying to do all those things you need to do to be a responsible individual with a history of coronary artery disease and somebody who’s sixty years old. So far, so good.” That afternoon, he felt another twinge, but went to a birthday party for Alan Greenspan and did not call his doctor until the next morning, when the pain returned more sharply while he was dressing. Even then, he headed to the White House for meetings without mentioning the pain to anyone. By afternoon, it had worsened, and he was rushed to George Washington University Hospital, where doctors operated and found his artery clogged again.

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And never far from his mind was his father’s read-my-lips reversal. That was one mistake he would not repeat. Secretary of the Treasury Paul O’Neill had urged him to consider triggers that would scale back the tax cuts if the government’s fiscal situation worsened. But Bush resisted. “I won’t negotiate with myself,” he said. Alan Greenspan, the Federal Reserve chief who had collaborated with O’Neill on the triggers idea, had assumed Bush’s unyielding stance was a bargaining position as with any White House. “I did not foresee how different the Bush White House would be,” he said later. So when Nick Calio, Bush’s chief lobbyist on Capitol Hill, came to the president and reported they could get a deal that fell short of $1.6 trillion, Bush sent him back with a firm no.

The Oil Age Is Over: What to Expect as the World Runs Out of Cheap Oil, 2005-2050
by Matt Savinar
Published 2 Jan 2004

The Columbian military has used US military hardware against native Columbian peoples who have opposed oil and gas exploration by Occidental and Shell on their lands.115 67 The Oil Age is Over 66. I'm a Baby Boomer. What can I expect in the years to come? You can expect the evaporation of any entitlement programs such as Social Security and Medicare in addition to being despised by your grandchildren's generation. A. Dissolution of Entitlement Programs If Alan Greenspan's announcement in March 2004 did not make it perfectly clear, let me do so: you can kiss Social Security and Medicare goodbye. If that is too blunt for you, consider economist Dr. John Attarian's more nuanced explanation of how oil depletion will affect entitlement programs: The Congressional Budget Office projects that spending for Social Security, Medicare, and Medicaid will rise from 7.8 percent of GDP in 2001 to 14.7 percent by 2030.

How the Other Half Banks: Exclusion, Exploitation, and the Threat to Democracy
by Mehrsa Baradaran
Published 5 Oct 2015

And they frankly own the place.”121 Senator Elizabeth Warren has also repeatedly voiced outrage at the coziness between Washington and Wall Street, repeating the phrase, “The game is rigged.”122 Demands are rising across the political spectrum, including from Joseph Stiglitz, Simon Johnson, Paul Krugman, Richard Fisher, and even the king of deregulation, Alan Greenspan, for breaking up the banks.123 We cannot have a banking system that is so large and powerful that it relies on government bailouts. Their size leads to bailouts, and the promise of bailouts in turn leads to more risk-taking, a cycle some have called a “doom loop.”124 If the deep-seated fears of concentrated bank power had not been pacified over the last several decades, they would surely have intensified during the recent government bailout of the banking industry.

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When President Obama proposed a bill in Congress that allowed judges to modify home mortgages so borrowers could avoid foreclosure, the banks swiftly killed the bill and refused to even negotiate with senators over some of its provisions.125 The banking sector hired more lobbyists and gained unprecedented access to Washington insiders, leading a senior Obama advisor to remark, “You would hope after American taxpayers stepped in to save these companies from a disaster of their own making they would be deploying their army of lobbyists to strengthen and not thwart financial reform.”126 According to a congressional staffer, the path to reform looked like “an orchestrated, well-funded effort by banks to manipulate our legislation and leave no fingerprints.”127 Banks fought most attempts at major banking reform, arguing that any reforms that lowered bank profits would lead to a longer crisis and recovery period. The political influence was not gained just through donations. An ideological capture of key policymakers—Larry Summers, Robert Rubin, Alan Greenspan, Timothy Geithner, Henry Paulson, and others—who had spent their careers marinating in the industry, working in “captured” regulatory agencies, or captivated by extreme laissez-faire ideology, also took place during this era. Agencies also went along with or even pushed deregulation. The OCC and the OTS, agencies funded by their regulated entities (their customers), courted them through lax regulations.

The Black Box Society: The Secret Algorithms That Control Money and Information
by Frank Pasquale
Published 17 Nov 2014

“Unknown unknowns,” “black swans,” and “deep secrets” are popular catchphrases for our many areas of social blankness.3 There is even an emerging field of “agnotology” that studies the “structural production of ignorance, its diverse causes and conformations, whether brought about by neglect, forgetfulness, myopia, extinction, secrecy, or suppression.” 4 2 THE BLACK BOX SOCIETY Gaps in knowledge, putative and real, have powerful implications, as do the uses that are made of them. Alan Greenspan, once the most powerful central banker in the world, claimed that today’s markets are driven by an “unredeemably opaque” version of Adam Smith’s “invisible hand,” and that no one (including regulators) can ever get “more than a glimpse at the internal workings of the simplest of modern financial systems.”

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Pozen, “Deep Secrecy,” Stanford Law Review 62 (2010) 257–340. 222 NOTES TO PAGES 1–6 4. Robert N. Proctor, “Agnotology: A Missing Term to Describe the Cultural Production of Ignorance (and Its Study),” in Agnotology: The Making and Unmaking of Ignorance, ed. Robert N. Proctor and Londa N. Schiebinger (Stanford, CA: Stanford University Press, 2008), 3. 5. Alan Greenspan, “Dodd-Frank Fails to Meet Test of Our Times,” Financial Times, March 29, 2011; Friedrich A. Hayek, “The Use of Knowledge in Society,” American Economics Review 35 (1945): 519–530. Of course, as Richard Bronk observes, “Hayek’s analysis falls short by ignoring the role of dominant narratives, analytical monocultures, self-reinforcing emotions, feedback loops, information asymmetries and market power in distorting the wisdom of prices.”

Against the Gods: The Remarkable Story of Risk
by Peter L. Bernstein
Published 23 Aug 1996

Financial institutions themselves are vulnerable to volatility in interest rates and exchange rates; to the extent that they can hedge that volatility, they can extend more credit to a wider universe of deserving borrowers. Society stands to benefit from such an environment. In November 1994, Alan Greenspan, Chairman of the Federal Reserve Board, declared: There are some who would argue that the role of the bank supervisor is to minimize or even eliminate bank failure; but this view is mistaken, in my judgment. The willingness to take risk is essential to the growth of a free market economy....

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*An excellent review of this matter appears in "The Triumph of Indexing," a booklet published by the Vanguard Group of mutual funds in May 1995. This controversial subject receives more detailed treatment later in this chapter. *In a speech to the National Association of Realtors in May 1995, none other than the Chairman of the Federal Reserve Board, Alan Greenspan, confirmed the piggy bank metaphor: "It is hard to overestimate the importance of house price trends for consumer psyches and behavior.... Consumers view their home equity as a cushion or security blanket against the possibility of future hard times." As a consequence of the growth in borrowing in the form of home equity loans, home equity has shrunk from 73% of home value in 1983 to around 55% at this writing, provoking what the July 10, 1995, issue of Business Week describes as "a major deterrent to buoyant spending."

Liberalism at Large: The World According to the Economist
by Alex Zevin
Published 12 Nov 2019

‘Time to Choose’, 31 October 1992; ‘Getting His Way’, 7 November 1992. 8. Globalization and Its Contents 1.As Federal Reserve chairman, Alan Greenspan was the most eloquent spokesperson for the new economy, which his loose money policies from early 1995 to mid-1999 helped sustain – boosting stock market valuations, and creating a ‘wealth effect’ that fuelled corporate and household borrowing. The Economist lauded him – ‘Man of the New Year’, 7 January 1989; ‘Prosperity Not Politics’, 27 August 1995; ‘Almighty Alan Greenspan’, 8 January 2008 – with one short hiccup along the way, when it suggested he might honourably step down to make way for someone younger in ‘A Bias towards Change’, 26 April 2003. 2.Philip Augar, Chasing Alpha: How Reckless Growth and Unchecked Ambition Ruined the City’s Golden Decade, London 2009, pp. 119, 105, 34, 10–11; Lucinda Maer and Nida Broughton (2012), ‘Financial Services: Contribution to the UK Economy’, House of Commons Standard Note, SN/EP/06193. 3.Brian Groom, ‘Manufacturers Remain Divided over Legacy of Thatcher Policies’, Financial Times, 12 April 2013. 4.Augar, Chasing Alpha, pp. 10–11.

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‘Special Report: American Politics’, 3 January 2004; John Mickleth-wait and Adrian Wooldridge, The Right Nation: Why America Is Different, London 2004. 78.That enthusiasm endured: in 2018, Wooldridge published Capitalism in America, albeit with a new writing partner, former chairman of the Federal Reserve, Alan Greenspan. 79.Micklethwait and Wooldridge, Future Perfect, pp. xxii–xxiii, 232. 80.Ibid., pp. 73, 61, 32, 90, 80, 43. 81.‘Asked where he wants to be in five years, Espinosa [a young engineer at a GE plastics plant in Cartagena, Spain] points at the back of the plant manager and says “in his office”.

Utopia or Bust: A Guide to the Present Crisis
by Benjamin Kunkel
Published 11 Mar 2014

We were somewhere in the middle of Harvey’s closely argued pages, which pay special attention to the role of property markets in capitalist crises, when the investment bank Bear Stearns collapsed from misbegotten investments in mortgage-backed securities. I can’t say the complete financial panic that broke out six months later didn’t surprise Chad and me, but we were less taken aback than, for example, Alan Greenspan, former chairman of the Federal Reserve, who admitted before a congressional hearing to being “shocked” to discover a “flaw in the model that I perceived as the critical functioning structure of how the world works.” The five years since 2008 have confirmed the bafflement of many other economists in the face of a crisis more successfully anticipated by a number of Marxists outside the discipline than by all but a few of its credentialed members.

Automation and the Future of Work
by Aaron Benanav
Published 3 Nov 2020

In an effort to revive stagnant economies, governments spent almost a half century imposing punishing austerity on their populations, underfunding schools, hospitals, public transportation networks, and welfare programs. At the same time, in a world of ultralow interest rates, governments, businesses, and households took on record quantities of debt. They did not do so to invest in our digital future, as former Federal Reserve chairman Alan Greenspan argued they would in the midst of the late-1990s tech bubble. Instead, firms mortgaged their assets to pay off shareholders, while poorer households borrowed in an effort to make ends meet. These trends have left the world economy in an incredibly poor position as it faces one of its greatest challenges: the COVID-19 recession.

Misbehaving: The Making of Behavioral Economics
by Richard H. Thaler
Published 10 May 2015

Similarly, if you believe that everyone will save just the right amount for retirement, as any Econ would do, and you conclude from this analysis that there is no reason to try to help people save (say, by creating pension plans), then you are passing up the chance to make a lot of people better off. And, if you believe that financial bubbles are theoretically impossible, and you are a central banker, then you can make serious mistakes—as Alan Greenspan, to his credit, has admitted happened to him. We don’t have to stop inventing abstract models that describe the behavior of imaginary Econs. We do, however, have to stop assuming that those models are accurate descriptions of behavior, and stop basing policy decisions on such flawed analyses.

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So there appears to be some predictive power stemming from Shiller’s long-term price/earnings ratio. Which brings us to that “but.” The predictive power is not very precise. In 1996 Shiller and his collaborator John Campbell gave a briefing to the Federal Reserve Board warning that prices seemed dangerously high. This briefing led Alan Greenspan, then the Fed’s chairman, to give a speech in which he asked, in his usual oblique way, how one could know if investors had become “irrationally exuberant.” Bob later borrowed that phrase for the title of his best-selling book, which was fortuitously published in 2000 just as the market began its slide down.

Making Globalization Work
by Joseph E. Stiglitz
Published 16 Sep 2006

With loans, the risk is of default, with all of its consequences; lenders can reduce that risk simply by lending less. If they perceive a high likelihood of a bail-out, they lend more than they otherwise would. Lending markets are also characterized by, in the famous words of former chairman of the U.S. Federal Reserve Bank Alan Greenspan, “irrational exuberance,” as well as irrational pessimism. Lenders rush into a market in a mood of optimism, and rush out when the mood changes. Markets move in fads and fashions, and it is hard to resist joining the latest fad, especially when international financial organizations and the U.S.

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GLOBAL IMBALANCES AND GLOBAL FINANCIAL INSTITUTIONS The world is relieved that there has not been a repeat of the crises and protests that marked the end of the last century and the beginning of the twenty-first. The fact that there has not been a crisis has lulled some into a sense of complacency. I remember in the late 1990s, when there had not been an economic recession in America for longer than the usual four years that separates one recession from the next, even Alan Greenspan, chairman of the U.S. Federal Reserve Board, seemed to boast we had entered into a new era. New technology had led to a new economy in which recessions were a thing of the past. But no sooner had these ideas become widely accepted than the U.S. economy sank into the recession of 2001. So, too, today in the global economy: the fact that there has not been a crisis for several years does not mean all is well with the global economy.

A Man for All Markets
by Edward O. Thorp
Published 15 Nov 2016

This allowed big institutions to take on more risk with less regulation through the trading of massive amounts of unregulated derivative securities. When Commodity Futures Trading Commission chairperson (1996–99) Brooksley Born wanted to regulate the derivatives that would later be a major cause of disaster, the PBS program Frontline detailed how she was blocked in 1998 by the triumvirate of Federal Reserve chairman Alan Greenspan, US Treasury Secretary Robert Rubin, and Deputy US Treasury Secretary Lawrence Summers, all of whom would later advise government on the 2008–09 bailout. Nassim Taleb asked why, after a driver crashes his school bus, killing and injuring his passengers, he should be put in charge of another bus and asked to set up new safety rules.

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This model has worked well for decades, is easy to regulate, mostly by the exchanges themselves, and has had few problems. Institutions that are “too big to fail,” and have a significant risk of doing so, should be broken into pieces that are small enough to fail without jeopardizing the financial system. As Alan Greenspan finally admitted, “Too big to fail is too big.” This is a catchy sound bite but it misstates the real problem. It’s not the mere size of an institution that creates the danger. It is the size of the risk to the financial system from a failure. As Paul Krugman points out, Canada’s financial system was as concentrated in big institutions as was that of the United States yet Canada didn’t have massive mortgage defaults, collapsing financial institutions, and giant bailouts.

Efficiently Inefficient: How Smart Money Invests and Market Prices Are Determined
by Lasse Heje Pedersen
Published 12 Apr 2015

If central banks generally try to dampen exchange-rate swings, then exchange rates move only slowly toward their new fundamentals, creating trends in currency markets that macro traders can exploit as discussed below in section 11.4. Example: The Greenspan Briefcase Indicator Many macro traders were religiously following Alan Greenspan when he was the chairman of the Federal Reserve. Perhaps for this reason, he made intentionally ambiguous statements using language that was dubbed “Fedspeak.” (Chairman Bernanke, in contrast, believed that transparency is more helpful.) Traders monitored Greenspan’s every move, especially on the days when the Federal Open Market Committee (FOMC) would decide on the new interest rate target.

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So at the height of the boom, the amount of credit involved is at its maximum and a reversal precipitates forced liquidation, depressing real estate values. Not all bubbles involve the extension of credit; some are based on equity leveraging. The best examples are the conglomerate boom of the late 1960s and the Internet bubble of the late 1990s. When Alan Greenspan spoke about irrational exuberance in 1996, he misrepresented bubbles. When I see a bubble forming I rush in to buy, adding fuel to the fire. That is not irrational. And that is why we need regulators to counteract the market when a bubble is threatening to grow too big; we cannot rely on market participants, however well informed and rational they are.

Virtual Competition
by Ariel Ezrachi and Maurice E. Stucke
Published 30 Nov 2016

Thus the rallying cry in some circles, as the next chapter explores, will be for a light regulatory hand (if any). 3 Light Touch Antitrust I N 1998, a banking merger wave was increasing substantially the measures of U.S. national concentration. Many financial institutions were falling into fewer hands. Alan Greenspan, chairman of the Federal Reserve System, told the U.S. Senate not to worry. The antitrust thinking over bigness had evolved: In the 1970s and 1980s, there was a significant shift in emphasis from a relatively deterministic antitrust enforcement policy to one based on the belief (under the aegis of the so-called Chicago School) that those market imperfections that are not the result of government subsidies, quotas, or franchises would be assuaged by heightened competition.

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“A Web Marketing System with Automatic Pricing,” Computer Networks 33 (2000): 775–78; L. M. Minga, Y. Q. Fend, and Y. J. Li, “Dynamic Pricing: ECommerce—Oriented Price Setting Algorithm,” Proceedings of the 2nd International Conference on Machine Learning and Cybernetics, Xi’an, China, 2003, vol. 2. 82. See Mehra, “Antitrust and the Robo-Seller.” 3 • Light Touch Antitrust 1. Alan Greenspan, “The Effects of Mergers (Testimony before the Committee on the Judiciary, U.S. Senate),” Federal Reserve Bulletin, 84 (June 16, 1998): 643, 646, at 5. 2. Note, however, differences between the EU and US with respect to abuse of dominance. The European Commission has taken a rather critical look at some activities by dominant technology companies.

Narrative Economics: How Stories Go Viral and Drive Major Economic Events
by Robert J. Shiller
Published 14 Oct 2019

The likely interpretation is that the contagion rate for housing market narratives had decreased, and that indeed the decline in home prices could be viewed as the end of an epidemic. What were the narratives in spring 2005? ProQuest finds 246 stories with the phrase housing bubble from March to May 2005, before the cover stories in the Economist and other places. One of these stories included a statement from Alan Greenspan, who said that he saw “a little froth” and an “unsustainable underlying pattern” in the housing market. This statement was then compared with his “irrational exuberance” speech about the stock market in December 1996. Between 2005 and 2007, there were 169 news stories with both Greenspan and froth in them.

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See also economic fluctuations butterfly effect, 299–300 buy-and-hold strategy, xiii “Buy Now Campaign” during Great Depression, 255 Callahan, Charlene, 281 Canada, National Dream, 151; Bank of Canada, 156 Čapek, Karel, 181–82, 203 Capital in the Twenty-First Century (Piketty), 150, 210–11 capitalism: Bitcoin narrative and, 87; triumphant narrative of, 29 Capper, Arthur, 249 The Captive Mind (Milosz), 57 Carroll, Lewis, 188 Case, Karl, 216, 226, 285 Case-Shiller home price index, 216, 222 Cass, David, 74 Cassel, Gustav, 188 causality between narratives and events, 71–74; controlled experiments and, 72–73, 77–79; vs. correlation, 286; direction of, 71, 72–74; economists’ presumption about, 73, 76–77; flashbulb memory and, 80; for recessions and depressions in US, 112. See also self-fulfilling prophecies in economics Cawelti, John G., 16 celebrities: adding human interest to narratives, xii, 100–102, 153; Alan Greenspan as, 227; American Dream narrative and, 153; in Bitcoin-related stories, 7–8, 92; of Bloomsbury group, 26; changed in mutated narrative, 108–9; economic events affected by colorful phrases of, 75–76; forgotten or discredited, 110; Franklin Roosevelt as, 128; J. P. Morgan as, 115, 117–18; Keynes as, 25–26; not usually the inventors of narratives, 72; Oliver Wendell Holmes, Jr., as, 127; preference for one’s country or ethnic group, 102; quotes associated with, 102; Reagan’s free-market revolution and, xii; Reagan’s supply-side rhetoric and, 51; shoeshine boy narrative and, 236–37; substituted as originator of a quote, 102; substituted for different target audience, 101; substituted to increase contagion, xii; Trump as, xii; Virginia Woolf as, 26; William Jennings Bryan as, 168 Centennial Exhibition of 1876, 177 central bank: end of wage-price spiral narrative and, 261; inflation targeting by, 261, 262; words and stories that accompany actions of, xvi.

