The Invisible Hand (of Alan Greenspan)


The always terrific Michael Lewis quietly slipped by an intriguing Bloomberg article.

Do not miss it.

In the piece, titled “Did Greenspan Use O’Neill to Send Bush a Signal?,” Lewis suggests that Federal Reserve Chairman Alan Greenspan was a willing accomplice in former Treasury Secretary Paul O’Neill’s White House tell all/hatchet job via Ronald Suskind’s The Price of Loyalty:

“The character in this drama with interesting motives isn’t O’Neill but his more shadowy friend, Alan Greenspan. It’s evident that Greenspan helped with the book; his fingerprints are all over the thing.

Why would the Fed chairman grant an interview, even off the record, to a journalist he knew to be armed and dangerous to the Bush White House? Surely, not out of a sense of loyalty to his old friend Paul O’Neill. If Greenspan had that gene, he wouldn’t have lasted as long as he has.”

Absolutely brilliant take on this issue; Frankly, I cannot claim I would have been able to tell if “Greenspan’s fingerprints were all over” the book if I had forensically dissected the book. However, having read nearly everything else Lewis has written, I am more than willing to give him the benefit of the doubt (He’s very good).

Lewis also observes that it was Greenspan — as much as O’Neill — who pried open the secretive Bush White House:

“Up until about three weeks ago, the Bush administration had done an outstanding job of hiding what goes on inside the White House. Its media strategy — pretend the media don’t exist — had been consistent and effective.

But then we learned that Bush’s former Treasury secretary, on a whim, had handed all of his private papers and unhappy memories to a journalist he barely knew.

The journalist, who I’m sure still cannot believe his good luck, used those materials to elicit what clearly was some behind- the-scenes help from the chairman of the Federal Reserve, the former head of the Environmental Protection Agency and a phalanx of staffers at the National Security Council. And just like that — kaboom! — the previously discreet Bush administration is an open book.

Bush, too. For the first time since he took office, the president has been described doing his job by people who worked with him closely. “The Price of Loyalty,” by Ron Suskind about Paul O’Neill’s two bizarre years as Bush’s Treasury secretary, dwells on the president’s incuriosity, but the Bush trait exposed by the book is not incuriosity. It’s insecurity.”

Simply fascinating stuff. The Fed Chairman’s political machinations are even more hidden from view trhan than the Vice-President’s Energy Task Force. The article provides a rare glimpse at the usually well hidden relationship between the Fed Chief and the White House.

The bigger issue is why we even have such an opaque Fed. Wouldn’t it be better, from a policy perspective at least, for the Fed’s intention’s to be transparent?

Recall what happened the last time the Fed’s message got garbled.

Hey Michael! Sir Alan’s manuevering’s are surely worthy of a much longer expose than 1250 words or so. How about another Sunday Times magazine article on the subject? Its definitely worthy . . .

Did Greenspan Use O’Neill to Send Bush a Signal?
Michael Lewis
Bloomberg, February 5, 2004 08:26 EST

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