Others joined the chorus, too, lauding his steady, disciplined hand on the monetary steering wheel, his success keeping inflation and unemployment low, and his having represented the embodiment of prosperity in compiling a record of achievement his successor will be hard-pressed to match.
In 2004, William Greider in The Nation magazine had a different view. He's the author of "Secrets of the Temple" on "how the Federal Reserve runs the country." He wrote Greenspan "ranks among the most duplicitous figures to serve in modern American government (who used) his exalted status as economic wizard (to) regularly corrupt the political dialogue by sowing outrageously false impressions among gullible members of Congress and adoring financial reporters."
They were front and center in the New York Times for the man who "steer(ed) the economy through multiple calamities and ultimately....one of the longest economic booms in history....(He earned his bona fides) weather(ing) the Black Monday stock crash of 1987 (and in 18 and a half years in office) achieved more celebrity than most rock stars" and may now approach them in earnings.
The new book of his memoirs "The Age of Turbulence" is just out for which his reported advance exceeded $8.5 million (second only to Bill Clinton's $10 for his memoirs) plus additional royalties if sales exceed 1.9 million copies. They may given the amount of high-impact publicity it and he are getting nonstop. And that's not all. He's in great demand on the lecture circuit at six figure fees, has his own consulting firm, Greenspan Associates LLC, and his lawyer, Robert Barnett says "virtually every major investment-banking firm" in the world wants to hire him for his rainmaking connections.
They have value, not his market advice, best avoided for the man who engineered the largest ever stock market bubble and bust in history through incompetence, timidity, dereliction of duty, and subservience to the capital interests he represented at the expense of the greater good and a sustained sound economy he didn't worry about nor did Wall Street.
For firms on the Street and big banks, he could do no wrong and was above reproach for letting them cash in big and then get plenty of advance warning when to exit. Most ordinary investors weren't so fortunate. They're not insiders and were caught flat-footed by advice from market pundit fraudsters and the most influential one of all in the Fed Chairman. Just weeks before the market peak in January, 2000, he claimed "the American economy was experiencing a once-in-a-century acceleration of innovation, which propelled forward productivity, output, corporate profits and stock prices at a pace not seen in generations, if ever."
It was hype and nonsense and on a par with famed economist and professor Irving Fisher's remarks just before the 1929 stock market crash and Great Depression when he claimed economic fundamentals in the country were strong, stocks undervalued, and an unending period of prosperity lay ahead. It took a world war a decade later, not market magic, for them to arrive, but before it did Fisher kept insisting in the early 1930s recovery was just around the corner. It's the same way Wall Street touts operate today on gullible investors who even after they've been had are easy prey again for the next con.
And they're really in trouble when it comes from the "Maestro," who at the height of the stock market bubble said: "Lofty equity prices have reduced the cost of capital. The result has been a veritable explosion of spending on high-tech equipment...And I see nothing to suggest that these opportunities will peter out anytime soon....Indeed many argue that the pace of innovation will continue to quicken....to exploit the still largely untapped potential for e-commerce, especially the business-to-business arena."
One week later, the Nasdaq peaked at 5048 and crashed to a low of 1114 on October 9, 2002. It lost 78% of its value, the S&P 500 stock index dropped 49%, and retail investors lost out while Greenspan was busy engineering another bubble with a tsunami of easy money for Wall Street and big investors. It's now unwinding as he gets a big payday for his memoirs and a chance to rewrite history. He aims to raise himself to sainthood and at the same time distance himself from the very costly policies he implemented on top of trillions he helped scam in the greatest modern era wealth transfer from the public to the rich. More on that below.
Greenspan's Background and Tenure as Federal Reserve Chairman
Alan Greenspan grew up in New York, got his B.A. and M.A. in economics from New York University and later was awarded a Ph.D. in economics from Columbia without completing a dissertation the degree usually requires. In a highly unusual move, Columbia made an exception in his case.
Early on, he became enamored with free market ideologue Ayn Rand, wrote for her newsletters and authored three essays for her book "Capitalism: The Unknown Ideal." It expressed her views on capitalism's "moral aspects" and her attempt (with Greenspan's help) to rescue it from its "alleged champions who are responsible for the fact that capitalism is being destroyed without a hearing (or) trial, without any public knowledge of its principles, its nature, its history, or its moral meaning."
That was in 1966 when Rand, a staunch libertarian as is Greenspan, believed fundamentalist capitalism was being battered by a flood of altruism in the wake of New Deal and Great Society programs she (and Greenspan) abhorred. She defended big business, made excuses for its wars, and denounced the student rebellion at the time and the evils of altruism. Greenspan concurred, maintained a 20 year association with Rand (who died in 1982), and never looked back.
From 1948 until his 1987 Federal Reserve appointment, he served as Richard Nixon's domestic policy coordinator in his 1968 nomination campaign and later as Gerald Ford's Council of Economic Advisers Chairman. He also headed the economic consulting firm, Townsend-Greenspan & Company, from 1955 - 1987. Its forecasting record was so poor it was about to be liquidated when he left to join the Fed. A former competitor, Pierre Renfret, noted: "When Greenspan closed down his economic consulting business to (become Fed Chairman) he did so because he had no clients left and the business was going under (and we found) out he had none (of his employees left)." That made him Reagan's perfect Fed Chairman choice, and Renfret added it was Greenspan's failure in private business that got him into government service in the first place.