The Little Book of Hedge Funds
by Anthony Scaramucci
Published 30 Apr 2012

For many years shorting was the key ingredient to his success, that is—until the tech bubble burst. It was 2000. New Year’s Eve. As the ball was about to drop in Times Square, cynics prophesized that the new millennium would usher in a technological crisis so catastrophic that it would rival Noah’s devastating flood. So serious was this supposed crisis that Federal Reserve Chairman Alan Greenspan spent New Year’s Eve in a government crisis center. Yet, Dick Clark rang in 2000 without the smallest glitch. However, the true Y2K crisis affected the long/short equity managers, many of whom were long low P/E stocks and short high P/E Internet stocks. Robertson was one of those short selling managers.

The View From Flyover Country: Dispatches From the Forgotten America
by Sarah Kendzior
Published 24 Apr 2015

If you go twenty-one consecutive days without complaining or switching the bracelets, you are rewarded with a Certificate of Happiness. “Our words indicate our thoughts,” the certificate says. “Our thoughts create our world.” In an America built on the reinvention of reality, critical words make people uneasy—and so do those who speak them. In 1996, Alan Greenspan famously chided the financial community for “irrational exuberance.” They ignored him, and America became a bubble economy—housing, credit, technology, higher education. Those who warned of collapse were derided and dismissed: they were only complaining. When the bubbles popped, and the jobs disappeared, and the debt soared, and the desperation hit, Americans were told to stay positive.

The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance
by Ron Chernow
Published 1 Jan 1990

Phelan consulted mostly with William Schreyer of Merrill Lynch and John Gutfreund of Salomon Brothers—not with Morgan Stanley—reflecting the new importance of trading and retail houses, rank outsiders to the club in 1929. The Federal Reserve moved with a dispatch that left no doubt as to its resolve. On October 20, Alan Greenspan issued a tersely effective statement affirming the Fed’s “readiness to serve as a source of liquidity to support the economic and financial system.”17 The Fed bought dollars and engineered a sharp drop in interest rates. E. Gerald Corrigan, president of the New York Fed, personally pleaded with banks to continue lending to sound securities firms.

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Carter Bacot initiated the Irving raid because he feared his own bank would be swallowed by another firm. In their gorgeous art deco headquarters at 1 Wall Street, Irving executives first scoffed at the bid, sure the Fed would never countenance a hostile bank takeover. Gleacher and Cohen correctly predicted that Fed chairman Alan Greenspan would break the precedent. The Bank of New York stalked Irving with lawsuits, proxy fights, and strident exchanges of press releases. After the Bank of New York won, Gleacher quickly threw fear across the economic landscape, telling the press the hostile fight was “a precursor of things to come.”21 The Bank of New York had promised to pay for the takeover through normal attrition.

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Like other banks, it tried to scramble into so many investment bank activities that Congress would have to rubber-stamp the marketplace reality. Lew Preston also believed in making an intellectual case for change, and in 1984 the bank produced a treatise called Rethinking Glass-Steagall. One patron was Alan Greenspan, then a Morgan director, who followed Paul Volcker as Fed chairman. “As a director, Greenspan was very instrumental in getting that document out,” said a Morgan insider. Lew Preston knew that after Rule 415, straight blue-chip underwriting was a less lucrative auction business. The Morgan bank wanted to underwrite corporate bonds mainly to offer customers a full line of financial services.

Success and Luck: Good Fortune and the Myth of Meritocracy
by Robert H. Frank
Published 31 Mar 2016

I was disappointed, but not surprised, when Ned left to join the University of Michigan faculty the following year. From there, he went on to various high policy positions in Washington. As a member of the Board of Governors of the Federal Reserve, he is most remembered for his sharply worded 2002 memo urging Fed chairman Alan Greenspan to take action against the strengthening housing bubble. 9. Watts summarizes the Music Lab experiment in detail in Everything Is Obvious. 10. Brett Martin, “Vince Gilligan: Kingpin of the Year 2013,” GQ, November 13, 2013, http://www.gq.com/story/vince-gilligan-men-of-the-year-kingpin. 11.

The Corporation: The Pathological Pursuit of Profit and Power
by Joel Bakan
Published 1 Jan 2003

Especially in high-technology companies, where stock options are widely used to compensate employees, failure to account for them unduly inflates reported earnings, sometimes by hundreds of millions of dollars. Yet, despite criticism of the practice by investor groups, accounting bodies, and the likes of Alan Greenspan and Warren Buffett, the federal government seems reluctant to stop it. Why? Likely because powerful business interests unduly influence what government does. True, many large companies- Coca-Cola, General Electric, Home Depot, Dow Chemical Company, and General Motors-now voluntarily count stock options as compensation expenses, but these are not companies that make significant use of the practice .

Masters of Mankind
by Noam Chomsky
Published 1 Sep 2014

This has all happened under the impact of the kind of fanatic religious ideology called neoclassical economics—hypotheses that have no theoretical grounds and no empirical support but are very attractive because you can prove theorems if you adopt them: the efficient market hypothesis, rational expectations hypothesis, and so on. The spread of these ideologies, which is very attractive to concentrated wealth and privilege, hence their success, was epitomized in Alan Greenspan, who at least had the decency to say it was all wrong when it collapsed.4 I don’t think there has ever been a collapse of an intellectual edifice comparable to this in history—at least, I can’t remember one. Interestingly, it has no effect. It just continues. Which tells you that somehow it’s serviceable to power systems.

Last Best Hope: America in Crisis and Renewal
by George Packer
Published 14 Jun 2021

The inequality of sacrifice in the global war on terror was almost too normal to bear comment. But this grand elite failure seeded cynicism in the young downscale generation. The financial crisis of 2008, and the Great Recession that followed, had a similar effect on the home front. The guilty parties were elites—bankers, traders, regulators, and policymakers. Alan Greenspan, the Federal Reserve chairman and an Ayn Rand fan, admitted that the crisis undermined his faith in the narrative of Free America. But those who did the suffering were lower down the class structure: middle-class Americans whose wealth was sunk in a house that lost half its value and a retirement fund that melted away; working-class Americans thrown into poverty by a pink slip.

The Right to Earn a Living: Economic Freedom and the Law
by Timothy Sandefur
Published 16 Aug 2010

So to limit it would in our judgment emasculate the Act; would permit just such consolidations as it was designed to prevent.67 In short, by anticipating and meeting the needs of customers, providing quality aluminum at the lowest possible cost, ALCOA had tried to “perpetuate its hold upon the ingot market” and violated the law.68 This decision warranted Alan Greenspan’s indignant comment years later that ALCOA was “condemned for being too successful, too efficient, and too good a competitor.” The antitrust laws, he wrote, “have led to the condemnation of productive and efficient members of our society because they are productive and efficient.”69 Federal courts eventually repudiated Hand’s view that merely serving customers well can make a business into a monopoly,70 deciding instead that antitrust laws “protect competition, not competitors.”71 Yet some prominent scholars have criticized this new approach72—and worse, some state courts have not followed the federal courts’ lead.

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Armentano, “Efficiency, Liberty, and Antitrust Policy,” in Economic Liberties and the Judiciary, ed. James. A. Dorn and Henry G. Manne (Washington: Cato Institute, 1987), pp. 309–16. 64. United States v. Aluminum Co. of America, 148 F.2d 416 (2d Cir. 1945). 65. Ibid. at 430–31. 66. Ibid. at 429. 67. Ibid. at 431. 68. Ibid. at 432. 69. Alan Greenspan, “Antitrust,” in Capitalism: The Unknown Ideal, ed. Ayn Rand (New York: New American Library, 1967), p. 71. 70. Olympia Equipment Leasing Co. v. Western Union Telegraph Co., 797 F.2d 370, 375–76 (7th Cir. 1986); and United States v. Syufy Enterprises, 903 F.2d 659, 668 (9th Cir. 1990). 71. Syufy Enterprises, 903 F.2d at 668 (emphasis in original). 72.

From Counterculture to Cyberculture: Stewart Brand, the Whole Earth Network, and the Rise of Digital Utopianism
by Fred Turner
Published 31 Aug 2006

New, more entrepreneurial forms of corporate organization, rapid investment in high technology, and the ability to corral the intangible knowledge and skills of employees—all seemingly Wired [ 215 ] made possible by the suddenly ubiquitous computer and communication networks—were transforming America and perhaps even bringing an end to the business cycle itself. In 1999 even the exceptionally sober-minded chairman of the Federal Reserve, Alan Greenspan, had come on board. With his inimitable diction, he explained to an audience of bankers in Chicago that “a perceptible quickening in the pace at which technological innovations are applied argues for the hypothesis that the recent acceleration in labor productivity is not just a cyclical phenomenon or a statistical aberration, but reflects, at least in part, a more deep-seated, still developing, shift in our economic landscape.”16 This vision of a New Economy was accompanied by an ongoing swing to the right in American corporate and political life.

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For a review and analysis of the literature on this issue in the late 1980s and early 1990s, see Brynjolfsson, “Productivity Paradox of Information Technology”; Gordon, “Does the ‘New Economy’ Measure Up?” 50, 57. 16. Shiller, Irrational Exuberance, 20 –21, quoted in Thrift, “Romance Not the Finance Makes Business Worth Pursuing,” 426; Alan Greenspan, “The American Economy in a World Context,” at the 35th Annual Conference on Bank Structure and Competition, Federal Reserve Bank of Chicago, May 6, 1999, available at http://www.federalreserve.gov/ board-docs/speeches/1999/19990506.htm, quoted in Gordon, “Does the ‘New Economy’ Measure Up?” 49. 17.

European Spring: Why Our Economies and Politics Are in a Mess - and How to Put Them Right
by Philippe Legrain
Published 22 Apr 2014

If enough people bet the same way – and banks continue lending more to them so that they can go on raising their stakes – their mistakes can be self-validating for years before fundamentals finally intrude and prices correct. In the bubble years, several false ideas seemed to justify investors’ irrational exuberance: the mistaken belief that house prices in America and elsewhere couldn’t fall; the absurd notion that supposedly God-like policymakers such as US Federal Reserve chairman Alan Greenspan, UK finance minister Gordon Brown and European Central Bank (ECB) President Jean-Claude Trichet had abolished the age-old cycle of boom and bust50; the delusion that financial crises didn’t happen in advanced economies; and the misconception that all government debt was safe. All of that seemed to justify Western banks taking ever greater risks with ever more debt – and thus with ever less margin for error – while investors got caught up in the belief that speculation was the path to effortless riches.

…

But this reliance on – and faith in – central bankers’ powers to stabilise the financial system created ever greater instability: first the dotcom bubble and bust, then the financial and property bubble and the current crisis. Lulled into a false sense of security by the supposedly superior powers of Alan Greenspan and other central bankers, everyone assumed the good times were here to stay and that central bankers could fix any problems that might emerge. But in the current slump, monetary policy has proved to be largely ineffective and increasingly destabilising. In effect, it is trying to create a new bubble to save us from the last.

The Default Line: The Inside Story of People, Banks and Entire Nations on the Edge
by Faisal Islam
Published 28 Aug 2013

In the USA, ‘naked CDS’ were illegal under anti-gambling laws until the US Commodity Futures Modernisation Act of 2000, which gave the product specific exemptions. This was one of the last legislative acts of Bill Clinton in the White House. The act also created the ‘Enron loophole’, which collapsed the energy giant in a mire of corruption. The act was passed after the findings of a taskforce that included Alan Greenspan of the Federal Reserve and Treasury Secretary Larry Summers, whose aim was to block an effort by the commodities regulator to rein in derivatives. Even the intervening LTCM debacle failed to stop the race for derivative deregulation. The case against CDS and naked CDS is clearly mixed. German regulators did not find they had a key role in Greece’s demise.

…

Politicians have hypnotised themselves into believing the economic fates and meteorology are so immutable, that they dare not even think they can change things. They have become superneutral. Central bankers have been key to the use of economics. As the crisis raged in 2008, I got the chance to put it to Alan Greenspan, chairman of the US Federal Reserve from 1987 to 2006, that it was basically his fault. He told me: ‘The housing bubble in the US is fully explained by global forces, and indeed we at the Fed could not control long-term rates, which are the rates that effectively drive mortgage rates, which essentially said to us that our power to affect the forces driving the bubble were de minimis.

The Power of Gold: The History of an Obsession
by Peter L. Bernstein
Published 1 Jan 2000

As readers will note in Chapters 17 and 18, this fascinating material brought the times to life as nothing else could have. The following people also provided significant assistance along the way and deserve my warmest thanks: Barbara Boehm, Ulla BuchnerHoward, Mike Clowes, Barclay Douglas, Hans Falkena, Rob Ferguson, Benjamin Friedman, Milton Friedman, Alan Greenspan, James Howell, Henry Hu, Steve Jones, Dwight Keating, Leora Klapper, Benjamin Levene, Richard Rogalski, Paul Samuelson, Ronald Sobel, and Gentaro Yura. Convention dictates that the author relieves all of the above from any responsibility for errors that may remain in the manuscript. Charlie Kindleberger decries this convention, pointing out that the author, after all, depended on the authority of these individuals in preparing the work and should not be expected to check out the accuracy of their suggestions.

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The issue was at the heart of the controversy between Andrew Jackson and the Bank of the United States, in the valiant but losing battle of William Jennings Bryan against "crucifying American labor on a cross of gold," in the frightful struggles to restore a functioning currency system after World War I and in the course of the Great Depression, in General de Gaulle's fanatic attack on the U.S. dollar in the 1960s, and in the virtual deification of Alan Greenspan in the 1990s. Lopez admits that the Byzantines probably enjoyed a higher standard of living than the Europeans or the Arabs until at least around 1200, although he also suggests that the Byzantines were not necessarily winners when measured in terns of progress and growth. They appeared to have stalled at a relatively high level while other areas gained on them.

Animal Spirits: The American Pursuit of Vitality From Camp Meeting to Wall Street
by Jackson Lears

The reliance on numbers as the key to understanding subjective experience characterizes all sorts of enterprises from happiness surveys to opinion polling; it has spread to the citadels of numerology on Wall Street, where soothsayers deploy quantitative methods to penetrate (or claim to penetrate) the mysteries of capital markets. Perhaps the greatest mystery remains the ebb and flow of animal spirits. The phrase itself has reentered public discourse since the crash of 2008—though a dozen years earlier, Alan Greenspan’s caution against “irrational exuberance” was a warning against animal spirits run amok. As in the post–World War II era, financial policymakers sought to conjure animal spirits, but also to keep them moving in the right direction by systematically deploying statistics, as Wells Fargo does in its animal spirits index.

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“Not in our lifetime”: Cheney, cited in Bob Woodward, “CIA Told to Do ‘Whatever Necessary’ to Kill Bin Laden,” Washington Post, October 21, 2001, www .washingtonpost.com/archive/politics/2001/10/21/cia-told-to-do-whatevernecessary-to-kill-bin-laden/19d0e8f1-dbe5–4b07–9c47–44c5b4328f1f/. “irrational exuberance”: Alan Greenspan, “The Challenge of Central Banking in a Democratic Society,” speech to American Enterprise Institute, Dec. 5, 1996, www.federalreserve.gov/boarddocs/speeches/1996/19961205.htm. EPILOGUE: A FIERCE GREEN FIRE “We reached the old wolf”: Aldo Leopold, A Sand County Almanac [1949] (reprint, 2020), 121–22.

The Retreat of Western Liberalism
by Edward Luce
Published 20 Apr 2017

I began this book with a reminiscence about the fall of the Berlin Wall. A decade later, I found myself employed as speechwriter to Lawrence Summers, when he was the US Secretary of the Treasury in the Clinton administration. Looking back, I am astonished at that era’s unshakeable self-confidence. This was the high noon of the Washington Consensus. Alongside Alan Greenspan, the chairman of the US Federal Reserve, and Robert Rubin, the previous Treasury Secretary, Summers personified the global intellectual elite. Though often abrasive, he is also brilliant – especially when he is wrong. But when the facts change he is capable of changing his mind. By 2008 he had already walked away from much of the triumphalism of the late 1990s.

The Second Curve: Thoughts on Reinventing Society
by Charles Handy
Published 12 Mar 2015

I would amend MacNamara’s second step to read, ‘to assume that what can be measured accurately leads to the desired outcome even if that cannot be measured’. That is the real missing link in the syllogism. Without that missing link it is a false market that leaves customers and policymakers in the dark, relying on hunches, not hard evidence. This is dangerous. So, in the light of all this, was it not a touch naive of Alan Greenspan, the former Chairman of the US Federal Reserve, to say in his latest memoir, referring to the financial crisis of 2008, that ‘I and other economic forecasters did not understand that markets are prone to wild and even deranging mood swings that are uncoupled from any underlying rational basis’?

The Gone Fishin' Portfolio: Get Wise, Get Wealthy...and Get on With Your Life
by Alexander Green
Published 15 Sep 2008

So they did, accumulating positions totaling $1.25 trillion. Of course, they hadn’t really eliminated risk. And when Russia defaulted on its sovereign debt in 1998, the fund blew up. LTCM shareholders lost $4.6 billion in less than four months. To clean up the resulting mess, Federal Reserve Chairman Alan Greenspan had to orchestrate a buyout by 14 major investment banks. Another example is Mensa. This society welcomes people from all walks of life, provided their IQ is in the top 2% of the population. But these folks could stand to pick up a copy of Investing for Dummies. During a recent 15-year period when the S&P 500 had average annual returns of 15.3%, the Mensa Investment Club’s performance averaged returns of just 2.5%.

EuroTragedy: A Drama in Nine Acts
by Ashoka Mody
Published 7 May 2018

Duisenberg said that America’s troubles would prove to be a “weak wind,” the eurozone’s “underlying growth dynamism” would prevail.96 In February 2001, Duisenberg repeated that “the impact of events outside the euro area is of a rather limited significance to the euro area.” 97 Euro-area GDP, he predicted, would grow by 3 percent in 2001 and in 2002. In contrast to the ECB’s holding pattern, the Fed moved quickly. On January 3, 2001, Chairman Alan Greenspan initiated a conference call with his colleagues on the Federal Open Market Committee (FOMC)—​ the Fed’s rate-​ setting body. Although the data was not yet alarming, Greenspan was worried about disturbing signs of economic deceleration. The American economy, he said, was “in the position of the person falling off the 30-​story building and still experiencing a state of tranquility at 10 floors above the street.”98 The FOMC decided it was time to 7 6 5 4 European Central Bank 3 US Federal Reserve 2 1 0 Jan Apr 2001 01 Jul 01 Sep 01 Dec Mar 01 02 Jun 02 Sep 02 Dec Mar 02 03 Jun 03 Sep 03 Dec 03 Figure 3.1.

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A return to steady economic growth would dampen financial anxieties, which would, perhaps, kindle greater empathy for other Europeans and stir greater willingness to practice solidarity. There were, however, worrying signs. While the United States was experiencing real economic progress, it was also in a phase of “irrational exuberance.”4 Alan Greenspan, legendary chairman of the Fed, cautioned as early as December 1996 that prices of US assets, such as stocks and homes, were reaching “unduly” high levels.5 Yet, with a brief interruption after the bursting of the dot-com bubble in 2000 and the September 11 attacks, the exuberance continued almost unabated.

