Greenspan, Please, Retire Already!

Originally I was going to write an essay on two international mutual funds for you today. However, in light of the recent comments by Alan Greenspan, that essay has been relegated to tomorrow. Enough is enough.

Since retiring from his post as Chairman of the Federal Reserve, Alan Greenspan has simply refused to go away. Some commentators have taken a cute approach to handling this topic, comparing Greenspan to a “guest” who just won’t leave a party. The truth is that Greenspan is no guest. None of us invited/ voted for him. And as for the party… that all ended in 2005 and now everyone’s hung over and looking for their wallets (all empty).

No, Greenspan is not a guest. He’s a nuisance. And he needs to go away. Few people in history have been rewarded for such a staggering display of incompetence. Even fewer have managed to bungle things as much while shirking any and all responsibility for their actions.

The full scale of Greenspan’s bungling requires more space than this e-letter allows. But anyone looking for an in depth look at Greenspan’s career would do well to read hedge fund manager Jeremy Grantham’s 1Q08 shareholder letter. The particular essay is titled Immoral Hazard.

However, it is Greenspan’s recent actions, not his tenure as Fed Chairman, that I wish to focus on today. Since retiring, Greenspan has written a book, blaming the various administrations he served under for what occurred during his time as Fed Chairman. He’s also written a Financial Times article absolving himself from any and all responsibility for the housing bubble.

He’s also gone on a number of speaking engagements, charging $100,000 per hour. Let that sink in for a moment….

Alan Greenspan, the man who admitted to John Stewart of the Daily Show that the Fed manipulates the market, the man who didn’t believe bubbles could exist —at least not until after he retired, the man who failed to see the housing bubble forming despite the fact housing prices had risen more than two standard deviations from their historic relationship to incomes (a 1 in 80 year event)… that guy earns six figures per speaking engagement.

As a side note…Who in their right mind would pay Greenspan a cent, let alone $100K to talk about anything? Has anyone ever read any of his testimony to congress? His statements are virtually incomprehensible.

Aside from this, Greenspan has been popping up in the media giving forecasts for whether we’re in a recession or not. In December 2007, he told NPR that the chances of a recession were rising. In February he was back telling BusinessWeek that there was a 50% chance of the US entering a recession. In early June he said there was a “reduced possibility” of a deep recession. He then did a 180 last week saying that “we are on the brink of a recession.”

In truth, Alan Greenspan has done a lot since retirement. The one thing he hasn’t done is actually retire and go away. I wish he would. His policies have made me, you and everyone in this country poorer. He created two bubbles that wiped out trillions of dollars’ worth of household wealth. And he began the destruction of our currency that continues to unfold today.

Greenspan should be vilified, not revered. There were many decades in this country when people didn’t even know who the Fed Chairman was. In fact, there were whole periods when we didn’t even have a central bank. Thanks to Greenspan and his successor, Ben Bernanke, we may enter another such period in the next couple of years.

Alan, please stop speaking to the media. Leave us alone with our shameful currency and depreciating housing prices. Go read a book or something. I suggest Greenspan’s Bubbles by William Fleckenstein.

Comments

[icandoitdon]

hear! hear!

i ranted against greenspan long before most...starting when he lowered interest rates to the ridiculous level of 1% in the aftermath of the tech bubble. he is a self serving SOB who did more damage to the financial system than anyone in the history of the federal reserve.

cheap credit and plentiful credit is ALWAYS anathama to a healthy economy and this $*)&$ idiot never understood it. bernake is walking down the same path in the interests of saving the incompetent financial institutions who distributed greenspan's cheap money to homeowners utterly incapable of paying it back. if bernake isn't careful he's going to go down in history the same way.

what the hell happened to competence in this once great country?

[HARM]

Amen! Could not have put it better myself. The Queen should revoke his knighthood, just like she did for Robert Mugabe.

[User 179505]

I was anti-Greenspan before being anti-Greenspan was cool. Of course I'm anti-fed so that figures!

[Jim Hawthorne]

Yes!
But look; we are also the people who fawn over the likes of Paris Hilton, Donald Trump, Henry Kissinger and other disastrous frauds...

We don't set the bar very high, do we?

[pepe]

While in the position of Fed Chairman, it was impossible for anyone, especially Congress, to engage in a meaningful discussion with Al since his rhetoric was INCOMPREHENSIBLE. Since retiring he has improved this artform to INSCRUTABLE and BAFFLING.

[richjoy]

Very few were so critical of Mr. Greenspan during his tenure...now almost everyone wants to trash him. It seems to me he was never the god some made him--nor the incompetent some say today.

[timfogl]

I think 10 cents worth of duct tape over his mouth would be a super duper good thing. No more $100K per hour coming out of that silenced mouth.

[Small Town Indiana]

After all the people of the U.S. have been through since 9/11, isn't time we quit letting idiots tell us what to do and ruining our lives? WE THE PEOPLE OF AMERICA allow all this crap. WE don't do anything except complain about it. Remember the U.S. was once the greatest country in the world and all others looked to her. We the people need to get a grip, quit complaining and blaming and take back our nation. Government By The People and For the people, NOT anything less. People in "public" positions talk and get paid to talk, because WE the people PAY to hear it and then get upset? Time to quit judging others and work towards getting our country back on track. That will only happen when us "little guys" do our job(s) and quit complaining and DO.

