Alan Greenspan Interview

Charlie Rose interviews Alan Greenspan (see here, click on picture; 37 minutes long).   There are some interesting comments on Greece at the beginning. 

14 replies on “Alan Greenspan Interview”

… the econometrics of human nature… You couldn’t make it up! LOL

Interesting but not surprising to learn about his views on the social discount.

Many thanks John. Fascinating performance. Terrific grasp of detail at age 85, and still has that great capacity to cover a multitude in a couple of succinct sentences. Getting fascinated by human nature in his old age, but he can’t see his own failings too well. That’s human too.

Bernanke has rescued the credit system but he can’t deliver confidence in the real economy. Inflationary overhang, European crisis, but no mention of the long term structural impact of globalisation on US employment. Even my local Chinese barber worries (no kidding) that the US won’t pay their debts.

The trouble with Greenspan is that he has lost a lot of credibility with policies that have been widely criticized. Yet he has enormous experience and must surely be able to recognize a failed entity/sovereign. So who would you rely on Greenspan or Juncker for advice in relation to the sustainability of the Greek debt mountain? I think I would choose Greenspan on the basis that he is no longer a player and has no need to keep any particular show on the road.

Amazing interview although distasteful as usual.
That last look on his face made me feel sorry for the man for the first time – he may well go down as the most destructive man since Nero if you assume he is human.
However the Chutzpah he displays is off the scale.

If you accept Greenspan has not plotted deliberately the destruction of the western world his thinking is illuminating.
He does not seem to think of the economic ecosystem as a physical unit – I believe he may walk down the street and see numbers flowing through doors and down sinks.
The quality of the consumption or production is alien to him or at least is irrelevant or unquantifiable.
He is a broken glass Keynesian in that manner but has a Austrian exterior or more accuretly perhaps a quantum view of finance that is I believe not empirical.
For instance he only expects inflation when other people expect inflation.
He has created this infinite paper universe but hopes against hope that no one will defect in this global prisoners dilemma.
He seems perplexed that excess reserves are not being used but there is a simple reason why that is the case.
There is no longer any physical economy to run down so cash is useless – its been decapatilised to a uber extreme level that would be impossible without the derivatives that he was so affectionate towards
The man could be extremely autistic are perhaps just clinically insane – its amazing that just one man of such instability could have wielded monetory power with such impunity..
His final take on industrial companies and how they should be wound down is a laugh – Goldman was broke to near infinity but is not considered a entity that should experience such a trauma.
Although perhaps more of a libertarian bent then Adam Curtis – the second episode of his Mayfair set documentary is beginning to hit home for me.
http://www.youtube.com/watch?v=0zXiGQU64SY

There has been a Gigantic asset strip of the western world fuelled by oil based credit which has left a workforce of juvenile soap opera vegetables unable to build anything beyond a doughnut
So much basic technological expertise has been lost in the monetarist ether that it seems almost impossible to get it back.
Its been a great robbery of ambition starting with the Nixon vacuum
As a pathetic product of this great big nothingness I feel we are encapsulated in this great big void wether talented or not.
Greenspans universe has expanded beyond light speed , matter is decaying to more fundemantal units while light is being extinguished.

Its a econmic heat death

The lesson I suppose forvall of us is to be careful of our success. Greenspan was right for almost fifteen years when he spoke of the productivity miracle, the power of the market and the fundamental shift downwards of inflation but he was disastrously wrong that bubbles don’t mattervand he was almost criminally irresponsible when he championed the unfettered use of derivatives. His tragedy is that he is alive and conscious of the consequences of his actions.

He is also a product of uncontrolled central banking, that jumps on the falling inflation bandwagon to print money and then finds that printing more money is the solution for all problems….economy strong, asset valuations exploding, banking system leveraging up, no problem, this is not a symptom of excess liquidity, it’s the free market. Markets falling, oh, then lets
Ring more money…..”central banks can never identify bubbles ex ante, they can only act to prevent the consequences of burst bubbles from infecting the real economy” is, when you think about it, a recipe for ever larger bubbles…but neither the FEd nor any central banker will admit that….they refuse to see that their own actions are central to the current mess…and for as long as that is the case, there can be no long term solution…..time to call an end to “independent” central banks…it’s a dangerous fallacy.