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For instance, in November 2007, when the ABCP market was still collapsing and the term premium on interbank lending was rising, Trichet hopefully said that the ECB had “observed a progressive appeasement of tensions in the money market.”35 The exact same difference between the Fed and ECB philosophy and response had appeared between 2001 and 2003. In January 2001, Fed Chairman Alan Greenspan had also deployed a risk management strategy. He had described the American economy as “in the position of the after the bust, the denial 201 person falling off the 30-​story building and still experiencing a state of tranquility at 10 floors above the street.”36 In the spirit of spreading a safety net before the falling person crash-landed, the FOMC had initiated a series of rate cuts.

American Made: Why Making Things Will Return Us to Greatness
by Dan Dimicco
Published 3 Mar 2015

I would caution against embracing irrational defeatism—the notion that whatever crises the country might face are beyond solving at this point, and so the best any leader can do is give lip service to the nation’s problems. The mood is the opposite of the “irrational exuberance” that former Federal Reserve chairman Alan Greenspan warned of in the mid-1990s, when the tech bubble was inflating. I also don’t think government should fix everything. The private sector needs to carry its weight, too. You’ve got to live in the market, respond to the market, grow with the market, and use competition to constantly reinvent yourself.

Sabotage: The Financial System's Nasty Business
by Anastasia Nesvetailova and Ronen Palan
Published 28 Jan 2020

The implosion of the institution would be a major blow, not merely to LTCM and its founders, but to Wall Street as a whole. Too much of what Wall Street was about – smart finance, the power of financial engineering, connections, reputation – was at stake with the fund’s collapse. The Fed decided it had to step in and shore LTCM up. Alan Greenspan, the Fed’s then chair, asked fourteen major banks that served as prime brokers5 to contribute to a private bailout of LTCM.6 Thirteen did agree, but Bear’s CEO, Jimmy Cayne, refused to chip in. In fact, compounding the stress, Bear called in $500m. The other Wall Street firms had no choice but to pay an additional $50m each on top of the agreed $250m contribution to the bailout package.7 In a last attempt to make Bear contribute, it was threatened with the loss of LTCM’s clearing business.

The Currency Cold War: Cash and Cryptography, Hash Rates and Hegemony
by David G. W. Birch
Published 14 Apr 2020

His thesis on the future of money, later reprinted in David Boyle’s superb collection The Money Changers (de Bono 2002), was that technological developments in computers, communications and cryptography (my paraphrasing) would reduce the cost of creating money to the point where it would make sense for private organizations to make their own. In particular, Dr de Bono suggested that it would make economic sense for companies to issue their own currency rather than use equities (hence the title of his pamphlet). He went on to say he looked forward to a time when ‘the successors to Bill Gates will have put the successors to Alan Greenspan out of business’. Dr de Bono was arguing that companies could raise money just as governments do now: by printing it. He put forward the idea of private currency as a claim on products or services produced by the issuer rather than as bank credit. In his formulation, IBM might issue IBM dollars that would not only be redeemable for IBM products and services, but also (in practice) be tradable for other companies’ monies or other assets.

The Great Crash 1929
by John Kenneth Galbraith
Published 15 Dec 2009

They were attractive to lenders for all of these reasons, and because they had nothing to lose. A borrower with nothing to lose will sign papers that another will not. A government that permits this to happen is complicit in a vast crime. As in 1929, the architects of disaster will form a rich rogues gallery to go shooting in. The Old Objectivist, Alan Greenspan, was intermittently aware of impending disaster and resolutely unwilling to stop it. The Liberal's Banker, Robert Rubin, had a reputation for fiscal probity eclipsed by catastrophic complacency at Citigroup, where he was paid SI 15 million and maintained silence, so far as we know. There will be Phil Gramm, of whom in April 2008 the Washington Post wrote that he was "the sorcerers apprentice of financial instability and disaster."

100 Baggers: Stocks That Return 100-To-1 and How to Find Them
by Christopher W Mayer
Published 21 May 2018

My newsletter peers, people in the media—they all do it. It’s unbelievable. Don’t these people get bored? Or do they do this because they’re bored? I’m so bored with the Federal Reserve. Boring. And, thankfully, it is largely irrelevant to you as an investor. Warren Buffett himself once said, “If Fed Chairman Alan Greenspan were to whisper to me what his monetary policy was going to be over the next two years, it wouldn’t change one thing I do.” I read every day somebody, somewhere writing about QE or interest rates or the dollar. They are mostly rehashing the same old narrative: “When QE stops, stocks will fall.”

The People's Republic of Walmart: How the World's Biggest Corporations Are Laying the Foundation for Socialism
by Leigh Phillips and Michal Rozworski
Published 5 Mar 2019

As wages, both in the United States and across much of the global North, have grown at glacial pace or outright stagnated since the 1970s, workers have taken on more personal debt just to keep up. At the same time, governments have cut public benefits, leaving workers more vulnerable when they are laid off or injured. Even Alan Greenspan, the former head of the US Federal Reserve, called today’s workers “traumatized.” Translated, this means that pressures to fall into line now exist outside the explicit top-down hierarchies. Capitalism is stuck with planning even though it regularly transmogrifies its techniques of planning.

Damsel in Distressed: My Life in the Golden Age of Hedge Funds
by Dominique Mielle
Published 6 Sep 2021

The insurance firms who offered coverage? The bankers who extended mortgage financing? The government who zoned the area as residential? 2008 was the equivalent of Murder on the Orient Express, and, as Hercules Poirot found, everyone was at least partially guilty of the financial bloodbath. Alan Greenspan, the Federal Reserve chairman who believed in the efficiency of markets like it was the Bible, played a special role in the unraveling. On September 14, 2007, some twenty months after stepping down as Fed chairman, he gave an interview on CNBC to Maria Bartiromo. Remember, we were then on the doorstep of one of the biggest financial blowups of all time.

The Relentless Revolution: A History of Capitalism
by Joyce Appleby
Published 22 Dec 2009

Those people who ran hedge funds, established derivatives, and created option adjustable rate mortgages had built a house of cards with mortgage paper. Their initial success with rising house prices bred the “irrational exuberance” noted in an earlier bubble by the former Federal Reserve Bank president Alan Greenspan, himself a somewhat repentant opponent of regulation. Ignoring their conflicts of interest, credit rating agencies gave artificially high ratings to mortgage securities. Thus even those created to assess risk failed the system. When house prices started to fall in late 2007, the securities they backed fell too.

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Every economic downturn gives critics a chance to draft obituaries for capitalism, but they underestimate the fecundity of capitalism in promoting ingenuity and turning novel prototypes into great cash cows. Contemporary Capitalism and Its Critics Gordon Gekko, the business antihero in the movie Wall Street, said that “greed, for lack of a better word, is good,” but few agree. Alan Greenspan, for one, pointed to the dangers of an “infectious greed” while speaking to Congress in 1997 as chairman of the Federal Reserve Board. Nor is greed the only thing that people hold against capitalism. I’ve made a little list, and it includes such charges as responding to short-term opportunities to the neglect of long-term effects, dispensing power without responsibility, promoting material values over spiritual ones, commoditizing human relations, monetizing social values, corrupting democracy, unsettling old communities, institutions, and arrangements, and rewarding aggressiveness and—yes—greed.20 Two other capitalist responsibilities have cast long shadows forward: intractable poverty and a deteriorating environment.

Oil: Money, Politics, and Power in the 21st Century
by Tom Bower
Published 1 Jan 2009

To reverse Wendy Gramm’s liberalization required congressional approval for new regulations. Although the CFTC was only answerable to Congress and not the Treasury, Born circulated a “concept release” in April 1998 on OTC derivatives to several Washington politicians, including Bob Rubin, the Treasury secretary, and Alan Greenspan, the chairman of the Federal Reserve. Getting their support to extend the CFTC’s authority over the “swaps loophole” was politically critical. At a meeting with Rubin and Greenspan, Born was surprised when Rubin opposed her proposal. Under pressure from Wall Street, the traders and energy companies, especially Enron, Rubin insisted that the OTC market only existed because of the 1993 relaxation, and the CFTC was rightly denied any legal authority.

…

Under pressure from Wall Street, the traders and energy companies, especially Enron, Rubin insisted that the OTC market only existed because of the 1993 relaxation, and the CFTC was rightly denied any legal authority. Born disagreed about the legal nuances. When the two sides parted, Rubin believed he had triumphed. He was wrong. In May, Born issued her “concept release,” recommending control. Rubin’s assistant telephoned her and warned, “Brooksley, the big banks won’t like this.” Alan Greenspan, ideologically committed to free markets, successfully urged Rubin to initiate legislation to prevent Born’s proposed reintroduction of controls. Greenspan’s influence was marginal compared to the intense lobbying of Congress and the administration by John Damgard on behalf of the Futures Industry Association.

A Generation of Sociopaths: How the Baby Boomers Betrayed America
by Bruce Cannon Gibney
Published 7 Mar 2017

The annual “tax gap”—the difference between what the IRS believes is owed and what is actually and timely paid—ran over $400 billion dollars annually for the 2008–2010 period, the most recent years analyzed by the Service, and that was before recent cuts to enforcement.39 It will hardly be surprising if the tax gap widens. Taxation and Consequences Let us remember that the basic purpose of any tax cut program in today’s environment is to reduce the momentum of expenditure growth by restraining the amount of revenues available and trust that there is a political limit to deficit spending. —Alan Greenspan (1979)40 Hogcock, which is a combination of hogwash and poppycock. —Jack Donaghy, 30 Rock Notwithstanding all these tax cuts, the government has not simply evaporated or been cut in half, although that was the stated intent of the 1980s tax revolution. Returning to Grover Norquist, the purpose of the tax revolt was to starve the government of revenue so that it would shrink back to its size around the turn of the last century, making government small enough “to drown it in a bathtub.”41 (The government is not a person, but metaphorical murder of an institution that embodies society does reek of sociopathy.)

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When the Fed does make mistakes, it rarely admits them and only after a suitably sanitizing interlude, as with Bernanke’s public dismay at the bank’s response to the Great Depression, seven decades after the fact. While the Fed might be entitled to the benefit of the doubt, it should never get the sort of uncritical deference that prevailed from the 1980s to the 2000s, when it was viewed as some sort of economic magician. (Alan Greenspan, Fed chairman from 1987 to 2006, was called the “Maestro,” first as a joke, then as a compliment, then sarcastically, and now not at all.) Moreover, because the Fed has a mandate to protect the economy overall and its tools work best in the short term, it tends to protect the largest classes of interests extant at any given time at the expense of the long view.

The Aristocracy of Talent: How Meritocracy Made the Modern World
by Adrian Wooldridge
Published 2 Jun 2021

He has also worked as the Economist’s American bureau chief and author of the Lexington column, and management editor and author of the Schumpeter column. He earned a doctorate in history from Oxford University, where he was a Fellow of All Souls College. He is the author of ten previous books, including Capitalism in America co-written with Alan Greenspan and seven co-written with John Micklethwait: The Wake-Up Call, The Witch Doctors, A Future Perfect, The Company, The Right Nation, God is Back and The Fourth Revolution. For Simon Green il miglior fabbro Introduction A Revolutionary Idea It is now a commonplace that the ideas which have shaped and sustained Western societies for the past 250 years or more are faltering.

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Sandel, Democracy’s Discontent: America in Search of a Public Philosophy (Cambridge, Mass., Belknap Press of Harvard University Press, 1996), p. 156 48 Kett, Merit, p. 98 49 Andrew Jackson’s Bank Veto, 10 July 1832, University of Virginia, Miller Center, Presidential Speeches, https://millercenter.org/the-presidency/presidential-speeches/july-10-1832-bank-veto 50 Walter Russell Mead, Special Providence: American Foreign Policy and How It Changed the World (New York, Alfred Knopf, 2001), p. 238 51 Pole, The Pursuit of Equality in American History (2nd rev.edn. 1993), p. 157 52 Kett, Merit, p. 95 53 Frederic Lincoln, ‘An Address to the Massachusetts Charitable Mechanic Association’ (2 October 1845), p. 20 54 Alexis de Tocqueville, Democracy in America, 2 Vols. (New York, Knopf, 1996), Vol. 2, p. 243 55 Ibid. 56 Ibid., p. 256 57 Sven Beckert, Empire of Cotton: A New History of Global Capitalism (London, Allen Lane, 2014); Alan Greenspan and Adrian Wooldridge, Capitalism in America: A History (New York, Penguin Press, 2018), pp. 73–9 58 Address before the Wisconsin State Agricultural Society, Milwaukee, Wisconsin, 30 September 1859, http://www.abrahamlincolnonline.org/lincoln/speeches/fair.htm 59 Lepore, These Truths, p. 701 60 Pole, The Pursuit of Equality in American History, p. 254 61 Walter Isaacson and Evan Thomas, The Wise Men: Six Friends and the World They Made (New York, Simon and Schuster, 1986), p. 40 62 Pole, The Pursuit of Equality in American History, p. 264 63 Jerome Karabel, The Chosen: The Hidden History of Admission and Exclusion at Harvard, Yale and Princeton (New York, Houghton Mifflin, 2005), p. 13 64 Bellow, In Praise of Nepotism, p. 320 65 Ibid., p. 323 66 Francis Fukuyama, Political Order and Political Decay: From the French Revolution to the Present (London, Profile Books, 2015), p. 144 67 Kett, Merit, pp. 117–18 68 Isaacson and Thomas, The Wise Men, p. 87 69 Kett, Merit, p. 174 70 W.

Elsewhere, U.S.A: How We Got From the Company Man, Family Dinners, and the Affluent Society to the Home Office, BlackBerry Moms,and Economic Anxiety
by Dalton Conley
Published 27 Dec 2008

The result is this Elsewhere Society, where not only have physical boundaries become less important, where not only do many of us function with split-screen attentions (becoming, in essence, a collection of intraviduals), but where social boundaries dissolve, leaving us in a new cultural landscape without a map or a guidebook. This very book intends to serve as the first-edition guidebook to this new world we have created. 1∗Note that the economic term job separation is a nice euphemism that borrows from the domestic realm. 2†Central bankers such as Paul Volcker and Alan Greenspan like to say that they learned how to manage economies better. Others give them less credit and claim that it is a question of more liquid credit markets, increases in international trade, just-in-time management techniques that have reduced crises of over- (and under) supply, more flexible labor practices, or any combination of the above.

The Oil Factor: Protect Yourself-and Profit-from the Coming Energy Crisis
by Stephen Leeb and Donna Leeb
Published 12 Feb 2004

As OPEC engineered rises in oil prices, prices rose across the board, even in the face of a slowing economy. In the 1970s, a new term entered the economic lexicon: “stagflation,” a combination of stagnant growth and high inflation. At times we didn’t know which of these enemies to fight first. In 1974, thanks in part to Alan Greenspan, then economic adviser to President Ford, Americans were urged to wear “WIN” buttons, standing for “whip inflation now.” Those buttons were quickly discarded when it turned out that a more devastating enemy was the recession that had started in 1973 with no one noticing. Well, not exactly nobody—the stock market clearly noticed.

The Vanishing Face of Gaia: A Final Warning
by James E. Lovelock
Published 1 Jan 2009

Yet we are asked to believe that temperature will rise smoothly for another forty years, unless of course we put the carbon dioxide in the atmosphere somewhere else. You may think that climate and economic forecasts have little in common, but they do: both systems are complex and non‐linear and can change suddenly and unexpectedly. Alan Greenspan, until recently the USA’s economic guru, said in a BBC interview that for this reason he refused to predict the course of the world economy; and the distinguished Cambridge economist Sir Partha Dasgupta warned that models of the economy shared with those of the climate a similar fickle unpredictability.

Where Does It Hurt?: An Entrepreneur's Guide to Fixing Health Care
by Jonathan Bush and Stephen Baker
Published 14 May 2014

Eddie, following his summer stint with us, had gone on to work at Viant, one of the early Internet consultancies. They were helping traditional companies, like Sears or Chrysler, figure out this brand-new medium, the Internet. This was the dot-com boom, a time of excitement and insanity. The Fed chairman, Alan Greenspan, had recently warned of “irrational exuberance” in the markets. Lots of stupid stuff was happening, and Internet companies with no revenue were soaring on the stock market. At the same time, though, established companies really did have to start figuring out how they would operate in a world of e-commerce and ubiquitous information.

What About Me?: The Struggle for Identity in a Market-Based Society
by Paul Verhaeghe
Published 26 Mar 2014

This led to his theory that the doctors were transferring something — he called it ‘cadaverous particles’ — from the dead to the living woman, causing her to fall ill. [* The term ‘paradigm’ was devised by Thomas Kuhn, who studied its impact on the evolution of scientific disciplines. Michel Foucault (1975) speaks of ‘discourse’, and looks at this in a broader social context, with the aim of exposing power structures. By way of illustration: when Alan Greenspan (who for 20 years was chairman of the Federal Reserve of the United States) had to explain the spectacular credit crisis of 2007 and 2008 and the associated failure of ‘the market’ to a committee of the House of Representatives (on 23 October 2008), the best he could come up with was that he was in a state of ‘shocked disbelief’; for him, it was simply impossible for the free market to fail.

Eat People: And Other Unapologetic Rules for Game-Changing Entrepreneurs
by Andy Kessler
Published 1 Feb 2011

Bad policy meant capital got overallocated, and then some, as a combination of IPO lockups (insiders have to wait 180 days before they can sell), NASDAQ trading restraints involving “momos” (mutual funds that only buy on momentum, i.e., only stocks that are going up), and day traders turned greedy drove up stock prices of every company with dot-com in its name for no fundamental reasons. Wall Street trading was broken. And then insult to injury saw Alan Greenspan and the Federal Reserve flood the system with money over fears the banks’ computers would freeze up when the world went from 1999 to 2000 and we would see a bank run as people closed accounts and withdrew to all cash. It never happened. All that Fed money ended up in the stock market. Mopping up that money burst the bubble.

Double Entry: How the Merchants of Venice Shaped the Modern World - and How Their Invention Could Make or Break the Planet
by Jane Gleeson-White
Published 14 May 2011

GDP measures not only record the economic life of a nation but help to determine it. They are used by governments to calculate budgets and to assess the impact of fiscal and monetary policy on an economy. They are used by politicians in campaign strategies, and by corporations for investment decisions and Wall Street takeovers. As former chairman of the US Federal Reserve Alan Greenspan acknowledges, GDP figures have ‘a profound influence on markets’ and ‘are the basis for Federal budget projections and political rhetoric’. So sacred is the single GDP figure to the US economy that a complex ritual has evolved around its announcement, rivalling in mystique and secrecy the selection and announcement of a new Catholic pope.

I See You Made an Effort: Compliments, Indignities, and Survival Stories From the Edge of 50
by Annabelle Gurwitch
Published 6 Mar 2014

After dousing myself with more Asprey Purple Water, I lay awake because the pillow had my initials monogrammed into them. That’s something I am still a little confused about. Do they keep stacks of initialed linens? Is there an algorithm that predicts the frequency of combinations, otherwise the linen closet would be immeasurably vast? Was my head resting on the same pillow used by Alan Greenspan? Do they remove the embroidery after you check out or was I expected to take the pillowcases home? It was truly vexing. Plus, I didn’t want to waste one minute of how pleasurable the bedding felt by sleeping. The thread count of the sheets was so high they felt cold and creamy. The texture was not unlike what became one of my mother’s signature dishes at our island home.

