Wednesday, October 28, 2009
From his latest quarterly musing over at GMO, Jeremy Grantham (whose market calls this year have been spot-on) offers a few more thoughts on the former Fed Chairman.
In Case You’ve Forgotten, We Have My Old Nemesis, GreenspanOuch! If Grantham hadn't been so right about so many other recent financial market developments, you could easily dismiss this as sour grapes of one kind or another.
Alan Greenspan receives the title of Maestro in the U.S. and is knighted by the Queen for thoroughly demolishing the integrity of the U.S. financial system. He overtly ignored the great threat of bubbles in asset classes and, in fact, encouraged them. He Ayn Rand-ishly facilitated the progressive dismantling of governmental restrictions on financial behavior, he deliberately kept real interest rates at zero for years, etc., etc., etc. You have heard it before. Now, remarkably, in his very old age he has become imbued with the spirit of Hyman Minsky: “Unless somebody can find a way to change human nature, we will have more crises.” Now he finally gets it. Too late! In his merely old age, he ignored or abhorred Minsky, and consistently behaved as though markets were efficient and the players were honest and sensible at all times. But for all of the egg on his face, the Maestro continues to consult with the rich and famous, considerably to his financial advantage. In the good old days, he would have been set in the village stocks, and not the kind you buy and sell. And I would have been right there, Alan, with very ripe tomatoes.
But he hasn't and you can't.