Brooking No Excuses from Alan Greenspan

Pardon the headline pun, but there is hardly a more comfortable place to float a re-writing of your own personal history than the conservative enclave known as the Brookings Institute. The Greenmeister laid his golden egg yesterday at that worthy institution, a forty-eight page paper that expressed some remorse. And yet, wetting a finger to the friendly winds in the audience, the ex-Fed-Chief who ate the American economy pleaded that "little could be done to identify a bubble before it burst, much less to pop it." Except of course, those who forecast it, those who made billions short-selling it and those who pleaded for investigations of the likes of Bernie Madoff, Lehman Brothers and AIG. An even halfway hungry dog might have wandered away from his food-bowl long enough to sniff out itinerant workers buying $700,000 homes.

Forget the family spaniel's instincts, Alan Greenspan was sanguine as hedge fund managers copped $100 million a year, stock prices reflected forty times earnings ratios and Goldman Sachs shorted (inside the company) the same investments it was touting (outside the company). A hell of a lot can be done to identify a bubble, Alan, but precious little was done on your watch. At the end of this article there are links to articles I wrote about Mr. Greenspan from 2002 to 2007 (leaving the later entries as too close to the current history). If a dummy like me was on the scent, how does our top economic policymaker make a claim to ignorance?

“We had been lulled into a sense of complacency by the only modestly negative economic aftermaths of the stock market crash of 1987 and the dot-com boom,” Mr. Greenspan wrote. “Given history, we believed that any declines in home prices would be gradual. Destabilizing debt problems were not perceived to arise under those conditions,” the great man droned from the lectern.

Lulled? Goddammit, your only job was to not be lulled.

“Unless there is a societal choice to abandon dynamic markets and leverage for some form of central planning, I fear that preventing bubbles will in the end turn out to be infeasible,” Mr. Greenspan wrote. “Assuaging their aftermath seems the best we can hope for.”

Societal choice? Where are you Al, on Planet Greenspan or back in your study boning up on Ayn Rand again? Society hasn't had a choice in our American history as it relates to dynamic markets, except to buy their food, clothing, homes and cars at whatever best price they are offeredby the central planning of industry..