The Age of Illusions: How America Squandered Its Cold War Victory
by Andrew J. Bacevich
Published 7 Jan 2020

What had worked in the West would surely work in the East and the South as well. Although in the near term the embrace of globalization might create winners and losers, losers would have both incentive and opportunity to retool and get with the program. Truth to tell, no real alternative existed. So, at least, august figures insisted. As Alan Greenspan put it in 2007, “The world is governed by market forces.” The former Federal Reserve chairman offered that blunt judgment without caveats or exceptions. It was, therefore, incumbent upon senior officials, whether elected or appointed, to recognize and defer to this immutable reality. Indeed, Greenspan deemed it “fortunate” that “policy decisions in the U.S. have been largely replaced by global market forces,” so much so that “national security aside, it hardly makes any difference” whom Americans installed in the White House.9 Yet the creation of such an open world, accelerating and intensifying the movement of goods, capital, technology, ideas, and people, meant more than simply greater material abundance.

Money: The True Story of a Made-Up Thing
by Jacob Goldstein
Published 14 Aug 2020

It was to be a new, digital currency, issued by the bank. The federal government tested it in secret for several years, including a pilot program in which government officials used Citi’s e-money to buy tens of thousands of Dell computers and collected taxes from a tobacco company—some $350 million in transactions. Alan Greenspan, the Fed chairman who loved to warn against excessive regulation of everything, warned against excessive regulation of digital cash. “I am especially concerned that we not attempt to impede unduly our newest innovation, electronic money,” he said. (Much later, after the financial crisis, Greenspan would say that he had warned against regulation too much.)

Kings of Crypto: One Startup's Quest to Take Cryptocurrency Out of Silicon Valley and Onto Wall Street
by Jeff John Roberts
Published 15 Dec 2020

Many who received Bitcoin Cash sold it and plowed the proceeds right back into other parts of the overheated market. Crypto prices, already tethered to little in the way of real-world value, kept climbing. And investors kept buying. The crypto spree of 2017 made the stock buying of the 1990s dot-com boom—famously described by then Federal Reserve Chair Alan Greenspan as “irrational exuberance”—look relatively sane. It fell to Olaf, who was riding high at his crypto hedge fund since leaving Coinbase, to put an exclamation point on the era. He graced the cover of Forbes magazine, his shaggy blond mane set against a suit coat. In the photo, tossing coins casually, he fixes his elfish stare on the camera.

Internet for the People: The Fight for Our Digital Future
by Ben Tarnoff
Published 13 Jun 2022

Internet Index lost almost $1.7 trillion. “It’s rare to see an industry evaporate as quickly and completely,” a CNN journalist remarked. And 2001 brought more bad news. The dot-com era was dead. Today, the era is typically remembered as an episode of collective insanity—as an exercise in what Alan Greenspan, during his contemporaneous tenure as Fed chairman, famously called “irrational exuberance.” Pets.com, a startup that sold pet supplies online, became the best-known symbol of the period’s stupidity, and a touchstone for retrospectives ever since. Never profitable, the company spent heavily on advertising, including a Super Bowl spot; it raised $82.5 million in its IPO in February 2000 and imploded nine months later.

Antifragile: Things That Gain From Disorder
by Nassim Nicholas Taleb
Published 27 Nov 2012

The same can be seen in the Fukushima nuclear reactor, which experienced a catastrophic failure in 2011 when a tsunami struck. It had been built to withstand the worst past historical earthquake, with the builders not imagining much worse—and not thinking that the worst past event had to be a surprise, as it had no precedent. Likewise, the former chairman of the Federal Reserve, Fragilista Doctor Alan Greenspan, in his apology to Congress offered the classic “It never happened before.” Well, nature, unlike Fragilista Greenspan, prepares for what has not happened before, assuming worse harm is possible.4 If humans fight the last war, nature fights the next one. Your body is more imaginative about the future than you are.

…

Unlike with medicine, where iatrogenics is distributed across the population (hence with Mediocristan effects), because of concentration of power, social science and policy iatrogenics can blow us up (hence, Extremistan). Not Doing Nothing A main source of the economic crisis that started in 2007 lies in the iatrogenics of the attempt by Überfragilista Alan Greenspan—certainly the top economic iatrogenist of all time—to iron out the “boom-bust cycle” which caused risks to go hide under the carpet and accumulate there until they blew up the economy. The most depressing part of the Greenspan story is that the fellow was a libertarian and seemingly convinced of the idea of leaving systems to their own devices; people can fool themselves endlessly.

The Quest: Energy, Security, and the Remaking of the Modern World
by Daniel Yergin
Published 14 May 2011

But this time, “the Boys” did not cooperate. The January 2006 attacks were the beginning of a wave of bloody intimidation, kidnappings, and murder. Violence in Nigeria became a key factor in the world oil market. “The balance of world oil supply and demand has become so precarious,” U.S. Federal Reserve chairman Alan Greenspan warned in June 2006, “that even small acts of sabotage or local insurrections have a significant impact on prices.” The dense swamps and intricate network of creeks and waterways made it easy for MEND and such similar organizations as the Martyrs Brigade to attack and then fade back into the jungle—and they did so with impunity.

…

Today, on a fleet average basis, a new car is required to get 30.2 miles per gallon. Insulation and heating controls in a new house today are much more effective than in previous decades. Some of the gain also reflects structural changes in the U.S. economy. The economy has gotten “lighter,” as Alan Greenspan put it. In his words, “Today it takes a lot less physical material to produce a unit of output than it did in generations past.” Less of the economy—and thus of measurable GDP—is devoted to energy-intensive manufacturing, and those processes have gotten much more efficient in themselves. More of the economy is devoted to services and to information technologies and lighter industries, much of which did not even exist in the 1970s.

…

Chapter 31: The Fifth Fuel—Efficiency 1 National Academy of Sciences, Real Prospects for Energy Efficiency in the United States (Washington, DC: National Academies Press, 2010), p. 4; ExxonMobil, Outlook for Energy: A View to 2030, December 2010. 2 World Economic Forum and IHS CERA, Energy Vision Update 2010: Towards a More Energy Efficient World, 2010, p. 12; Barack Obama, “Remarks by the President on Energy,” June 29, 2009. 3 Alan Greenspan, The Age of Turbulence: Adventures in a New World (New York: Penguin Press, 2007), p. 492. 4 Scott Murtishaw and Lee Schipper, “Disaggregated Analysis of U.S. Energy Consumption in the 1990s: Evidence of the Effects of the Internet and Rapid Economic Growth,” Energy Policy 29, no. 15 (2001) pp. 1335–56. 5 Wen Jiabao, speech, National Teleconference on Energy Conservation and Emission Reduction, April 27, 2007. 6 Erica Downs, “China’s Energy Rise,” in China’s Rise in Historical Perspective, ed.

Rigged Money: Beating Wall Street at Its Own Game
by Lee Munson
Published 6 Dec 2011

Citigroup, the largest bank measured by assets back in 1999, could then create wildly successful mortgage-backed securities that only investment banks could make before. Profits would jump for shareholders, pay packages for executives that were tied to the increase in revenue would boom, and Federal Reserve Chairman Alan Greenspan would tell the public that the risk of system failure would be different this time. In May 2000, Greenspan said, “So long as we recognize the risks and insist on good risk-management systems . . . economic growth is, I suggest, enhanced by the kinds of financial innovation that technology and deregulation are now producing.”1 Plus, with the government backing banks, it didn’t matter if things blew up like they did in the 1920s or late 1980s with the savings and loan crisis.

Weapons of Math Destruction: How Big Data Increases Inequality and Threatens Democracy
by Cathy O'Neil
Published 5 Sep 2016

They even hold bets that other gamblers will win or lose their own bets. These people wager on many movements associated with the game, but not as much on the game itself. In this, they behave like hedge funds. That made us feel safe, or at least safer. I remember a gala event to celebrate the architects of the system that would soon crash. The firm welcomed Alan Greenspan, the former Fed chairman, and Robert Rubin, the former Treasury secretary and Goldman Sachs executive. Rubin had pushed for a 1999 revision of the Depression-era Glass-Steagall Act. This removed the glass wall between banking and investment operations, which facilitated the orgy of speculation over the following decade.

The Great Reset: How the Post-Crash Economy Will Change the Way We Live and Work
by Richard Florida
Published 22 Apr 2010

The United States used to be revered for its innovative capacity, its so-called American ingenuity, but all that somehow got refocused on overly risky financial innovation. The economy became a giant bazaar, fueled by easy credit. At the same time, the financial markets, once a haven for investors, mutated into rolling casinos, where many of our most brilliant minds gambled recklessly, making bets of dizzying complexity. It’s been nearly ten years since Alan Greenspan revised his description of “irrational exuberance,” replacing it with the more condemning phrase “infectious greed” as he watched the house of cards rise higher and grow ever more precarious. Inevitably, it all came crashing down, but this isn’t news to anyone. Nor is it anything new. We’ve been here before.

Rebel Cities: From the Right to the City to the Urban Revolution
by David Harvey
Published 3 Apr 2012

Roll on endless suburbanization that is both land- and energy-consuming way beyond what is reasonable for the sustained use of pl a n e t earth for human h ab itation! The authors m ight plausibly maintain that they had no remit to connect their thinking about urbanization with issues of global warming. Along with Alan Greenspan, they could also argue that they were blin d-sided by the events of 2007-09, and that they could not be expected to h ave anticipated anyth ing troubling abo ut the rosy scenario they painted. By inserting the words "prudent" and "well-regulated" into the argument they h ad, as it were, "hedged" against potential criticism.

Nickel and Dimed: On (Not) Getting by in America
by Barbara Ehrenreich
Published 2 Jan 2003

Every city where I worked in the course of this project was experiencing what local businesspeople defined as a “labor shortage”—commented on in the local press and revealed by the ubiquitous signs saying “Now Hiring” or, more imperiously, “We Are Now Accepting Applications.” Yet wages for people near the bottom of the labor market remain fairly flat, even “stagnant.” “Certainly,” the New York Times reported in March 2000, “inflationary wage gains are not evident in national wage statistics.”[36] Federal Reserve chief Alan Greenspan, who spends much of his time anxiously scanning the horizon for the slightest hint of such “inflationary” gains, was pleased to inform Congress in July 2000 that the forecast seemed largely trouble-free. He went so far as to suggest that the economic laws linking low unemployment to wage increases may no longer be operative, which is a little like saying that the law of supply and demand has been repealed.[37] Some economists argue that the apparent paradox rests on an illusion: there is no real “labor shortage,” only a shortage of people willing to work at the wages currently being offered.[38] You might as well talk about a “Lexus shortage”—which there is, in a sense, for anyone unwilling to pay $40,000 for a car.

Quantitative Value: A Practitioner's Guide to Automating Intelligent Investment and Eliminating Behavioral Errors
by Wesley R. Gray and Tobias E. Carlisle
Published 29 Nov 2012

We can achieve this taking an average of earnings over the business cycle. We can't know how long a business cycle will last, so Graham recommended using an average of between 5 and 10 years. More recently, Robert Shiller, author of the book Irrational Exuberance, which took for its title the phrase then-chairman of the Federal Reserve Alan Greenspan used to warn of the dot-com bubble in 1996, collaborated with John Campbell to argue2 that annual earnings are too “noisy” to use as the denominator in price-to-earnings (P/E) ratios. Campbell and Shiller point out that extremes in a price ratio can be remedied only by the denominator's or numerator's moving in a direction that restores the ratio to a more normal level.

The Secret Club That Runs the World: Inside the Fraternity of Commodity Traders
by Kate Kelly
Published 2 Jun 2014

It was an era of light regulation in Washington, and it was the dot-com boom: Internet companies like Netscape, Yahoo, and Amazon were hitting the public markets with wild success, and small investors were shifting in mass numbers into stocks. Under the guidance of the conservative Fed chairman Alan Greenspan and, later, Rubin’s successor at Treasury, Lawrence Summers, officials were beating back attempts to curb trading in off-exchange commodities and other risky contracts—including a notable push by Brooksley Born, the female lawyer who was chair of the CFTC. In 2000, President Clinton signed the Commodity Futures Modernization Act, a piece of legislation supported by Summers, Gensler, and other Treasury staffers that preserved almost complete autonomy for banks and speculators in the trading of private contracts known as “over-the-counter derivatives,” positions betting on the price movements of stocks, bonds, or commodities in some way.

The New Elite: Inside the Minds of the Truly Wealthy
by Dr. Jim Taylor
Published 9 Sep 2008

It didn’t reach 1000 until 1972, and it took another eleven years for it to gain a mere 100 points and close above 1100. But 1983 was the start of the biggest and longest bull market in history. It took just four years for the Dow to close above 2000, another four years for it to close above 3000, and four more years to hit 4000. (Alan Greenspan’s famous comment about the irrational exuberance of the stock market came on December 5, 1996; the Dow Jones closed that day at 6437).7 For the final half decade of the 1990s, the Dow added about 1000 points a year, sometimes in much less than a year, rising from 4000 in early 1995 to over 11,700 in early 2000.

Social Democratic America
by Lane Kenworthy
Published 3 Jan 2014

In the one brief period of nontrivial wage growth in the past generation, the late 1990s, the key seems to have been a tight labor market.53 The unemployment rate dipped below 4 percent, the lowest since the 1960s. It would be good to repeat this, but I suspect it won’t happen. The next time our unemployment rate gets near 4 percent, the Federal Reserve is more likely to slam on the brakes by raising interest rates. In the late 1990s, Fed chair Alan Greenspan held interest rates low despite opposition from other Fed board members who worried about potential inflationary consequences of rapid growth, rising wages, and the Internet stock market bubble. Greenspan’s belief in the self-correcting nature of markets led him to worry less than others. Given the painful consequences of the 2000s housing bubble, the Fed is highly unlikely to repeat that approach.

Smart Money: How High-Stakes Financial Innovation Is Reshaping Our WorldÑFor the Better
by Andrew Palmer
Published 13 Apr 2015

We were just trying to convey that triple AAA is as safe as the US government, and that BBB is like Mexico, not that AAA was a default probability of X percent.” This is the paradox of big data: an approach that tries to be more rigorous and data driven produces results that have a tendency to be taken on faith. “Part of what went wrong over the long term was two things: computing power and the Greenspan consensus [named for Alan Greenspan, a former chairman of the Federal Reserve] that markets worked,” says the former employee. “The finance industry could slice, dice, and analyze information in ways they couldn’t before. Information was available, which meant markets could function properly. People thought information asymmetry was the problem, and now that problem was solved.

Borrow: The American Way of Debt
by Louis Hyman
Published 24 Jan 2012

Subprime lending played out almost exactly the same as the Section 235 program had twenty-five years earlier. Hopeful home owners with little financial experience relied on the judgment of experts, who quickly packaged mortgages for resale. In the aftermath of the collapse of the market for technology stocks in 2000, Alan Greenspan, the Fed chief who had presided over the economy since 1987, kept cutting the prime interest rate. President George W. Bush and Greenspan both feared a recession as the bubble in tech stocks burst. With a low cost of borrowing, businesses could keep growing and the economy could keep adding jobs and growth.

Chomsky on Mis-Education
by Noam Chomsky
Published 24 Mar 2000

Forgotten is what “the truth” was going to be when the impressive exercise in democracy was roaring full-steam ahead.37 While the experts have downgraded NAFTA to “no significant effects,” dispatching the earlier “experts’ view” to the memory hole, a less than “distinctly benign economic viewpoint” comes into focus if the “national interest” is widened in scope to include the general population. Testifying before the Senate Banking Committee in February 1997, Federal Reserve Board Chair Alan Greenspan was highly optimistic about “sustainable economic expansion” thanks to “atypical restraint on compensation increases [which] appears to be mainly the consequence of greater worker insecurity”—an obvious desideratum for a just society. The February 1997 Economic Report of the Presidenty, taking pride in the administration’s achievements, refers more obliquely to “changes in labor market institutions and practices” as a factor in the “significant wage restraint” that bolsters the health of the economy.

The Fix: How Bankers Lied, Cheated and Colluded to Rig the World's Most Important Number (Bloomberg)
by Liam Vaughan and Gavin Finch
Published 22 Nov 2016

As an undersecretary to Rubin, Gensler had played a prominent role in pushing through the Commodity Futures Modernization Act of 2000, which exempted over-the-counter derivatives such as interest-rate swaps and credit default swaps from regulation. At the time, the head of the CFTC, Brooksley Born, had warned the government it was making a mistake, but she was roundly ignored by heavyweights including Fed Chairman Alan Greenspan. That decision ushered in the explosive growth of derivatives, which turbocharged the global financial meltdown. In the end, Gensler went before the Senate and issued a mea culpa, admitting that Born had been right and promising to help bring in a new era of strict oversight of the banks. Gensler, a natural pragmatist, didn’t see the volte-face as some kind of Damascene conversion.

The Rise of Carry: The Dangerous Consequences of Volatility Suppression and the New Financial Order of Decaying Growth and Recurring Crisis
by Tim Lee , Jamie Lee and Kevin Coldiron
Published 13 Dec 2019

Greenwich, Connecticut–based giant hedge fund LTCM pioneered the use of complex mathematical models to extract supernormal returns from highly levered carry, or volatility-selling, bets. The culmination of the carry crash in 1998 saw LTCM collapse, threatening—at least in the eyes of central banks—global financial markets as a whole. 26 THE RISE OF CARRY In what must be considered a pivotal moment in the rise of carry, Federal Reserve chairman Alan Greenspan directly expressed his concerns about the sharp widening of credit spreads that marked the 1998 carry crash and implemented a surprise rapid easing of US monetary policy that featured three consecutive interest rate cuts within two months, over September to November 1998. The US economy at the time was very strong and in no way justified cuts in interest rates from what were already quite low levels.

Cogs and Monsters: What Economics Is, and What It Should Be
by Diane Coyle
Published 11 Oct 2021

There is no such thing as ‘real GDP’ out in the world; it is a constructed, not an observable, phenomenon. There are real events in the economy—how much income a certain household has to spend and the prices it pays for things—but these are the territory of microeconomic analysis of large surveys (with their own biases and uncertainties). Aggregate, macroeconomic, variables are ideas. Alan Greenspan, the former Federal Reserve Board chairman, was famous for his interest in detailed industry-level statistics because his concern for detail was so unusual. Nevertheless, for all the many genuine improvements made to macro modelling and forecasting since the GFC, macroeconomists have continued to make strong claims and engage in polemic: austerity is the right policy, or absolutely the wrong one; monetary policy needs to be run according to MMT (modern monetary theory—Kelton 2020), or MMT is a half-baked, incoherent policy (Rogoff 2019).

Fully Automated Luxury Communism
by Aaron Bastani
Published 10 Jun 2019

Elsewhere the likes of Brazil and Russia have been mired in recession almost as severe as parts of Europe, the only difference being their economic malaise has kicked in at far lower levels of relative development. Such a shift has only served to strengthen the forces of autocracy. So our world is one increasingly defined by low growth, low productivity and low wages. Before the crisis, most policy-makers would have thought such events impossible, let alone speculated about an appropriate response. Alan Greenspan’s 2008 remarks to the US House of Representatives are illustrative: the banking crisis having left this former chairman of the Federal Reserve in a state of ‘shocked disbelief’ and ‘distressed’ by events he previously viewed as impossible. While neoliberalism, which emerged with the Thatcher and Reagan governments, led to higher unemployment and lower wage growth, for more than a generation this was mitigated by access to cheaper goods and services – by relocating production to countries with lower wages – as well as inflated asset prices, particularly housing, and access to cheap mortgage and consumer debt.

Tomorrow's Capitalist: My Search for the Soul of Business
by Alan Murray
Published 15 Dec 2022

“The Washington Consensus,” a set of free market economic principles developed jointly by the International Monetary Fund, the World Bank, and the US Treasury, all based in Washington, became the bible for addressing economic crises around the globe. In February 1999, Time magazine enshrined the state of global economic thinking with a dramatic cover that anointed Federal Reserve Chairman Alan Greenspan, Treasury Secretary Robert Rubin, and his deputy Lawrence Summers as the “Committee to Save the World.” Summers, who later that year succeeded Rubin as Treasury Secretary, was particularly a product of the times. Considered one of the brightest economic thinkers of his generation, he had grown up in a family of Keynesian economists.

