No ax to grind here. It is no small feat to live to 100 years of age. He was a wit in his day, looked up to by all, until it all crashed. The debacle he presided over made an apt addition to chapter of ‘Tom Irregardless and Me,’ which I wrote in 2016:
“An observer might well suppose that the entire purpose of the [2007] meltdown was to chastise Alan Greenspan. As head of the Federal Reserve for 19 years prior to the 2007 economic collapse, did he not, per Ricky Ricardo, have a lot of ‘splainin to do? He attempted it before Congress:
“‘We are in the midst of a once-in-a-century credit tsunami. Central banks and governments are being required to take unprecedented measures. You, importantly, represent those on whose behalf economic policy is made, those who are feeling the brunt of the crisis in their workplaces and homes. I hope to address their concerns today.’
“This is the same Alan Greenspan whose voice to the financial community was once as that of God. As chairman of the Reserve, he’d issue statements regularly about interest rate policy. He’d make the statements incomprehensible; it was almost a game. He’d rehearse them in his head. If they could be understood, he’d rework them. Finance people would strain to discern his real intent, but of course, the task was impossible by design. Far from becoming fed up with such obscuration, they took it all for brilliance! Whereas any street person would instantly recognize a con, the bankers hailed it all as wisdom from on high.
“Mr. Greenspan’s successor, Ben Bernanke, left to clean up the mess, was more straightforward in his speech. Mr. Greenspan himself became that way addressing Congress. He dropped the smart-alecky double talk. His words were clear. And not pretty:
“‘Given the financial damage to date, I cannot see how we can avoid a significant rise in layoffs and unemployment. Fearful American households are attempting to adjust, as best they can, to a rapid contraction in credit availability, threats to retirement funds, and increased job insecurity. All of this implies a marked retrenchment of consumer spending as households try to divert an increasing part of their incomes to replenish depleted assets, not only in 401Ks but in the value of their homes as well.’
“No more smug cuteness, building indecipherable word castles. For, alas,
“‘those of us who have looked to the self-interest of lending institutions to protect shareholder’s equity (myself particularly) are in a state of shocked disbelief.’
“Mr. Greenspan went on to discuss what had triggered the collapse:
“‘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. A Nobel Prize was awarded for the discovery of the pricing model that underpins much of the advance in derivatives markets. This modern risk management paradigm held sway for decades. The whole intellectual edifice, however, collapsed in the summer of last year because the data inputted into the risk management models generally covered only the past two decades, a period of euphoria.’
“Note the absolute failure of the best and the brightest, the cream of the crop of human experts. A Nobel Prize was even awarded for the economic model that would ruin everybody!
“Not everybody, Tom,” Mr. Strawman observed. “My portfolio recovered. I held on.” True enough: When Bob Pittance saw his net worth chopped in half, he panicked and sold all his holdings, saying that half is better than nothing. When Billy Banks saw his net worth chopped in half, he said: “Well, I guess if I have to, I can live on a half billion,” and snapped up Bob’s fire sale stocks. (and boasted about it afterward!) With wealth transfer complete, it was ‘pedal to the metal!’
“Mr. Greenspan’s final statement is breathtaking for its admission of stupidity: Nobody thought to test the model outside of party time,“a period of euphoria.” Nobody thought the real world might differ from the party world. Isn’t there some scripture somewhere about how you can’t trust nobles as far as you can spit?
“As with the opioids that killed Prince, there is a fatal flaw. It is a flaw that would instantly be spotted by any commoner were the scoundrels not so deliberately intent upon muddying the waters for reasons of greed. The opioid company wanted a grand slam with their new drug. The finance people wanted to party on with other people’s money. They should have had Bible education, but they had only the world’s university education.
“Does this again not validate how Jehovah’s Witnesses don’t bow and scrape over today’s higher education? They use the world’s education system to acquire the skills necessary to make a living. But as for acquiring wisdom from that source, they’re not keen on it. Within their congregations, they defer to training that addresses the more important moral concerns. For them, that goal is achieved in the context of Bible education.”
****** The bookstore