Wikinvest Wire

If Jeremy Grantham had a blog...

Tuesday, December 01, 2009

When reading Jeremy Grantham's insightful commentary on what makes the financial world go round, sometimes you have to wonder what he would name his blog, if he had one, as there are few who bash former Fed chairman Alan Greenspan as well as he does.

From this Paul Farrel piece at MarketWatch comes another Grantham-Greenspan gem.

14. Finally, Grantham's irrational 'old nemesis, Greenspan'

He gets "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. ... 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."
The first 13 points of his 14-point analysis of what's wrong in the world, in general, and at the highest levels of U.S. government, in particular, are also worth a look.

My guess is that, by the end of Bernanke's second term as Fed chief, Grantham will have completely forgotten about the Maestro, instead spending all his energy on Greenspan's "most passionate cheerleader" who is now "completely clueless", his reappointment seen as akin to "reappointing the Titanic's captain" (see point #2).

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3 comments:

Anonymous said...

Iceberg straight ahead, but we can't worry about that. The only thing that matters is that the ship keeps moving forward at a steady pace so the crew has something to do. (Changing course would mean that some crew members would have to do something different, which is potentially disruptive to the economy).

The iceberg is a long run problem, so we can safely ignore it.

Mark said...

"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."

Sorry, but this is one aspect of Greenspan where Grantham doesn't have a clue. Calling Alan Greenspan an acolyte of Ayn Rand is like calling Darth Vader a Jedi Knight. Rand would have been appalled by Greenspan's actions and most likely would have been one of his most vocal critics.

Anonymous said...

^^^ agree. The transformation of Greenspan from Objectivist gold-standard-bearer in the 60s to fiat-money-manipulator in the 90s would make an interesting psychological study. However, asserting the premise that AG's actions in the
90s are reconcilable with his stated beliefs of the 60s is the mark of a shallow and lazy writer.

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