Transport for Humans: Are We Nearly There Yet?
by Pete Dyson and Rory Sutherland
Published 15 Jan 2021

. — Isaac Newton1 By early 1720 Isaac Newton had become suspicious of the stock market hype surrounding the South Sea Company but he made a modest investment nevertheless, and it paid off.2 Seeing the stock rise further he reappraised his views and went all in on what came to be known as the South Sea Bubble, returning to invest more many times. Three months later the stock had crumbled and Newton had lost the equivalent of £20 million in today’s money. How does a mathematical genius make such an error? Was he as vulnerable as the rest of us to what Alan Greenspan, former chairman of the Federal Reserve, called ‘irrational exuberance’? If Newton had known, as we know now, that our biases make us over-optimistic in these situations, would he have stayed out of the bubble, or is this an example of a problem beyond calculation for even the finest minds? We all like to believe that when someone sits behind a desk or makes a big decision, they jettison their behavioural biases, park their emotions and think clearly at all times.

Escape From Model Land: How Mathematical Models Can Lead Us Astray and What We Can Do About It
by Erica Thompson
Published 6 Dec 2022

The aim of the regulator is to maintain the stability of the overall system. The aim of the regulated participants in the market is to make money for themselves as individuals and their companies as a whole. The kinds of limits imposed by the regulator in the short term work against opportunities for profit. Alan Greenspan, ex-chair of the US Federal Reserve, said after the financial crisis, ‘Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief.’ It would be convenient to think that a Darwinian ‘survival of the fittest’ approach to markets would enforce this kind of self-interest, but it fails due to the immediate feedback of competitive pricing outweighing the long-term feedback of system stability.

The Signal and the Noise: Why So Many Predictions Fail-But Some Don't
by Nate Silver
Published 31 Aug 2012

However, these pricing patterns would not have been very easy to profit from unless you were very patient. They’ve become meaningful only in the long term, telling you almost nothing about what the market will be worth one month or one year later. Even looking several years in advance, they have only limited predictive power. Alan Greenspan first used the phrase “irrational exuberance” to describe technology stocks in December 1996,47 at which point the P/E ratio of the S&P 500 was 28—not far from the previous record of 33 in 1929 in advance of Black Tuesday and the Great Depression. The NASDAQ was more richly valued still. But the peak of the bubble was still more than three years away.

…

The book also predicted that the Dow would rise to 100,000 by 2020, giving it its new title. See http://www.amazon.com/Dow-100-000-Fact-Fiction/dp/0735201374 retrieved November 25, 2011. 46. By “real return,” I refer to the share price plus dividends but less inflation. I assume that dividends are automatically re-invested in the stock index rather than held. 47. Alan Greenspan, “The Challenge of Central Banking in a Democratic Society,” Remarks at the Annual Dinner and Francis Boyern Lecture of The American Enterprise Institute for Public Policy Research, Washington, DC, December 5, 1996. http://www.federalreserve.gov/boarddocs/speeches/1996/19961205.htm. 48.

Lords of Finance: The Bankers Who Broke the World
by Liaquat Ahamed
Published 22 Jan 2009

The United States was, however, now so flush with gold that the solidity of its currency was assured. Led by Strong, the Fed had undertaken a totally new responsibility—that of promoting internal economic stability. It was Strong more than anyone else who invented the modern central banker. When we watch Ben Bernanke or, before him, Alan Greenspan or Jean-Claude Trichet or Mervyn King describe how they are seeking to strike the right balance between economic growth and price stability, it is the ghost of Benjamin Strong who hovers above him. It all sounds quite prosaically obvious now, but in 1922 it was a radical departure from more than two hundred years of central banking history.

…

For example, the bill for German reparations was fixed in 1921 at $12 billion. A similar debt today would be $2.4 trillion. ACKNOWLEDGMENTS I have been thinking about this book now for over a decade. In 1999, Time magazine featured a cover story entitled “The Committee to Save the World.” The cover depicted three men: Alan Greenspan, then chairman of the Federal Reserve Board; Robert Rubin, then secretary of the treasury; and Larry Summers, then deputy secretary of the treasury. The article described how close the world had come to an economic meltdown in 1997 and 1998—the big Asian economies of Korea, Thailand, and Indonesia had had to suspend payments on hundreds of billions of dollars of debt, Asian currencies had collapsed against the dollar, Russia had defaulted on its domestic debt, and the hedge fund, Long-Term Capital Management, had lost $4 billion of its investors’ capital, threatening the stability of the entire U.S financial system.

The Intelligent Investor (Collins Business Essentials)
by Benjamin Graham and Jason Zweig
Published 1 Jan 1949

On January 7, 1973, the New York Times featured an interview with one of the nation’s top financial forecasters, who urged investors to buy stocks without hesitation: “It’s very rare that you can be as unqualifiedly bullish as you can now.” That forecaster was named Alan Greenspan, and it’s very rare that anyone has ever been so unqualifiedly wrong as the future Federal Reserve chairman was that day: 1973 and 1974 turned out to be the worst years for economic growth and the stock market since the Great Depression.2 Can professionals time the market any better than Alan Green-span? “I see no reason not to think the majority of the decline is behind us,” declared Kate Leary Lee, president of the market-timing firm of R.

Before Babylon, Beyond Bitcoin: From Money That We Understand to Money That Understands Us (Perspectives)
by David Birch
Published 14 Jun 2017

Companies The issue of private company money was intriguingly explored by the famous lateral thinker Edward de Bono, who set out his thoughts in a pamphlet for the London-based think tank the Centre for the Study of Financial Innovation back in the early 1990s. His central point was that if the cost of issuing currency falls, it makes economic sense for companies to issue their own money rather than use equities (de Bono 2002); he went on to write that he looked forward to a time when ‘the successors to Bill Gates will have put the successors to Alan Greenspan out of business’. De Bono’s argument was that companies could raise money just as governments do now: by printing it. He put forward the idea of private currency as a claim on products or services produced by the issuer rather than the bank credit of Hayek. IBM might issue ‘IBM dollars’ that would be theoretically redeemable for IBM products and services but also practically tradable for other companies’ monies or for other assets.

Them: Adventures With Extremists
by Jon Ronson
Published 1 Jan 2001

She showed me the lists of Bohemian attendees she had managed to surreptitiously acquire over the years. They read much like a Bilderberg roll-call, with Kissinger and Rockefeller, alongside Presidents Bush and Reagan and Ford and Nixon. There were movies stars like Clint Eastwood and Danny Glover, the ex-Tory cabinet minister Chris Patten, Alan Greenspan of the Federal Reserve and Caspar Weinberger and George Shultz. ‘What do you know about the owl-burning ceremony?’ I asked her. ‘They call it the “Cremation of Care”,’ she said. ‘Is it deeply occult as many people think? Some say they’re killing children up there and sacrificing them on the altar.

The New Economics: A Bigger Picture
by David Boyle and Andrew Simms
Published 14 Jun 2009

This was the period in the UK when politicians were searching for the elusive ’feel-good factor’ that explained why people were so stressed, unhappy and angry with the government even though the numbers said they were wealthy. It was the same in the USA: ‘There seemingly inexplicably remains an extraordinarily deep-rooted foreboding about the economic outlook,’ said Alan Greenspan of the Federal Reserve. People had money in their pockets, but they weren’t content. It appeared to be a mystery. The Wall Street Journal had just worked out that the O. J. Simpson trial had cost the equivalent of the total GDP of Grenada. Was that progress, asked the authors? Then there were the liposuction operations – 110,000 of which take place every year in the USA, each of them pumping $2000 into the growth figures.

Buying Time: The Delayed Crisis of Democratic Capitalism
by Wolfgang Streeck
Published 1 Jan 2013

If governments and parliaments are forced today to pay greater heed to the needs and preferences of international financial markets, this too is attributable to the mistakes of the past.69 Just a few years later it was possible to express the same idea more bluntly. In September 2007, in an interview with the Zurich daily Tages-Anzeiger (19 September 2007), the chairman of the US Federal Reserve, Alan Greenspan, gave the following reply to the question of which candidate he supported for the presidency of the United States: ‘We are fortunate that, thanks to globalization, policy decisions in the US have been largely replaced by global market forces. National security aside, it hardly makes any difference who will be the next president.

The Authoritarian Moment: How the Left Weaponized America's Institutions Against Dissent
by Ben Shapiro
Published 26 Jul 2021

Jonah Goldberg, Liberal Fascism: The Secret History of the American Left, from Mussolini to the Politics of Change (New York: Broadway Books, 2007), 158–59. 13. Samuel Staley, “FDR Policies Doubled the Length of the Great Depression,” Reason.org, November 21, 2008, https://reason.org/commentary/fdr-policies-doubled-the-lengt/. 14. Amity Shlaes, Great Society: A New History (New York: Harper Perennial, 2019). 15. Alan Greenspan and Adrian Woolridge, Capitalism in America: A History (New York: Penguin, 2018), 306. 16. Alex J. Pollock, “Seven decades of inflation-adjusted Dow Jones industrial average,” RStreet.org, April 18, 2018, https://www.rstreet.org/2018/04/18/seven-decades-of-the-inflation-adjusted-dow-jones-industrial-average/. 17.

Mastering the Market Cycle: Getting the Odds on Your Side
by Howard Marks
Published 30 Sep 2018

First, let’s review the meteoric rise of stocks in the late 1990s and early 2000, and especially the formation of the Internet bubble. What should the alert investor have noted during that time? In the decade of the 1990s, the U.S. economy enjoyed the longest peacetime expansion in its history. In December 1996, when the S&P 500 index of equities stood at 721, Fed Chairman Alan Greenspan asked, “How do we know when irrational exuberance has unduly escalated asset values?” But he was never heard from again on this subject, even as the S&P more than doubled to a high of 1527 in 2000. In 1994, Prof. Jeremy Siegel of the Wharton School published his book Stocks for the Long Run, in which he pointed out that there had never been a long period of time in which stocks had failed to outperform bonds, cash and inflation.

Listen, Liberal: Or, What Ever Happened to the Party of the People?
by Thomas Frank
Published 15 Mar 2016

.* Clinton had made an early offering to the gods of the market by choosing Robert Rubin and Roger Altman, two prominent investment bankers, to fill high positions in his administration. Before long there were numerous others, many of them protégés of Rubin from his days at Goldman Sachs. Twice did Clinton go on to reappoint Wall Street’s favorite libertarian, Alan Greenspan, to chair the Federal Reserve. By April 1994, according to the New York Times, the president was even taking the stability of financial markets into account in foreign policy decisions.30 Whatever was required to gratify the markets was done. Interstate banking was deregulated in 1994 in order to “let the strong take over the weak so that we can move forward,” as one prominent banker put it.

The Enablers: How the West Supports Kleptocrats and Corruption - Endangering Our Democracy
by Frank Vogl
Published 14 Jul 2021

They started to offer everything from insurance and mortgages to stock broking, bond underwriting, and an ever more exotic range of sophisticated new financial products. Banks constantly pressed the authorities for more and more deregulation. At the same time, the leading regulators, most notably Alan Greenspan, chairman of the Federal Reserve Board, the world’s most powerful central bank, encouraged the trends. He believed that market forces would counter excesses and that the banking system contained within it disciplines that would guard against reckless activities. He could not have been more wrong.

Heads I Win, Tails I Win
by Spencer Jakab
Published 21 Jun 2016

He also spoke of the excessive regret that Meir Statman told us is a trait of poor investors. “Unexpected news arrives, and shareholders panic. Shares are sold, but shareholders soon feel a sense of despair; they feel mistaken, and after some time they discover that they were wrong in their dealings.” He saw irrational exuberance three hundred years before Alan Greenspan uttered those words: “They are not afraid of the fires, nor do they fear the earthquake.” And blind panic as well: “They exaggerate the risks so much that the onlookers think they are witnessing death, even to the point to preferring death and disaster to anything else.”4 Having the gumption to resist the pull of the crowd has been a rare and, as I hope I’ve convinced you, extremely profitable trait throughout history.

Butler to the World: How Britain Became the Servant of Tycoons, Tax Dodgers, Kleptocrats and Criminals
by Oliver Bullough
Published 10 Mar 2022

‘It seems to me quite out of order that anyone on the Treasury staff should be allowed to write articles for magazines,’ one official sniffed in a handwritten annotation to one of his documents. ‘He might be presumed to have specialised knowledge.’ When he got his reply (‘Dear Bell’) it contained no information of use to anyone. It is little wonder he remained in America, where he worked with economists of the calibre of Paul Volcker and Alan Greenspan, both of whom went on to chair the Federal Reserve. ‘I got to know them all, because they weren’t snobby,’ he remembered. ‘Before, I hadn’t realised what could be done with research.’ He shouldn’t have taken the Bank of England’s refusal to share information with him personally; it was like that with almost everyone.

More Than You Know: Finding Financial Wisdom in Unconventional Places (Updated and Expanded)
by Michael J. Mauboussin
Published 1 Jan 2006

As Puggy Pearson once said, “Everything’s mental in life.”2 10 Good Morning, Let the Stress Begin Linking Stress to Suboptimal Portfolio Management It has become evident time and again that when events become too complex and move too rapidly as appears to be the case today, human beings become demonstrably less able to cope. —Alan Greenspan, “The Structure of the International Financial System” Why Zebras Don’t Get Ulcers What would be tops on a zebra’s list of things that cause stress? Well, a zebra certainly worries about physical stressors. A lion has just attacked you, you’ve succeeded in escaping, but the lion is still after you with lunch on its mind.

Debt: The First 5,000 Years
by David Graeber
Published 1 Jan 2010

Under the free-market orthodoxy that followed, we have all being asked, effectively, to accept that “the market” is a self-regulating system, with the rising and falling of prices akin to a force of nature, and simultaneously to ignore the fact that, in the business pages, it is simply assumed that markets rise and fall mainly in anticipation of, or reaction to, decisions regarding interest rates by Alan Greenspan, or Ben Bernanke, or whoever is currently the chairman of the Federal Reserve.5 One element, however, tends to go flagrantly missing in even the most vivid conspiracy theories about the banking system, let alone in official accounts: that is, the role of war and military power. There’s a reason why the wizard has such a strange capacity to create money out of nothing.

…

This is incidentally why complaints about the immorality of deficits are so profoundly disingenuous: since modern money effectively is government debt, if there was no deficit, the results would be disastrous. True, money can also be generated privately, by banks, but there would appear to be limits to this. This is why U.S. financial elites, led by Alan Greenspan, panicked in the late 1990s when the Clinton administration began to run budget surpluses; the Bush tax cuts appear to have been designed specifically to ensure that the deficit was maintained. 111. Wallerstein 1989. 112. 1988:600. 113. Britain passed its first bankruptcy law in 1542. 114.

The Rise of the Network Society
by Manuel Castells
Published 31 Aug 1996

According to these new statistics, US productivity grew at an annual rate of 2.3 percent in the golden period of 1959–73, then declined to between 1.4 and 1.6 percent in 1973–95. Then, from the third quarter of 1995 to the third quarter of 1999, productivity growth climbed to an annual rate of 2.6 percent, with the third quarter of 1999 posting an annualized rate of 4.2 percent, the biggest jump in two years (see figure 2.1).28 Commenting on these developments, Alan Greenspan, chairman of the Federal Reserve Board, stated that “although it is still possible to argue that the evident increase in productivity growth is ephemeral, I find such arguments hard to believe.”29 Indeed, Greenspan had previously lent strong credibility to the emergence of the new economy by asserting, in his report to the US House of Representatives on February 24, 1998, that: Our nation has been experiencing a higher growth rate of productivity – output per hour worked – in recent years.

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This interesting study is pointedly cited by Freeman and Soete (1994). 118 NIKKEIREN (1993). 119 Kumazawa and Yamada (1989). 120 Kuwahara (1989). 121 Inoki and Higuchi (1995). 122 Collective Author (1994). 123 Nomura (1994). 124 Joussaud (1994). 125 Collective Author (1994); Shinotsuka (1994). 126 Gelb and Lief Palley (1994). 127 Takenori and Higuchi (1995). 128 French (1999). 129 Kuwahara (1989); Whitaker (1990). 130 Rifkin (1995). 131 Reich (1991); Freeman and Soete (1994). 132 Harrison (1994); ILO (1994). 133 Arthur (1989). 134 This is the view usually expressed by Alan Greenspan, chairman of the US Federal Reserve Board, and by the International Monetary Fund and other international expert circles. For an economic discourse articulating this thesis, see Krugman (1994a); and Krugman and Lawrence (1994). 135 Cappelli and Rogovsky (1994). 136 Carnoy and Fluitman (1994). 137 Howell and Wolff (1991); Mishel and Teixeira (1991); Howell (1994). 138 Center for Budget and Policy Priorities, Washington, DC, cited by The New York Times (October 7, 1994: 9); see also Murphy and Welch (1993); Bernstein and Adler (1994). 139 Mishel and Bernstein (1994). 140 Carnoy (1994); for the persistence of racial inequality in the professional class in the new economy companies, see Harper-Anderson (forthcoming). 141 Sayer and Walker (1992). 142 Lee and Townsend (1993: 18–20). 143 Hutton (1995). 144 Esping-Anderson (1999). 145 Mishel et al. (1999); Bison and Esping-Anderson (2000). 146 Carnoy (2000: 48). 147 Warnken and Ronning (1990). 148 Shaiken (1993, 1995). 149 Bosch (1995). 150 Portes et al. (1989); Gereffi (1993). 151 For assessments of the decline of traditional unionism under new economic/technological conditions, see Carnoy et al. (1993a); see also Gourevitch (1984); Adler and Suarez (1993). 152 There is a tendency, however, for share of agricultural employment to be estimated lower than that of the entire employed population, as shown in table 4.16. 153 In order to comply with the standard classification of services, eating and drinking places are included in retail trade. 5 The Culture of Real Virtuality: the Integration of Electronic Communication, the End of the Mass Audience, and the Rise of Interactive Networks Around 700BC a major invention took place in Greece: the alphabet.

Made to Stick: Why Some Ideas Survive and Others Die
by Chip Heath and Dan Heath
Published 18 Dec 2006

As the contaminated bananas show, authorities are a reliable source of credibility for our ideas. When we think of authorities who can add credibility, we tend to think of two kinds of people. The first kind is the expert—the kind of person whose wall is covered with framed credentials: Oliver Sachs for neuroscience, Alan Greenspan for economics, or Stephen Hawking for physics. Celebrities and other aspirational figures make up the second class of “authorities.” Why do we care that Michael Jordan likes McDonald’s? Certainly he is not a certified nutritionist or a world-class gourmet. We care because we want to be like Mike, and if Mike likes McDonald’s, so do we.

The Greatest Story Ever Told--So Far
by Lawrence M. Krauss
Published 21 Mar 2017

The Higgs demonstrates that symmetry breaking in the laws of nature can occur as the result of a scalar field condensate throughout space. Depending upon the details, inflation thus becomes a far more natural and potentially generic possibility. As my colleague Michael Turner put it jokingly some time ago, aping then Federal Reserve Board chair Alan Greenspan, “Periods of inflation are inevitable!” That statement may have been more prescient than anyone imagined at the time. In 1998 it was discovered that our universe is now undergoing a new version of inflation, validating some previous and rather heretical predictions by a few of us. As I mentioned earlier, this implies that the dominant energy of the universe now appears to reside in empty space—which is the most plausible explanation of why the observed expansion of the universe is speeding up.