@ Dork
Another great link. You remind me of one these musicians who has gone off to somewhere like Sliabh Luachra, and come back with tunes that no one outside the locality has heard for centuries. The old stock.

White people still knew the meaning of totalitarianism back in the 1960s. Lots of them died fighting it or had relatives who were wiped out. The captains of industry couldn’t see the wood for the trees, and were easy meat for the financiers in the end.

As for the general public, they have been too busy feeding on consumer products to notice the decline of democracy and the real economy. Soft coercion, like in Aldous Huxley’s prescient 1960’s novel.
http://en.wikipedia.org/wiki/Island_(novel)

Your use of the term autistic is very interesting. Insofar as it displays a total inability to conceive anything beyond one’s own logic, that is a pretty apt description of Greenspan’s outlook, and of the financial sector more generally.

@Paul
Since I was a boy I was perplexed at the abandonment of Apollo and why we were not back stepping on the lunar regolith again
Now I know.
I remember Greenspan being asked a question recently about a aviation product and the money used to increase its efficacy and the man seemed genuinely off put – he conceived of technological capital creation as a waste of resourses which would be better spent on consumption.
The Nixon administration was the Queen Isabella of its day but this time it decided to burn the ships and turn inwards.
Very few have a true idea about what was lost in Industrial expertise.
A recent NASA heavy lift booster analysis suggested a Saturn V heritage vehicle was cheaper to run then a Shuttle derived vehicle – so essentially 40 years of Rocketry has been a waste.
And yet we hear the drone of computer technologists that our lives are going to be transformed by exponential computer power – outside of this medium technology has stagnated.
The west has been consumed by a monetarist madness that has destroyed all ambition and elan in the west.
Its neutron bomb economics.

It makes one want to cry
http://www.astronautix.com/lvs/saturnv.htm

@Paul/Dork

For autistic read arrogance.

For some reason there are those delusionists who actually still believe in the ‘independence’ of central bankers and Regulators alike – in many respects the last thing we actually require right now is these guys thinking independently given the state the ECB et al has driven us to.

Applying rule book solutions (and Greenspan makes reference to this in his crititsm of Dodd Frank) is always an extremely dangerous way to proceed when speaking economically – it’s a bit like a badly fitted new carpet in a room in that fixing up three of the corners seems always to leave a gap or an excess in the final one. The carpet analogy reminds me of central bankers always believing they can call it right and then being constantly surprised that their model or rule doesn’t work and they then seek to pull or push the carpet to the annoyingly out of sync final corner only to realise the problem has started all over again and this process continues ad infinitum.

Surely after many centuries of this folly the penny would have dropped – but seemingly not. The aura surrounding Greenspan is a by product of his time in the central banks bubble world – great storyteller but a lousy carpet layer.

Why we continue to believe we require central bankers to determine the base price of local currencies is a question that still baffles me – what’s wrong with the market in making such a determination -how bad could it really be?

Poor Alan! He has not been the same since his invitation to the Ayn Randite afternoon tea parties was withdrawn.

I think I would choose Greenspan on the basis that he is no longer a player and has no need to keep any particular show on the road.

Grenspan has no axe to grind? His attempts to ingratiate himself and his worldview again and to minimise the damage he’s caused say otherwise:

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.

http://www.ft.com/cms/s/0/14662fd8-5a28-11e0-86d3-00144feab49a.html#axzz1I5YYNcgb

“With ‘notably rare exceptions’, the first cross-Atlantic voyage of the Titanic was a success”

@ Paul Quigley

“Autistic” is an interesting description to give Randites like Greenspan.

Private Eye from 2008 but still good today now that the markets appear to have recovered from worries about Greece…

“That all-purpose Financial Article in full

World stock markets today staged a massive rally/nosedived spectacularly as a massive injection of Government money into a failing bank/fears that a failing bank could have to be propped up with Government money signaled what most observers agreed was the beginning of the end of the credit crunch/the beginning of the real credit crunch meaning that we can now look forward to the complete recovery of the global economy/the end of the world as we know it “

I was constructing a joke in my head about monotheism and monetarism and how it might not just be a co-incidence that the terms sounds so much alike but then I saw the Dork got there before me.

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