[ASAP]

Competence and discipline became "politically incorrect" and went out of fashion in America some time ago. We are now paying the price for this, and I am afraid it may only be the beginning.

[Brahm]

I heartily endorse all the prescriptions being suggested for Greenspan. Really, Greenspan should have a little bit of shame and just go away. To me the worst of him during the last 20 years was that he always was there championing tax cuts in-front of Congressional committies, but, when often asked by Congressmen as to how the budgets were to be balanced or where the cuts were to be made to balance the budget, he always pleaded that ain't his job to suggest or think about! He never saw a scheme from Wall Street that he never liked or advocated.

However, an appropriate question to ask also right now is why did our Congressmen often listened with such awe and attention to this gamesman? Does it suggest that Congressmen also have a lot to answer for? How come these Congressmen decided to confirm one of their own flunkies as chief of the SEC. (i.e this particular flunky is Mr. Cox) Anybodfy tell me why is there no hue and cry to drive this flunky from the SEC after the ruin we have? What did he do when Wall Street went crazy packing their banks and other firms with these now worthless securities from the fraudiuent mortgage industry syndicates behaving like wild species in our free markets?

[secmaven]

While the economy was booming Greenspan could do no wrong. Now that the public has stopped paying its debts incurred in that era Greenspan is cursed interminably. His responsibility for both the good times and the bad cannot be black and white.

[User 30121]

TERRIFIC article. TERRIFIC comments from you all, save for one who is obviously a non-believer.

How we survive now, in June 2008 going forward, is to buy as much silver and gold as you can possibly amass, taking PHYSICAL OWNERSHIP of such, and wait until the dust settles. Then you will be able to move on with your life in manner which suits you.

To: Small Town Indiana: I thank you for your commentary.

May I suggest how to begin to renew our hold on this great country of ours. At election time, vote out EVERY incumbent, and make it known that their replacement is under severe scruitiny from day one! Vote for McCain, clearly the best of the worst. Rememeber, the Republican Party is the party of BAD ideas. The Democratic Party is the party of NO ideas. That combination has put us where we are today!
GOD BLESS AMERICA!!!

[the final horseman]

amen to user...however, back to both feds---> draw em...barbeque em... quarter em and feed em to the dogs...hurts more

as to big al...the sob sold us out to the camel jockeys with his little euro vs dollar lecture.

[Jose Urioste]

One question, who makes debt issue decissions, the fed or the executive? I mean, who decides economics for the country. I supposed the fed had only to manage those decisions.
As for Greenspan's saying and misschieviengs, I agree: HEAR! HEAR

[Jose Urioste]

One question, who makes debt issue decissions, the fed or the executive? I mean, who decides economics for the country. I supposed the fed had only to manage those decisions.
As for Greenspan's saying and misschieviengs, I agree: HEAR! HEAR!

[delta7777]

Is Greenspan the one responsible for regulatory changes that allowed investment banks to enter and play essentially criminal games with the mortgage market by devising CDOs, SIVs, and other shady financial strategies that were not available to depository banks???......or has he now become the red herring whipping boy "chosen one" ??????.....I think it appropriate to look a bit deeper and properly ascertain those entities working assiduously at shifting blame before jumping on to this bandwagon....there are ongoing machinations and criminal coverups afoot here that will make Enron look like amateur hour.

[icandoitdon]

deta 7777...

if you think that congress, the executive branch or regulatory agencies in general make decisions regarding federal regulation, tax or fiscal policy in a vacum, you're wrong. the federal reserve is one of the most powerful and influential non-government agencies that exist.

greenspan and his ilk are up to their neck in the bad decisions coming out of every orfice of government. if you think otherwise you're naieve.

greenspan a whipping boy? the bastard deserves every lash he gets.

[User 36911]

Historically, the economy performs better when a Democrat is in the White House than when a Republican is president.
Here are some examples, by my calculations, for full four-year periods from 1948 through 2004:
Unemployment has averaged 4.6% when a Democrat is in the oval office and 6.2% under a Republican administrator.
The stock market has risen 46% under a Democratic president and 32% with a Republican in the Oval Office.
The U.S. budget deficit has averaged $11 billion under a Democratic president, compared with $163 billion when the president was a Republican.
The trade deficit has averaged $83 billion when a Democrat was in the White House and $117 billion under a Republican president.

[loweed]

Excellent. Years ago, on "Wall Street Week", Capiello said something to the effect that Greenspan had to go to work for the government because he was no good at picking good stocks.

[wonsonsang]

Mr. Summers is totally correct. I'm happy that someone finally has what it takes to call a spade a spade and not just sing undeserved praises to the number one cause of our present financial mess. I agree with Mr.Summer. Mr. Greenspan', Please Retire and Go Away. And don't come again another day!