Grave New World: The End of Globalization, the Return of History
by Stephen D. King
Published 22 May 2017

Part Two STATES, ELITES, COMMUNITIES 5 GLOBALIZATION AND NATION STATES The market-led model of globalization ultimately depended on the idea that, left to their own devices, increasingly internationalized markets could generate outcomes that were both in everybody’s self-interest and in societies’ collective interests. Yet, following the financial crisis, it was no longer obvious that this idea was in any way credible. Indeed, Alan Greenspan, former chairman of the Federal Reserve and for much of his life a cheerleader for market forces, was forced to admit as much while giving evidence to the US House Committee on Oversight and Government Reform in October 2008: ‘Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief.’

A Fine Mess
by T. R. Reid
Published 13 Mar 2017

“I myself opposed the VAT on money-machine grounds,” Bartlett continued. “I changed my mind when I realized that there was no longer any hope of controlling entitlement spending before the deluge hits when the baby boomers retire; therefore, the U.S. now needs a money machine.”10 Bartlett is not alone in his party. Alan Greenspan, the Federal Reserve chairman who endorsed the Bush tax cuts at the start of this century, has argued that a VAT is the “least worst” way to raise taxes. Now and then Republicans propose a VAT/GST or a similar form of consumption tax, operating on the theory that it’s better than the personal and corporate income tax regimes we have in place today.

The Impulse Society: America in the Age of Instant Gratification
by Paul Roberts
Published 1 Sep 2014

Of the nearly $1.3 trillion in equity that Americans extracted from their homes between 2003 and 2005, a third of it was spent on cars, boats, vacations, plasma screen TVs, and other items of personal consumption.23 Even government policymakers caught the virus. At the Federal Reserve, chairman Alan Greenspan, another champion of unfettered, efficient markets, saw rapidly appreciating housing prices and equity withdrawals as an easy way to help offset consumers’ flattening incomes. In this Panglossian scenario, by keeping interest rates low, the government hoped to harness financial markets to do what traditional economic activity no longer seemed capable of doing: maintain rising living standards.

The Darwin Economy: Liberty, Competition, and the Common Good
by Robert H. Frank
Published 3 Sep 2011

Then, they thought, they could obtain the whole store of precious metal at once; however, upon cutting the goose open, they found its innards to be like that of any other goose.1 This tale is a perennial favorite of movement libertarians, who invoke it to remind those who favor a more progressive tax system that such a system would impoverish everyone. Former Fed Chairman Alan Greenspan, who describes himself as a libertarian, echoed this view when he wrote that “All taxes are a drag on economic growth. It’s only a matter of degree.”2 But it’s not just libertarians who believe taxes inhibit economic growth. Variations of that view, often called trickle-down theory, have been repeated so often by so many people across the political spectrum that it has acquired an air of settled truth. 157 158 CHAPTER TEN It cannot literally be true, of course, that all taxes are a drag on economic growth.

Leaving Microsoft to Change the World: An Entrepreneur's Odyssey to Educate the World's Children
by John Wood
Published 28 Aug 2006

Erin and I had to personally pitch donors on every school we needed funding for, and every computer lab and language lab and library. Low overhead was one of our key points of differentiation, and an important one given that many of our early donors were technology entrepreneurs who preached the gospel of economic efficiency in a way that would make Alan Greenspan proud. Unfortunately, this also exacted a toll, as we worked insane hours to keep up with our growth. My idea of a weekend was to take either Saturday or Sunday morning off, but certainly not both. On Sunday, I might leave the office at 8 p.m. rather than the usual 10 p.m. These hours did not usually bother me.

The Enigma of Capital: And the Crises of Capitalism
by David Harvey
Published 1 Jan 2010

For most of the last century, many of the advanced capitalist states embraced progressive taxation, redistributions in kind and strong inheritance taxes, thereby curbing excessive concentrations of personal wealth and power. So why were the constraints to excessive concentration of money power loosened in the US and elsewhere after 1980? Explanations in terms of a sudden burst of ‘infectious greed’ (Alan Greenspan’s term) simply do not wash, since the underlying desire for money power has always been around. Why did President Bill Clinton cave in so easily to the bondholders? Why did Larry Summers when he was Clinton’s Treasury Secretary violently oppose regulating finance, and why did Joseph Stiglitz, who now positions himself on the left of mainstream but who was Clinton’s Chief Economic Adviser in the 1990s, find himself supporting moves that ‘incidentally’ ended up always making the rich richer?

Death of the Liberal Class
by Chris Hedges
Published 14 May 2010

The longer the power elite and the liberal class speak in words that no longer correspond to reality, the more an embittered and betrayed populace loses faith in traditional systems of government and power. The inability of liberals and the power elite to address our reality leaves the disenfranchised open to manipulation by the demagogues. The moral nihilism Dostoyevsky feared with the collapse of the liberal class inevitably leads to social chaos. Alan Greenspan, the former head of the Federal Reserve Board, once treated with reverential deference by the power elite and the liberal class, announced in 2008, “I made a mistake in presuming that the self-interest of organizations, specifically banks and others, were such that they were best capable of protecting their own shareholders and their equity in their firms.”8 Greenspan exposed the folly of the liberal experts and economists, who had promoted a baseless belief in the power of free markets to self-regulate and solve the world’s problems.

The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies
by Erik Brynjolfsson and Andrew McAfee
Published 20 Jan 2014

Second, Pigovian taxes raise revenue for the government, which could be used to compensate those harmed by the pollution (or for any other purpose). They’re a win-win. Taxes of this type are popular across the political spectrum and among people in many fields; members of the “Pigou Club,” a group of advocates identified by economist Gregory Mankiw, include both Alan Greenspan and Ralph Nader.37 By improving measurement and metering, the technologies of the second machine age make Pigovian taxes more feasible. Consider traffic congestion. Each of us imposes a cost on all other drivers when we join an already overcrowded highway and further slow traffic. At peak hours, traffic on Interstate 405 in Los Angeles crawls at fourteen miles per hour, more than quadrupling what should be an eight-minute drive.

The Connected Company
by Dave Gray and Thomas Vander Wal
Published 2 Dec 2014

The service economy In today’s world, where ideas are increasingly displacing the physical in the production of economic value, competition for reputation becomes a significant driving force, propelling our economy forward. Manufactured goods often can be evaluated before the completion of a transaction. Service providers, on the other hand, usually can offer only their reputations. — Alan Greenspan Industrialization is a phase, and in developed nations that phase is ending. Growth in developed economies will increasingly come from services. The Great Reset In The Great Reset: How New Ways of Living and Working Drive Post-Crash Prosperity, Richard Florida points to a shift from an economy based on making things to one that is increasingly powered by knowledge, creativity, and ideas: Great Resets are broad and fundamental transformations of the economic and social order and involve much more than strictly economic or financial events.

The Post-American World: Release 2.0
by Fareed Zakaria
Published 1 Jan 2008

But the earthquake that shook everything was the collapse of the Soviet Union in the late 1980s. With central planning totally discredited and one end of the political spectrum in ruins, the entire debate shifted. Suddenly, there was only one basic approach to organizing a country’s economy. This is why Alan Greenspan has described the fall of the Soviet Union as the seminal economic event of our time. Since then, despite all the unease about various liberalization and marketization plans, the general direction has not changed. As Margaret Thatcher famously put it in the years when she was reviving the British economy, “There is no alternative.”

When the Money Runs Out: The End of Western Affluence
by Stephen D. King
Published 17 Jun 2013

With the UK financial system now awash with liquidity, lending increased rapidly both within the financial system and to other parts of the economy that, frankly, didn't need any refreshing. In particular, the property sector boomed thanks to an abundance of credit and a gradual reduction in lending standards. Even as official interest rates were rising, interest rates on junk bonds were coming down. Meanwhile, the US had become dependent on serial bailouts. Alan Greenspan, ‘rescuer-in-chief’, established his bailout credentials when, as the newly appointed Chairman of the Federal Reserve, he saved the US from economic oblivion following the 1987 stock-market crash – thanks to both interest rate cuts and a browbeating session with bankers to make sure that they didn't starve each other of necessary funds.

Alpha Girls: The Women Upstarts Who Took on Silicon Valley's Male Culture and Made the Deals of a Lifetime
by Julian Guthrie
Published 15 Nov 2019

Wives, assistants, entrepreneurs, executives, colleagues, and investors had been trying to reach them. “The market has gone crazy!” one of Theresia’s partners exclaimed. * * * In March 2000 the stock market, which in recent years had only gone up, plummeted. In February, Alan Greenspan announced plans to aggressively raise interest rates, leading to some instability. Barron’s followed with an ominous cover story: “Burning Up: Internet companies are running out of cash—fast.” Although some market analysts brushed off the downturn as a blip, nearly a trillion dollars’ worth of stock value evaporated in a month.

Norman Foster: A Life in Architecture
by Deyan Sudjic
Published 1 Sep 2010

Legal wranglings stalled the old Rossiya Hotel site when Morab, one of the unsuccessful bidders, went to court to contest the tender process, claiming that Chigirinsky had insider knowledge of the deal. Chigirinsky successfully appealed when the decision went against him. Morab appealed in turn, and won, leading to a hiatus. In 2009, the city of Moscow was manoeuvring to take over the project. Work had already stopped on the Rossiya tower. ‘Say thanks to Alan Greenspan and George Bush,’ said Chigirinsky, blaming the credit crunch. Foster travelled to Moscow after his first trip to St Petersburg and met the mayor, Yuri Luzhkov. Some time later, he was introduced to Luzhkov’s wife, Yelena Baturina, in Chigirinsky’s office. Baturina was the first Russian female billionaire.

Lying for Money: How Fraud Makes the World Go Round
by Daniel Davies
Published 14 Jul 2018

Possibly with a winkie emoticon, possibly not, it was suggested that since he was designing the PowerPoint slides used by bankers in negotiations over corporate takeovers, he might share the names of the companies being taken over with his pals on AOL, who could buy the shares ahead of the good news. John Freeman didn’t invest in the stocks himself – he thought the market was too risky after Alan Greenspan had talked about ‘irrational exuberance’ and besides, he was broke. But he was willing to help out his cyber pals in return for a commission of 10 per cent of the trading profits. Before long, in response to increasing demand for tips, he was wandering through the building late at night, looking on people’s desks and rifling through shredder bins.

Future Tense: Jews, Judaism, and Israel in the Twenty-First Century
by Jonathan Sacks
Published 19 Apr 2010

Without compromising one iota of Jewish faith or identity, Jews must stand alongside their friends, Christian, Muslim, Buddhist, Hindu, Sikh or secular humanist, in defence of freedom against the enemies of freedom, in affirmation of life against those who worship death and desecrate life. We are entering, said Alan Greenspan, an age of turbulence. The antidote to fear is faith, a faith that knows the dangers but never loses hope. Faith as I understand it is not certainty but the courage to live with uncertainty, the courage Natan Sharansky discovered in his prison cell, the courage that led Jews to rebuild their lives and their ancestral home after the Holocaust, the faith that led generation after generation to hand on their way of life to their children, knowing the risks involved in being Jewish yet never ceasing to cherish the privilege of the challenge.

The Perfect Police State: An Undercover Odyssey Into China's Terrifying Surveillance Dystopia of the Future
by Geoffrey Cain
Published 28 Jun 2021

In 2012, a congressional panel released the results of a year-long investigation, claiming it had obtained documents from former Huawei employees that showed Huawei supplied services to a cyber-warfare unit in the Chinese army.34 The US government began taking aim at CEO Ren’s daughter, Meng Wanzhou, who went by the English nickname “Cathy.” As Huawei’s globe-trotting socialite, Cathy hosted business events that had Q&As with Alan Greenspan and others.35 Behind the scenes, the FBI and Department of Homeland Security were monitoring the business activities of Cathy and Huawei. It suspected that she oversaw a front company in Iran called Skycom that broke US trade sanctions by doing business with Iranian telecommunications companies.

The Pay Off: How Changing the Way We Pay Changes Everything
by Gottfried Leibbrandt and Natasha de Teran
Published 14 Jul 2021

News of the outage dominated the UK media that day and, predictably, nearly all coverage focused on the impact on house sales, quietly sidestepping the 70 per cent that did go through and ignoring the fact that property sales account for just 0.1 per cent of the total value transferred through CHAPS. The media’s decision to focus on the housing market was probably a reflection of the British obsession with property. But it also masked a failure of imagination as to what a more prolonged outage might mean. Alan Greenspan, who served as chair of the US Federal Reserve from 1987 until 2006, suffered no such illusions. Freed from the constraints of office, he wrote in 2007: ‘We had always thought that if you wanted to cripple the US economy, you would take out the payment system. Banks would be forced to fall back on inefficient physical transfer of money.

The Man Who Broke Capitalism: How Jack Welch Gutted the Heartland and Crushed the Soul of Corporate America—and How to Undo His Legacy
by David Gelles
Published 30 May 2022

In 1965 CEOs were paid about 20 times as much as an average employee at their company. That ratio began to balloon around the time Welch took over GE. CEOs started getting paid 50 times as much, then 100 times as much, then 200 times as much as their average employees. Some contrarians sounded the alarm even as the party was in full swing. With the dot-com bubble inflating, Alan Greenspan, then the chairman of the Federal Reserve, famously warned of “irrational exuberance.” William Bennett, who served in the administrations of Presidents Reagan and George H. W. Bush, raised the prospect that Welch’s tactics, left unchecked, could ultimately do profound damage to the fabric of the country.

Expected Returns: An Investor's Guide to Harvesting Market Rewards
by Antti Ilmanen
Published 4 Apr 2011

Sources: Haver Analytics, Standard & Poor’s, Robert Shiller’s website, Federal Reserve Board, Homer–Sylla (1991), own calculations. Whatever the fundamental reason for the close relation between equity and bond yields, investors have tried to exploit it. Yield ratio became a popular relative value indicator, labeled “the Fed Model” after Fed chairman Alan Greenspan referred to this indicator in Congressional testimony in 1997. Asness (2003) stresses that while the Fed Model is poorly constructed, in that it mixes real and nominal quantities, it may describe well how investors choose to set stock market P/E. In other words, if investors set P/E in relation to nominal bond yield, whether rationally or irrationally, over the short term the Fed Model may be a moderately useful trading tool.

…

This reflation policy may have worked too well to bolster financial markets but insufficiently to support job markets—the collateral damage to public-sector finances has been substantial. Box 27.1. Thoughts on the origins of the financial crisis The big picture is that the crisis followed the broad underpricing of risk in several asset classes amid persistently loose financial conditions. Recall Alan Greenspan’s warning during the boom years: “History has not dealt kindly with the aftermath of protracted periods of low risk premia.” A related interpretation is that the crisis was a modern-day bank run, where a bank run is defined as loss of confidence in a given bank, an asset class, or even the whole financial system.

The Great Disruption: Why the Climate Crisis Will Bring on the End of Shopping and the Birth of a New World
by Paul Gilding
Published 28 Mar 2011

However, people feel isolated and see their fellow citizens as different from them, as the ones who are greedy and excessive. So it appears we all secretly want this to happen! So who does support inequality? Not economists, who by a margin of four to one support governments taking action in this area.4 Not even the top “go for growth” economists like former Fed chairman Alan Greenspan want it. He called increasing inequality a “very disturbing trend.” It appears there is a clear and in some cases overwhelming majority of people and experts who think we need to have significantly greater equality in our society. Given that the data clearly demonstrates we’ll pretty much all be better off down that path, it’s time to get to work on making that happen.

The Misbehavior of Markets: A Fractal View of Financial Turbulence
by Benoit Mandelbrot and Richard L. Hudson
Published 7 Mar 2006

All these views you will find asserted as an unassailable fact in countless articles reviewed by countless worthy peers, and supported by countless computer runs, probability tables, and analytical charts. Wassily Leontief, a Harvard economist and 1973 Nobel winner, once observed: “In no field of empirical enquiry has so massive and sophisticated a statistical machinery been used with such indifferent results.” It is time to change that. As a first step, I issue a challenge to Alan Greenspan, Eliot Spitzer, and William Donaldson—Federal Reserve chairman, New York attorney general, and SEC chairman, respectively. In the April 2003 settlement of post-bubble fraud charges, the biggest Wall Street firms agreed to cough up $432.5 million to fund “independent” research. Spitzer’s office amply documented that what passed for investment research before was not only wrong, but fraudulent.

Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets
by Nassim Nicholas Taleb
Published 1 Jan 2001

His ego was pumped up as he was heading up a department of “great traders” who were then temporarily making a fortune in the markets and attributing the idea to the soundness of their business, their insights, or their intelligence. They subsequently blew up during the harsh New York winter of 1994 (it was the bond market crash that followed the surprise interest rate hike by Alan Greenspan). The interesting part is that several years later I can hardly find any of them still trading (ergodicity). Recall that the survivorship bias depends on the size of the initial population. The information that a person derived some profits in the past, just by itself, is neither meaningful nor relevant.

The Undercover Economist: Exposing Why the Rich Are Rich, the Poor Are Poor, and Why You Can Never Buy a Decent Used Car
by Tim Harford
Published 15 Mar 2006

Of course, start-up companies will borrow money from banks, and interest rates will rise or fall, depending on the balance between the number of people wanting to save and the number of people wanting to borrow. Interest rates are just another price: the price of spending today instead of next year. (You might have thought that interest rates were set by central bankers like Alan Greenspan at the Federal Reserve or Mervyn King at the Bank of England. Actually, Greenspan and King chair committees that set “nominal” interest rates. True interest rates are interest rates after inflation—set by the market in response to the central bankers.) The changes don’t stop there. The ripples in the price system continue outward.

The Curse of Cash
by Kenneth S Rogoff
Published 29 Aug 2016

Many finance economists have argued that due to a mix of psychology and market imperfections, long periods of ultra-easy monetary policy—whether through ultra-low interest rates or quantitative easing or both—invariably lead to speculative excesses that can reach systemic proportions. Presumably, those already concerned about quantitative easing or extended periods of near-zero interest rates will be even more concerned about deeply negative interest rates. This is an old debate, going back at least to the 1990s, when Alan Greenspan was chair of the Federal Reserve. The classical point of view, embodied in Ben Bernanke (Fed chair after Greenspan) and Mark Gertler’s well-known 1999 Jackson Hole conference paper, is that monetary authorities should take into account financial stability risks only to the extent that these risks affect their forecasts for primary target variables, such as inflation and output.2 The reasoning is that the monetary authorities are not any better at predicting asset prices than are markets, and therefore have no special way to tell whether a large run-up in housing prices or stock prices is a bubble.

The Upside of Inequality
by Edward Conard
Published 1 Sep 2016

Bullhound, June 17, 2015, http://www.gpbullhound.com/wp-content/uploads/2015/06/GP-Bullhound-Research-Billion-Dollar-Companies-2015.pdf. 43. Scott Austin, Chris Canipe, and Sarah Slobin, “The Billion Dollar Startup Club,” Wall Street Journal, February 18, 2015, http://graphics.wsj.com/billion-dollar-club. 44. Ibid. 45. Alan Greenspan, The Age of Turbulence: Adventures in a New World (New York: Penguin Press, 2007), 351. 46. “The Distribution of Household Income and Federal Taxes, 2011,” Congressional Budget Office 47. Ford, Rise of the Robots. Chapter 2: The Reasons for Slowing Wage Growth 1. Bruce Greenwald and Judd Kahn, Globalization: n.

