Greenspan Media Blitz!

I don’t see any need to buy it. We’ve all lived with the results of his decisions. Why would we need more?

Aaron:
I am not suprised at all by CNBC’s action. I don’t see how the new Faux Business Channel can be any more of a cheerleader than CNBC is. I wish people would remember that he was a disciple of Ayn Rand. That tells you a lot of what you need to know about his actions.

Easy Al was/is a resident of Laputa. Spurred on by the big money syncophants, he will eventually go down in history as “an amiable dunce”.

Brilliant marketing decision to have this blitz while anybody who cares is most focused on the Fed. Big Al knows he should keep mum, especially when the fomc is about to meet, but he needs the money. He’s of course being very careful not to comment on monetary policy directly, but he should be well aware that investors are reading into every lip tremor and sly glint in his glasses.
As for his not having seen the subprime problems coming, since when has the Sgt. Schultz defense worked for anybody but Sgt Schultz?

The oddest part about the 60 Min. interview was hearing him brag about his “success” in Fed Speak. I guess in his mind he wanted to give no guidance at all, or whatever guidance people wanted to hear (all sides simultaneously). An opaque Fed is one thing, but a gibberish spewing Alice in Wonderland Fed is another and I was never a fan of his testimony/meeting notes.

Hell, I’m not even qualified enough to read it never mind diseminate and critique it.

o-b-j-e-c-t-i-v-e analysis (psychological, philosophical, practical) of Greenspan’s book.

It looks like you’ve already outined the pertinate factors for a balanced approach seems like a good start.

I’ll read the book the minute my library gets it. Until then, except for novel insights into politics and personal anecdotes, I don’t imagine he’ll add much understanding to its core elements examined during his multiple interviews the last few days.

I’m not ready to attack Greenspan. He had a difficult job during the Soviet bloc’s and the Third World’s transition into rudimentary capitalism.

His most significant failure during his tenure was that he did not recognize the abuses of the mortgage industry (he’s admitted this) until well after they’d been clearly identified by other observers, while at the same time he gave tacit approval of using variable rate mortgage loans that only accelerated the abuse (I don’t think he’s acknowledged this).

Too, he very clearly and repeatedly expressed his confidence in mortgage securitization for its favorable effects on intermediation (except for generalized concerns he began to express in 2005, to my mind he’s never altered this opinion). As Bernanke is now making it clear, that intermediation has come at a very large cost of volatility and has subjected Fed monetary policy to second rate importance and lessened effectiveness.

I’ve read Greenspan’s speeches from 2005 and they’re not so different from Bernanke’s admonitions in 2007 regarding concerns he had about GSEs and their investment portfolios, just a lesser order of magnitude I suppose than Bernanke’s observations. Read all my commentary here (no need for me to write it all out again):

http://bigpicture.typepad.com/comments/2007/03/quote_of_the_da.html

You know… Greenspan’s defense of himself seems to center around the notion that, since he would’ve expected the authority of the Fed to ultimately be withdrawn legislatively if he’d acted, that he didn’t think he would’ve been able to persevere long enough to effect changes to monetary policy or to banking regulations that would’ve prevented the housing blow-up.

In other words, it’s as if he’d have concluded: “I have the power to stop this, but I’m afraid to use it because they’ll just take the power away from me.”

Here it is expressed in his exact words [quoted in brackets] followed by ***my comments:

http://www.msnbc.msn.com/id/20789997/site/newsweek/page/3/

[I regret to say that Federal Reserve independence is not set in stone. FOMC discretion is granted by statute and can be withdrawn by statute. I fear that my successors on the FOMC, as they strive to maintain price stability in the coming quarter century, will run into populist resistance from Congress, if not from the White House.
-and later in text-
But I fear that containing inflation through higher interest rates will be as unpopular in the future as it was when Paul Volcker did it more than twenty-five years ago. “You’re high on the hit parade for lynching,” Senator Mark Andrews told Volcker bluntly in October 1981.]

***Then, why do we even have a Fed, if it has to be fearful that it can’t act?… fearful that its authority would be challenged, attacked and withdrawn. We need an FOMC that can do its job day-in-and-day-out, not just when it’s fun to be popular. Volcker persevered… What makes Greenspan think he couldn’t have?

***More remarks from the excerpted Greenspan book:

[This brings us back to globalization. If my suppositions about the nature of the current grip of disinflationary pressure are anywhere near accurate, then wages and prices are being suppressed by a massive shift of low-cost labor, which, by its nature, must come to an end. A lessening in the degree of disinflation suggested by the upturn in prices of U.S. imports from China in spring 2007 and the firming of real long-term interest rates raise the possibility that the turn may be upon us sooner rather than later.]

***That massive shift is still only about halfway at best (in my estimation) though its most significant effects, and until it is complete it will continue to drive wages lower, whether denominated in pounds, dollars, yen… or denominated in the marine shells with eye-like peculiarities (used for money) that my father brought back from the South Pacific during WW II. Any person who cannot understand this will never achieve the o-b-j-e-c-t-i-v-i-t-y needed to forgive Greenspan, if indeed he needs forgiveness for anything. He recognized that the society of the United States was NOT PREPARED for this dynamic challenge to labor and income and would not be able to adjust in time to prevent lost jobs and rather dramatically lower wages (deflated value of labor). We had a nation asleep at the switch (still is) regarding the importance of education and training for our citizens who were about to lose much of their competitiveness against the Eastern Bloc and the Third World, even if relatively high wages could be maintained. Thus, the creation of WEALTH would shift away from the U.S. He was simply attempting to fulfill one important aspect of his sworn responsibility, a responsibility I’ve repeatedly said on this blog should NOT be imposed on the Federal Reserve. The Fed has no capacity ultimately to create GDP. They can only facilitate it by maintaining a stable financial system.
—

Now, to you, AA,

G’head, put your Roget’s-Thesaurian-lovin’ self to work and see if you can top that for this weekend’s inking.

Interesting that his title is wrong. With more jets flying at higher altitudes there’s actually proportionally less turbulence now than in propeller days