Garbage Land: On the Secret Trail of Trash
by Elizabeth Royte
Published 1 Jan 2005

“I decided after three months of school that I’d make a lousy lawyer,” she said, “but I stuck it out.” The prisons never got Wendy back, but the Hugo Neu Corporation did. Of all the materials recycled in this country, metals have the longest history of being collected and refashioned into new goods. The market for scrap has always been strong: Alan Greenspan is said to look at its price as a leading economic indicator. Recycling scrap is cost-effective, and working with clean recycled steel in electric arc furnaces, instead of virgin ore in blast furnaces, requires a third as much energy (because it avoids mining, processing, transporting, and converting ore to iron), cuts air pollution by more than 85 percent (because all that digging, transporting, and transforming produces large amounts of greenhouse gases), and cuts water usage by 40 percent (because iron ore isn’t being cleaned and cooled).

The Globalization Paradox: Democracy and the Future of the World Economy
by Dani Rodrik
Published 23 Dec 2010

Calls for increased regulation of finance were rebuffed by pointing out that banks would simply get up and move to less regulated jurisdictions.23 The immediate causes of the financial crisis of 2008 are easy to identify in hindsight: mortgage lenders (and borrowers) who assumed housing prices would keep rising, a housing bubble stoked by a global saving glut and the reluctance of Alan Greenspan’s Federal Reserve to deflate it, financial institutions addicted to excessive leverage, credit rating agencies that fell asleep on the job, and of course policy makers who failed to get their act together in time as the first signs of the crisis began to appear. Without these regulatory failings, the glut in global finance would not have proved dangerous; after all, low interest rates are a good thing insofar as they enable higher investment.

Wealth Without a Job: The Entrepreneur's Guide to Freedom and Security Beyond the 9 to 5 Lifestyle
by Phil Laut and Andy Fuehl
Published 12 Sep 2004

FED THINKS JOB MARKET MAY NOT RECOVER TILL ’05 Washington—The Federal Reserve policymakers expressed concern at their October meeting that the battered job market might not fully recover until at least 2005 even if the economic recovery grew stronger, according to minutes released Thursday of the discussion. That concern was one reason Fed Chairman Alan Greenspan and his colleagues who set U.S. interest rate policy held a main short-term rate at a 45 year low of 1 percent and suggested rates might stay in that range for a “considerable period.” “Members generally anticipated that an economic TABLE 2.1 Percentage of Women with Child under Six Years Old in the Labor Force Year % 1960 1970 1980 1993 2003 18.6 30.3 45.1 59.6 70.0 Source: U.S.

Better, Stronger, Faster: The Myth of American Decline . . . And the Rise of a New Economy
by Daniel Gross
Published 7 May 2012

And like the stimulus, the government’s market interventions and backstops also represented a quick, largely effective, and pragmatic response. Between 2001 and 2008 the distinguishing factor of monetary and financial policy was the triumph of ideology over pragmatism. Once the financial crisis hit, the reaction marked a shift away from ideology and a rediscovery of pragmatism, the original American philosophy. Where Alan Greenspan idolized the libertarian goddess Ayn Rand, his successor, Ben Bernanke, seemed to look to the 1980s TV action hero MacGyver as a role model: he would patch markets together with gumballs, pine needles, and a paper clip. Henry Paulson, the former chief executive of Goldman Sachs who served as treasury secretary in the latter years of the Bush administration, was similarly willing to dispense with ideological purity for the sake of saving the system that had enriched him.

The Seventh Sense: Power, Fortune, and Survival in the Age of Networks
by Joshua Cooper Ramo
Published 16 May 2016

A world of ceaseless change means that a useful education involves not merely the mastery of facts, as it might at a Western university, but also the training of a vigilant instinct. A version of this same aim, to adjust and thrive amid change, was at the heart of Master Nan’s teaching. It made his ideas, in a Chinese age of constant shifts, magnetically appealing. The circulation lists on his lecture notes were the Chinese equivalent of a roster that included Alan Greenspan, Colin Powell, and Warren Buffett. “I just had a very senior leader here,” Nan told me during a visit several years later. I had seen the high security at the compound and the military cars whipping in and out all day. “He asked me what books I could recommend to understand this period we are living in.

The New New Thing: A Silicon Valley Story
by Michael Lewis
Published 29 Sep 1999

In March 1999 Jack Welch, the chairman of General Electric, one of those people who created conventional business wisdom every time he opened his mouth, said that the Internet was "the single most important event in the U.S. economy since the Industrial Revolution." Even the normally understated chairman of the U.S. Federal Reserve, Alan Greenspan, said that "the revolution in information technology has altered the structure of the way the American economy works." Growth was change, and change was disturbingand if you doubted it you needed only to ask any Serious American Executive. The business magazines even had a phrase for the pangs of incipient doom that afflicted them: "Internet anxiety."

Freakonomics: A Rogue Economist Explores the Hidden Side of Everything
by Steven D. Levitt and Stephen J. Dubner
Published 11 Apr 2005

Economics is seen as the ideal blend of intellectual prestige (it does offer a Nobel, after all) and practical training for a high-flying finance career (unless, like Levitt, you choose to stay in academia). At the same time, economics is ever more visible in the real world, thanks to the continuing fetishization of the stock market and the continuing fixation with Alan Greenspan. The greatest change, however, is within the scholarly ranks. Microeconomists are gaining on the macro crowd, empiricists gaining on the theorists. Behavioral economists have called into doubt the very notion of “homo economicus,” the supposedly rational decision-maker in each of us. Young economists of every stripe are more inclined to work on real-world subjects and dip into bordering disciplines—psychology, criminology, sociology, even neurology—with the intent of rescuing their science from its slavish dependence upon mathematical models.

Rethinking Capitalism: Economics and Policy for Sustainable and Inclusive Growth
by Michael Jacobs and Mariana Mazzucato
Published 31 Jul 2016

In 2009–2010 these deficits reached as much as 32.3 per cent in Ireland, 15.2 per cent of GDP in Greece, 12.7 per cent in the US, 10.8 per cent in the UK, 8.8 per cent in Japan and 7.2 per cent in France.7 The financial crash exposed fundamental weaknesses in the functioning and regulation of the global financial system. As former Chairman of the Federal Reserve Alan Greenspan grudgingly acknowledged in his testimony to Congress, there had been a ‘flaw’ in the theory underpinning the Western world’s approach to financial regulation. The presumption that ‘the self-interest of organisations, specifically banks, is such that they were best capable of protecting shareholders and equity in the firms’ had proved incorrect.8 Contrary to the claims of the ‘efficient markets hypothesis’ which underpinned that assumption, financial markets had systematically mispriced assets and risks, with catastrophic results.9 The financial crash of 2008 was the most severe since that of 1929.

The Corruption of Capitalism: Why Rentiers Thrive and Work Does Not Pay
by Guy Standing
Published 13 Jul 2016

Besides QE, central banks have subsidised investors speculating in bonds and equities through assurances that they will act to buoy stock markets and keep interest rates low. This raises capital values and asset prices by reducing the risks of speculation. The most well-known instance is what has become known as the ‘Greenspan put’; Alan Greenspan, when Chairman of the US Federal Reserve, let it be understood that the Fed would cut interest rates to stop a stock market rout. Successive rate cuts duly propped up US stock markets during the 1990s and early 2000s. Some economists have even argued that central banks should buy shares in the open market to underpin ‘reasonable’ price-to-earnings ratios, as China’s did in 2015 by providing cash for a stock-buying fund.

The Rapture of the Nerds
by Cory Doctorow and Charles Stross
Published 3 Sep 2012

She grabs Doc by one ear and lifts. “Put that disgusting thing down right this instant, I say!” He lets go of the Taser shotgun as he rises, perforce to a stoop (for the Thought-Leader is not a tall person in this reincarnate body). “Do you call yourself an Objectivist? You aren’t fit to shine Alan Greenspan’s boots! And what’s this I hear about this bizarre superstitious plan to bring about a universal theocracy? Your illogic disgusts me! Truly pathological. Feh. You and I, we are going to have an open-minded discussion about the meaning of hypocrisy in the context of rational thought grounded on Aristotelian axioms.

The Myth of Capitalism: Monopolies and the Death of Competition
by Jonathan Tepper
Published 20 Nov 2018

Rockefeller: The Heroic Age of American Enterprise argued that while Rockefeller may have engaged in some illegal business practices, this should not undermine his creation of an organized industry. This line of thinking began to infect other economists. At a speech to an antitrust conference in the early 1960s, a little-known economist named Alan Greenspan bemoaned the loss of monopolies. Echoing Schumpeter, he argued, “No one will ever know what new products, processes, machines, and cost-saving mergers failed to come into existence, killed by the Sherman Act before they were born. No one can ever compute the price that all of us have paid for that Act which, by inducing less effective use of capital, has kept our standard of living lower than would otherwise have been possible.”54 Never mind that when he said that the US economy was booming, productivity was high, investment was high, and wages were rising for the middle class.

How to Own the World: A Plain English Guide to Thinking Globally and Investing Wisely
by Andrew Craig
Published 6 Sep 2015

House prices kept increasing and, thanks to a heady cocktail of money illusion and the endowment effect, people felt wealthier. In turn, politicians were happy, as there is no happier electorate than one that feels wealthy. In the “noughties”, particularly after 9/11, the stage was set for an even more frenzied bull market when Alan Greenspan, chairman of the Federal Reserve, cut real interest rates to less than zero and held them there for years. The real interest rate is the interest rate minus inflation, hence how it can be less than zero (as it is at the moment). All over the UK and the US, people were effectively being paid to borrow money to buy property.

Who Rules the World?
by Noam Chomsky

Left out of the gains of the plutonomy are the “non-rich,” the vast majority, now sometimes called the “global precariat,” the workforce living an unstable and increasingly penurious existence. In the United States, they are subject to “growing worker insecurity,” the basis for a healthy economy, as Federal Reserve chair Alan Greenspan explained to Congress while lauding his own skills in economic management.28 This is the real shift of power in global society. The Citigroup analysts advise investors to focus on the very rich, where the action is. Their “Plutonomy Stock Basket,” as they call it, has far outperformed the world index of developed markets since 1985, when the Reagan-Thatcher economic programs for enriching the very wealthy were really taking off.29 Before the 2008 crash for which they were largely responsible, the new post–golden age financial institutions had gained startling economic power, more than tripling their share of corporate profits.

No Regrets, Coyote: A Novel
by John Dufresne
Published 1 Jun 2014

He told me to cut the deck, and I did. He said they teach sociopathy in business schools. No right or wrong. Just the bottom line. It’s all that matters. He told me to pick a card, look at it, remember it, slip it back into the deck. Eight of spades. And then he went off on a rant about Ayn Rand and her cretinous drivel. He said Alan Greenspan was a felonious sociopath. Bay said sociopaths have the advantage—they know they’re right. Decent people always have misgivings. He never touched the deck. The check arrived. I said I had it, took out my wallet, and there was the eight of spades folded around my credit card. “How the hell did you do that?”

Capital Without Borders
by Brooke Harrington
Published 11 Sep 2016

We are now witnessing a similar back-and-forth between international governing bodies and global socioeconomic elites, in which ownership and taxation rights over primarily financial assets are at stake. 30. Tamar Frankel, “Cross-Border Securitization: Without Law, but Not Lawless,” Duke Journal of Comparative and International Law 8 (1998): 258. 31. Alan Greenspan, commencement address delivered June 10, 1999, at Harvard University, Cambridge, MA, www.federalreserve.gov/boarddocs/speeches/1999/199906102.htm. 32. Roscoe Pound, An Introduction to the Philosophy of Law (New Haven, CT: Yale University Press, 1922), 236. 33. The medieval imprint continues to be visible in the language of trusts.

Falter: Has the Human Game Begun to Play Itself Out?
by Bill McKibben
Published 15 Apr 2019

But you don’t need to be right to be influential. Her books animated many of the people who dominated American politics at crucial moments. When the United States was occupying the role of superpower, charting the course for a planet, she was occupying the hearts and minds of many of its most powerful people. Consider Alan Greenspan, the avatar of neoliberalism and the chief architect of the world’s economy in the years after the collapse of the Soviet Union—as The Economist once said, “the money men” regarded him as “Saint Alan.”1 He met Rand in the early 1950s, when he was a twenty-five-year-old economic forecaster. She was already the famous author of The Fountainhead, and he joined her circle, coming to her New York apartment every Saturday night to listen as she read drafts of her forthcoming novel, Atlas Shrugged, to her acolytes.

The Infinite Machine: How an Army of Crypto-Hackers Is Building the Next Internet With Ethereum
by Camila Russo
Published 13 Jul 2020

The same arguments popped up in the late 1990s, before the dot-com bubble popped, as stock analysts rationalized sky-high valuations by declaring that internet companies can’t be compared with “regular” companies. Things like revenue don’t matter like they used to and increased productivity thanks to technological developments reduced the risk of a recession. Then Fed chairman Alan Greenspan told the Senate Banking Committee that recent economic performance had been so “exceptional” that it might “carry productivity trends nationally and globally to a new higher track.” Technological developments were bringing forth a new system that couldn’t be measured by the standards of the old one.

Why I Left Goldman Sachs: A Wall Street Story
by Greg Smith
Published 21 Oct 2012

The Open Meeting was an interrogation chamber where the meeting chairs tried to push you to the limit, to test your knowledge on a number of fronts. First and most basic was your market knowledge. You might be asked, “Where is the S&P 500 trading?” or “Why was crude oil down three percent today?” or “Why did Alan Greenspan lower interest rates?” There was no cut-and-dried way to prep for what they were going to ask. The second category was Goldman Sachs history. I was relieved when they asked questions like “When was the firm founded? By whom? Who were all the senior partners from 1960 until today? Who is the current CFO of the firm?”

Sickening: How Big Pharma Broke American Health Care and How We Can Repair It
by John Abramson
Published 15 Dec 2022

The guru behind this wisdom, the Nobel Prize–winning economist Milton Friedman, equated laissez-faire capitalism with political freedom. Friedman argued that the role of government should be limited to three functions: “to preserve law and order, to enforce private contracts, [and] to foster competitive markets.” He and Alan Greenspan, the Reagan-appointed chair of the Federal Reserve, maintained that allowing markets to regulate themselves would create the greatest prosperity. Other conservative economists concurred, arguing society was best served by corporate managers “single-mindedly working to maximize shareholder value,” as measured by the price of shares on the stock market.

The End of Growth: Adapting to Our New Economic Reality
by Richard Heinberg
Published 1 Jun 2011

BOX 2.1 Plenty of Blame to Go Around The bipartisan Financial Crisis Inquiry Commission (established by Congress as part of the Fraud Enforcement and Recovery Act of 2009) released its report in January 2011. The many causal factors it highlighted include: • Federal Reserve Chairman (1987–2006) Alan Greenspan’s refusal to perform his regulatory duties because he did not believe in them. Green–span allowed the credit bubble to expand, driving housing prices to dangerously unsustainable levels while advocating financial deregulation. The Commission called this a “pivotal failure to stem the flow of toxic mortgages” and “the prime example” of government negligence

Living in a Material World: The Commodity Connection
by Kevin Morrison
Published 15 Jul 2008

‘In the old days producers or farmers used to think that the futures markets were like gambling with their wheat field or their gold mine. Ask them about their hedging strategies and they would say “what do you take us for, gamblers?” Today almost everyone in the physical markets uses futures markets,’ he said. Alan Greenspan, the former Federal Reserve chairman, in a speech in 1997 said that throughout the late 19th and early 20th centuries, farmers were often opposed to futures trading, particularly during periods when prices of their products were low or declining. ‘They presumed that the dreaded speculators were depressing their prices,’ TRADERS | 245 he said (Geenspan, 1997).

The new village green: living light, living local, living large
by Stephen Morris
Published 1 Sep 2007

Today’s Bush economics will leave a great deal of our federal budget servicing the debt the fiscally irresponsible Republicans have run up. 6. Inflation and Higher Prices By lowering interest rates to near zero to encourage false and unsustainable economic growth, the Federal Reserve under recently retired Chairman Alan Greenspan set the stage for inflationary pressure in the economy. Virtually non-existent interest rates not only fueled the current real estate bubble, but made borrowing in general too cheap and easy. This conned millions of Americans into a borrowing binge that has left us deep in debt to the banking industry.

The Irrational Economist: Making Decisions in a Dangerous World
by Erwann Michel-Kerjan and Paul Slovic
Published 5 Jan 2010

The same principle applies to any securitization that increases the number of steps between the original source of the risk and the ultimate risk-bearer. These remarks point to some of the tensions marking financial markets recurrently in the history of capitalism. INEFFICIENT INCENTIVES: AN ENDEMIC PROPERTY OF CAPITALISM? In a discussion of the current financial crisis, Alan Greenspan, who was chairman of the Federal Reserve of the United States from 1987 to 2006, raised a very pertinent question: Why did the financial concerns make such risky loans? They had obvious incentives not to put themselves at risk; they would be the losers, as indeed turned out to be the case. Also, they had as much information as anyone could have about the risks; this was not a case of ill-informed speculators.

The Cheating Culture: Why More Americans Are Doing Wrong to Get Ahead
by David Callahan
Published 1 Jan 2004

Partnoy observes that the value of trading in volatile financial derivatives, where people bet on the future value of anything from the yen to mortgages, is now larger than the trading in stocks and bonds. He and many other observers fear that it is only a matter of time before another wave of scandals sweeps through the financial markets.7 In July 2002, Alan Greenspan testified before a Senate panel that "It is not that humans have become any more greedy than in generations past. It is that the avenues to express greed have grown so enormously."8 The new laws designed to curb yesterday's abuses, along with a little extra money for the SEC, fall way short of what is needed to block off these avenues.

50 Psychology Classics
by Tom Butler-Bowdon
Published 14 Oct 2007

He attended the University of California, Los Angeles, where he received a BA in psychology, and completed his psychology PhD at New York University. Branden first met Ayn Rand in 1950, later becoming leader of the “collective” or inner circle around her, which included his wife Barbara Branden and Alan Greenspan, later chairman of the US Federal Reserve Board. In the late 1950s Branden established the Nathaniel Branden Institute to promote objectivism, and was considered the movement’s second voice. Despite being more than 20 years her junior, Branden had a lengthy affair with Rand, but only after they had gained the consent of their spouses.

The Clash of the Cultures
by John C. Bogle
Published 30 Jun 2012

As a result, the cost-benefit requirement has been used by opponents of reform to stifle regulatory action, a gambit that has so far succeeded in our courts. 4. The Federal Reserve Board Behind the housing bubble lay the extremely easy money policies fostered by then-Federal-Reserve-Chairman Alan Greenspan that made borrowing cheap for speculators and tolerated excessive debt and leverage in our financial system. But perhaps equally significant was that the Fed almost totally ignored the highly risky lending activities of the banks and commercial lenders exemplified by the firms I cited above, severing the essential link between borrower and lender.

The Physics of Wall Street: A Brief History of Predicting the Unpredictable
by James Owen Weatherall
Published 2 Jan 2013

A Mathematical Theory of Communication. Champaign: University of Illinois Press. Sharpe, William. 1964. “Capital Asset Prices: A Theory of Market Equilibrium Under Conditions of Risk.” Journal of Finance 19 (3): 425–42. Sheehan, Frederick J. 2010. Panderer to Power: The Untold Story of How Alan Greenspan Enriched Wall Street and Left a Legacy of Recession. New York: McGraw-Hill. Shiller, Robert J. 2005. Irrational Exuberance. 2nd ed. Princeton, NJ: Princeton University Press. — — — . 2008. The Subprime Solution: How Today’s Global Financial Crisis Happened, and What to Do About It.

The Idealist: Aaron Swartz and the Rise of Free Culture on the Internet
by Justin Peters
Published 11 Feb 2013

There are many battles to fight, and we need to keep going.70 Later that night, Swartz returned to the Supreme Court steps, where he talked and laughed and played the board game SET with the other members of his tribe, waiting for morning to come and the world to set itself right. The next morning, the courtroom was completely full. The Federal Reserve chairman Alan Greenspan was there; so was Hackers author Steven Levy. Jack Valenti was there, as was Sonny Bono’s widow, Representative Mary Bono. “The courtroom itself was an impressive structure,” Swartz noted on his blog. “Everything was very, very tall.”71 The court seemed skeptical of Lessig’s argument. “Many Justices repeatedly said that they felt [the CTEA] was a dumb law, that it took things out of the public domain without justification,” Swartz reported later on his blog.

Postcapitalism: A Guide to Our Future
by Paul Mason
Published 29 Jul 2015

In August 1971, the USA itself decided to repeat the experiment – this time using the whole world as its laboratory. Richard Nixon unilaterally scrapped an agreement that pegged all other currencies to the dollar and the dollar to gold. From then on, the global currency system was based on fiat money. In the late 1960s the future Federal Reserve boss Alan Greenspan had denounced the proposed move away from gold as a plot by ‘welfare statists’ to finance government spending by confiscating people’s money.17 But then, like the rest of America’s elite, he realized that it would first allow the USA, effectively, to confiscate other countries’ money – setting the scene for Washington to indulge in three decades of currency manipulation.

Pound Foolish: Exposing the Dark Side of the Personal Finance Industry
by Helaine Olen
Published 27 Dec 2012

A MUTUAL MARKETING EXPERIENCE When Charles Githler debuted the progenitor of the MoneyShow in 1978, it was anything but commercial. There were no exhibitors, and speakers could not have financial ties to the products or stocks they discussed. It was academic, political. Attendees paid several hundred dollars to hear from such notables as William F. Buckley Jr., Alan Greenspan, and former president Gerald Ford. But by the mid-1980s, the MoneyShow’s business model was in financial trouble. Investors, in the view of founder Githler and his wife, Kim, who by then had joined him in the business, no longer wanted to pay for financial advice when they could get it for next to no cost from their local newspaper.

Free Market Missionaries: The Corporate Manipulation of Community Values
by Sharon Beder
Published 30 Sep 2006

He argued that they ‘tend to see the world in terms that neutralize and then reduce the norms of public policy to those of private enterprise . . .’78 Certainly the evidence suggests that structured inequalities in the classification of SES officers across the different categories of departments, combined with the actual operation of the promotion system, has given a cumulatively disproportionate power to the younger economic rationalists in the central agency departments of Treasury, Finance and the Prime Minister and Cabinet who now comprise some 70 per cent of the Senior Executive Service population of these departments.79 The conservatism of the Senior Executive Service resulted from a selection process that favoured people with private school backgrounds and training in university economics departments where the philosophy of market economics prevails (see Chapter 6).80 Former US Treasurer Alan Greenspan has claimed that ‘what is being taught in the universities today will determine national economic policy 10 years from now’. Pusey observed this to be true in Australia: ‘it is through the power of a particular university economics curriculum that the recent past has had the strongest hand in casting the nations’ future’.

Money: The Unauthorized Biography
by Felix Martin
Published 5 Jun 2013

It was hardly going to be satisfied with the answer that no one saw the big picture. After all, seeing the big picture is exactly what macroeconomists, central bankers, and other financial regulators are meant to do. It was therefore no surprise that one of the witnesses called before the Committee was Alan Greenspan—the longest-serving Chairman of the Federal Reserve in history and indisputably one of the most important world economic policy-makers in the two decades leading up to the crash. Unlike the British Academy, Mr. Greenspan did not fudge responsibility. He did not deny that his job had been precisely to understand how the economy worked as a whole.

Predictably Irrational, Revised and Expanded Edition: The Hidden Forces That Shape Our Decisions
by Dan Ariely
Published 19 Feb 2007

And I’ve wondered if we really want to build our financial institutions, our legal system, and our policies on such a foundation. AS I WAS asking myself these questions, something very big happened. Soon after Predictably Irrational was published, in early 2008, the financial world blew to smithereens, like something in a science fiction movie.* Alan Greenspan, the formerly much-worshipped chairman of the Federal Reserve, told Congress in October 2008 that he was “shocked” (shocked!) that the markets did not work as anticipated, or automatically self-correct as they were supposed to. He said he made a mistake in assuming that the self-interest of organizations, specifically banks and others, was such that they were capable of protecting their own shareholders.

Rewriting the Rules of the European Economy: An Agenda for Growth and Shared Prosperity
by Joseph E. Stiglitz
Published 28 Jan 2020

It could use this channel to promote lending to small- and medium-sized enterprises, possibly through explicit restrictions on its dealings with banks that lend insufficiently to small businesses. †† Taking into account the effects on inequality is especially important for the EU, given the paucity of instruments available to counteract them. ‡‡ In the United States, both Alan Greenspan and his successor Ben Bernanke argued that you cannot tell a bubble until it bursts. That is wrong. It may not be possible to be entirely sure that it is a bubble. But no policy is conducted with perfect certainty. When median house prices relative to incomes reached levels never before seen, it should have been a warning.

The Permanent Portfolio
by Craig Rowland and J. M. Lawson
Published 27 Aug 2012

Through the courtesy of such volunteers from the communication and media fields, a very simple enlistment form will appear in many of tomorrow's newspapers along with the symbol of this new mobilization, which I am wearing on my lapel. It bears the single word WIN. I think that tells it all. I will call upon every American to join in this massive mobilization and stick with it until we do win as a nation and as a people. Alan Greenspan, former Chairman of the Federal Reserve, was an economic advisor in 1974 to the government and stated about the WIN program: “This is unbelievable stupidity,” in his book The Age of Turbulence. Later in the decade President Carter tried some other attempts to rein in inflation that also failed.

Brotopia: Breaking Up the Boys' Club of Silicon Valley
by Emily Chang
Published 6 Feb 2018

Given that entitlement, hubris, and risk taking are the very personality traits that show significant gender differences, it’s little surprise that so many of the founders selected for investment were men. There is plenty of blame to go around for the dot-com crash. With everyone in the system making so much money, few were brave enough to call bullshit. In 1996, the Federal Reserve Board chairman, Alan Greenspan, famously warned of “irrational exuberance” among investors, so many of whom threw money at companies with outrageous price-to-earnings ratios. It took four more years for investors to understand his message, and when they did, it was a financial catastrophe. Starting in the spring of 2000, $5 trillion in market value was lost in less than two years.

The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution
by Gregory Zuckerman
Published 5 Nov 2019

They began looking for undervalued investments while reacting to market-moving news, investing $30 million in various markets. Simons thought it might help if they could get their hands on news from Europe before their rivals, so he hired a Parisian studying at Stony Brook to read an obscure French financial newsletter and translate it before others had a chance. Simons also consulted with an economist named Alan Greenspan, who later would become Federal Reserve chair. At one point, Simons set up a red phone in his office that rang whenever urgent financial news broke, so he and Baum could enter trades before others. Sometimes the phone rang and they were nowhere to be found, sending new office manager Penny Alberghine, Carole’s sister-in-law, racing to find them, be it in a local restaurant or shop or even the men’s room, where she’d pound on the door to get their attention.

The Divide: A Brief Guide to Global Inequality and Its Solutions
by Jason Hickel
Published 3 May 2017

But Reagan didn’t cut taxes for everyone; in order to plug the hole left by tax cuts for the rich, he raised payroll taxes on the working class. A third component of Reagan’s economic plan was to deregulate the financial sector. Because Volcker considered this policy to be too extreme, Reagan appointed Alan Greenspan to take his place in 1987. Greenspan went about unravelling many of the banking regulations that had been established in the post-war era. He even managed to abolish the Glass–Steagall Act, which had been designed to prevent banks from engaging in the sort of reckless speculation that had triggered the Great Depression.55 Margaret Thatcher, who drew inspiration from Milton Friedman, implemented many of these same policies in Britain, at exactly the same time: high interest rates designed to clamp down on inflation, regressive taxation such as the ‘poll tax’ of 1989, and aggressive financial deregulation.

Don't Be Evil: How Big Tech Betrayed Its Founding Principles--And All of US
by Rana Foroohar
Published 5 Nov 2019

Back then, one of the triggers for the creation of the dot-com bubble was the Taxpayer Relief Act of 1997, which lowered the top marginal capital gains tax rate in the United States from 28 percent to 20 percent, and in turn made more people more interested in becoming speculative investors. Fed chair Alan Greenspan had actually encouraged this by talking up stock valuations, but that would, ironically, only help facilitate what he himself called “irrational exuberance” in the market. All of it was made possible in some senses by the Telecommunications Act of 1996 and other pro–Big Tech laws that allowed Internet firms to avoid many of the pesky regulations that other companies had to deal with.

file:///C:/Documents%20and%...
by vpavan

But instead of aligning employees' interests with shareholders', the options craze created an environment that rewarded executives for managing the share price, not for managing the business. Options gave executives strong incentives to use accounting tricks to boost the share price on which their compensation depended. And as many feared, stock options made corporate earnings look a lot better than they really were. Because of this, Federal Reserve Chairman Alan Greenspan joined the chorus of stock option critics. Fed researchers found that, between 1995 and 2000, the average earnings growth of the companies in the Standard & Poor's 500 index would have been 9.4 percent, not the 12 percent they reported, had they expensed stock options. If Cisco Systems Inc. had expensed options for its 2001 fiscal year, for example, it would have had to reduce earnings by $1.7 billion, turning a $1 billion loss into a $2.7 billion deficit.

The Glass Half-Empty: Debunking the Myth of Progress in the Twenty-First Century
by Rodrigo Aguilera
Published 10 Mar 2020

In 2015 the company finally ditched the original motto since the hypocrisy was just too obvious, and at least, according to one account was actually being taken seriously by some of the company’s staff.31 That these excesses can be reined in by the power of free markets to discipline its worst offenders is undoubtedly one of the most damaging myths peddled by the advocates of laissez-faire. As the long-standing former Fed Chairman Alan Greenspan reluctantly confessed after the 2008–2009 crisis, “I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such that they were best capable of protecting their own shareholders and their equity in the firms”.32 Too little, too late, as by then Greenspan’s dogmatic adherence to free markets — a hallmark of his nearly three-decade (1987-2006) stint at the helm of the Fed — had helped trigger the greatest economic crisis in the West since the Great Depression by sitting on the sidelines and letting these banks regulate themselves.

What's Next?: Unconventional Wisdom on the Future of the World Economy
by David Hale and Lyric Hughes Hale
Published 23 May 2011

This would help asset prices, and rises in asset prices could then convert loan loss write-offs into loan loss write-backs. This would be a simple, painless, and wholly welcome form of bank recapitalization. One might criticize this idea on the basis that deliberate money creation is inflationary. However, in current circumstances, it would be antidisinflationary. Contrary to the opinion of Alan Greenspan, Martin Feldstein, Allan Meltzer, and other American monetary conservatives in mid-2009, the big threat to the recovery in 2010 was not a return of inflation but a continuation and intensification of deflation. The year 2010 saw many interesting debates on the December 2009 set of the Basle Committee’s proposals.

The Four Pillars of Investing: Lessons for Building a Winning Portfolio
by William J. Bernstein
Published 26 Apr 2002

The granddaddy of all “total-market” funds is the Vanguard Total Stock Market Index Fund. With rock-bottom expenses of 0.20%, it is a superb choice. Since its inception in 1992, it has done an excellent job of tracking the Wilshire 5000, Wilshire actually besting it by a few basis points before expenses. (A basis point is one one-hundredth of 1%. For example, when Alan Greenspan cuts interest rates by 0.5%, he has cut the rate by 50 basis points.) Even more amazingly, over the past five years, it has managed to beat the index by four basis points even after expenses. This gets to an important issue, so-called “transactional skill.” It is often said that a monkey could run an index fund.

Confidence Game: How a Hedge Fund Manager Called Wall Street's Bluff
by Christine S. Richard
Published 26 Apr 2010

In the 1990s, Brooksley Born, the head of the Commodity Futures Trading Commission (CFTC), suggested bringing the credit-default-swap (CDS) market under the control of the commission. The CFTC already oversaw markets for futures and options, including those written on commodities such as pork bellies and corn. But Wall Street lobbyists, with the ideological backing of Federal Reserve Chairman Alan Greenspan, put up resistance. The Commodity Futures Modernization Act of 2000—buried in an 11,000-page budget bill and never debated—was passed the night before Congress recessed for Christmas in December 2000. It exempted credit-default swaps from federal oversight and from state gambling laws. The CDS market had another near miss with regulation, also in 2000, when bond insurers sought permission to enter the market.

Poisoned Wells: The Dirty Politics of African Oil
by Nicholas Shaxson
Published 20 Mar 2007

Skittish energy markets were as taut as an African drum, pulled from one end by surging demand from western and I 189 P o i s o n e d We l l s Asian economies, and from the other end by supply shortfalls after years of lackluster investment and disruptions in Iraq. “The balance of world oil supply and demand has become so precarious,” U.S. Federal Reserve chairman Alan Greenspan said, “that even small acts of sabotage or local insurrection have a significant impact on prices.”2 The delta is a zone of major strategic interest to the West: its 35 billion barrels of proven crude oil and gas reserves are bigger than all of the U.S. reserves, and it currently supplies nearly 10 percent of all U.S. crude oil imports.3 Some call this America’s spare fuel tank: the delta’s light, sweet oil is ideal for making motor fuels and lies just across the Atlantic from American refineries.

Business Lessons From a Radical Industrialist
by Ray C. Anderson
Published 28 Mar 2011

Others cite a triumph of greed over common sense that allowed homeowners to believe they could have their house and spend it, too; or a market failure that allowed Wall Street whizzes to convince themselves that if they chopped up and bundled enough bad investments and spread them around they would magically become good ones. No less a financial expert than former Federal Reserve chairman Alan Greenspan professes to be shocked at how corporations were no longer “acting in their own best self-interests.” But I think this crisis has deeper roots than just a string of bad mortgages or a tidal wave of global money seeking risky returns. I think it stems from our dangerous faith in what is clearly a broken industrial model that is yoked to our infatuation with stuff—namely, consumerism.

Hard Times: The Divisive Toll of the Economic Slump
by Tom Clark and Anthony Heath
Published 23 Jun 2014

This chapter attempts a cool appraisal of the average force with which the contemporary storm has blown. Anyone who has lent even half an ear to the news in the past five years cannot have failed to gather that this was no ordinary slump. This was the big one, or so they said – the ‘once in a century’ event, as Alan Greenspan put it in 2008.3 But the financial elite is interested in financial phenomena – share-price swings and overnight interbank rates – that are only of direct concern to itself. If we're talking people instead of percentages – and talking particularly about the majority of people who do not dabble in stocks or in interest-rate swaps – then is a purely financial crisis really such a big deal?

Breakout Nations: In Pursuit of the Next Economic Miracles
by Ruchir Sharma
Published 8 Apr 2012

The old view was that recessions were a natural phase in the business cycle, unpleasant but unavoidable. A new view started to emerge in the Goldilocks economy of the 1990s, when after many straight years of solid growth, people started to say that the Federal Reserve had beaten back the business cycle. Under Alan Greenspan and his successor, Ben Bernanke, the Fed shifted focus from fighting inflation and smoothing the business cycle to engineering growth. Low U.S. interest rates and rising debt increasingly became the bedrock of American growth, and the increases in total U.S. debt started to dwarf the increases in total U.S.

Crude Volatility: The History and the Future of Boom-Bust Oil Prices
by Robert McNally
Published 17 Jan 2017

Brent crude prices began to rise smartly, rising 50 percent from the mid $40s in January 2015 to nearly $60 by mid-April.85 Shale was replacing the Seven Sisters and OPEC and had become the new swing producer—or so it appeared.86 “With OPEC ceding control for the first time since the 1980s,” Bloomberg reported in April 2015, “U.S. shale oil has been anointed the world’s new ‘swing producer’ by everyone from ConocoPhillips and Goldman Sachs Group Inc. to former Federal Reserve Chairman Alan Greenspan.”87 Share prices of shale oil companies, which had plunged in value by 25 percent in the weeks following the November 27 OPEC meeting, recouped over half its losses by mid-April.88 All eyes turned to shale: “We have seen that shale oil works very well at $100 per barrel,” EIA head Adam Sieminski said in March, 2015, “[n]ow we are going to find out if it works at $50 to $75.”89 It was shale’s turn to surprise the market.

Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist
by Kate Raworth
Published 22 Mar 2017

That expansion was triggered by financial deregulation (think reregulation) – including the 1986 Big Bang in the UK and the 1999 repeal of the Glass–Steagall Act in the US – which ended the requirement for banks to keep customers’ savings and loans separate from their own speculative investments. Second, financial markets do not tend to promote economic stability, despite the claims that they do. Thanks to financial deregulation, said US Federal Reserve Chair Alan Greenspan in 2004, ‘not only have individual financial institutions become less vulnerable to shocks from underlying risk factors, but also the financial system as a whole has become more resilient.’45 Four years later, the financial crash disproved that claim in a fairly decisive way. At the same time, Eugene Fama’s efficient-market hypothesis – that financial markets are inherently efficient – lost credibility and has been countered by Hyman Minsky’s financial-instability hypothesis – that financial markets are inherently volatile – as we will see in Chapter 4.

An Extraordinary Time: The End of the Postwar Boom and the Return of the Ordinary Economy
by Marc Levinson
Published 31 Jul 2016

But it also diverted an increasingly large share of businesses’ investment spending from new plants and production machinery toward the installation of pollution-control equipment. It would be one more drag on growth as the world’s run of economic good luck came to an end.12 CHAPTER 5 The Great Stagflation As 1973 dawned, a leading economic consultant expressed no doubts about the future. Alan Greenspan, a former student of Arthur Burns and a campaign adviser to Richard Nixon, urged his clients to be confident. Greenspan’s political ambitions gave him reason to support the Fed chairman and the president. Rising prices and shaky currencies notwithstanding, he could find no fault with Burns. His forecasts offered no hint of a looming crisis.

The Economics of Enough: How to Run the Economy as if the Future Matters
by Diane Coyle
Published 21 Feb 2011

What happened during the 1930’s and 1940’s was that new norms of equality were established, largely through the political process. What happened in the 1980’s and 1990’s was that those norms unraveled, replaced by an ethos of “anything goes.” And a result was an explosion of income at the top of the scale.27 At the other end of the political spectrum, former Federal Reserve chairman Alan Greenspan has actually made a similar point, both about the social acceptability of greed and about the institutional failures that permitted it. Commenting in the wake of the collapse of Enron, he said: “An infectious greed seemed to grip much of our business community. Our historical guardians of financial information were overwhelmed.

Prosperity Without Growth: Foundations for the Economy of Tomorrow
by Tim Jackson
Published 8 Dec 2016

But this simply led to ‘moral hazard’ – the separation of risk from reward – and encouraged even more speculative behaviour. Securitisation of mortgage debts – another key element in the invisibility of subprime mortgage risk – compounded these risks. And securitisation was championed at the highest level, spearheaded by Alan Greenspan, former chairman of the Federal Reserve. In The Age of Turbulence, Greenspan defends the practice explicitly, arguing that ‘transferring risk away from… highly leveraged loan originators can be critical for economic stability, especially in a global environment.’28 In testimony to US Congress, Greenspan admitted to being ‘shocked’ that markets hadn’t worked as expected.