He wouldn't disappoint as Wall Street's man from the start. He bailed it out in 1987 after the disastrous October black Monday. It was the same way he did in it later in 1998 following Long Term Capital Management's collapse and again after the dot-com bubble burst. It was by his favorite monetary medicine guaranteed to work when taken as directed - floods of easy money followed by still more until the patient is healed, unmindful that the cure may be worse than the disease. No matter, it's a new Chairman's problem with Greenspan claiming no culpability for his 18 and a half year tenure of misdeeds, subservience to capital, and contempt for the public interest.
His new book claims the opposite. It's a breathtaking example of historical revisionism that's become standard practice for the man Sydney Morning News' Political and International Editor Peter Hartcher calls "Bubble Man" in his new book by that title. In it, he quotes Bob Woodward saying Greenspan "believed he had done all he could" to contain over-exuberance when, in fact, he let it get out of control. He now claims:
Greenspan was a one-man wrecking crew years before he became Fed Chairman, and his earlier role likely sealed the job for him as a man the power elite could trust. He earned his stripes and then some for his role in charge of the National Commission on Social Security Reform (called the Greenspan Commission). He was appointed by Ronald Reagan to chair it in 1981 to study and recommend actions to deal with "the short-term financing crisis that Social Security faced....(with claims the) Old-Age and Survivors Insurance Trust Fund would run out of money....as early as August, 1983."
There was just one problem. It was a hoax, but who'd know as the dominant media stayed silent. They let the Commission do its work that would end up transfering trillions of public dollars to the rich. It represents one of the greatest ever heists in plain sight, still ongoing and greater than ever, with no one crying foul to stop it. The Commission issued its report in January, 1983, and Congress used it as the basis for the 1983 Social Security Amendments to "resolve short-term financing problem(s) and (make) many other significant changes in Social Security law" with the public none the wiser it was a scam harming them.
The Commission recommended:
It was the first time US income tax rates were ever reduced at the top and raised at the bottom simultaneously. But it was far worse than that. In only a few years, Reagan got enacted the largest ever US income tax cut (mostly for the rich) while instituting the greatest ever increase entirely against working Americans earning $30,000 or less.
Alan Greenspan engineered it for him by supporting income tax cuts and doubling the payroll tax to defray the revenue shortfall. He also recommended raiding the Social Security Trust Fund to offset the deficit, and who'd know the difference. His scheme helped make the US tax code hugely regressive as well as for the first time transform a pay-as-you-go retirement and disability benefits program into one where wage earner contributions subsidize the rich as well as support current beneficiaries.
As a consequence, the wealth gap widened, continued under Clinton but became unprecedented under George W. Bush with Greenspan at it again. He supported the administration's wealth transfer scheme to the rich and outsized corporate subsidies with the public getting stuck with out-of-control deficits, deep social service cuts, and a new Treasury Department report just out promising more of the same.
It claims Social Security faces a $13.6 trillion shortfall "over the indefinite future," "reforms" are needed, delaying them punishes younger workers, and the program "can be made permanently solvent only by reducing the present value of scheduled benefits and/or increasing the present value of scheduled tax increases." Translation: cut benefits deeply, raise payroll taxes, and privatize Social Security so more public wealth goes to Wall Street and big investors.
Already the top 1% owns 40% of global assets; the top 10% 85% of them; the top 1% in the US controls one-third of the nation's wealth; the bottom 80% just 15.3%; and the top 20% 84.7%. In contrast, the poorest 20% are in debt, owe more than they own, and it's getting worse.
A generation of financial manipulation devastated working Americans, but it's even worse than that. Added are the effects of globalization, automation, outsourcing, the shift from manufacturing to services, deregulation, other harmful economic factors plus weak unions just gotten far weaker in the wake of the UAW September membership sellout to General Motors. The tentative agreement reached (for members to vote on) amounted to an unconditional surrender by a corrupted leadership after a two day walkout that was likely orchestrated in advance to cause GM the least pain. If the package is approved as is likely, it will encourage other companies to offer similar deals, take it or leave it. Organized labor suffered another grievous blow, corporate giants gained, and are more empowered than ever to win out at the expense of workers' futures.
The whole scheme was kick-started under Ronald Reagan. Between his tax cuts for the rich and the Greenspan Commission's orchestrated Social Security heist, working Americans lost out in a generational wealth transfer shift now exceeding $1 trillion annually from 90 million working class households to for-profit corporations and the richest 1% of the population. It created an unprecedented wealth disparity that continues to grow, shames the nation and is destroying the bedrock middle class without which democracy can't survive.
Greenspan helped orchestrate it with economist Ravi Batra calling his economics "Greenomics" in his 2005 book "Greenspan's Fraud." It "turns out to be Greedomics" advocating anti-trust laws, regulations and social services be ended so "nothing....interfere(s) with business greed and the pursuit of profits."
It won't affect the "Maestro." He's getting by quite nicely on his six figure retirement income that's just a drop in the bucket supplementing the millions he's making as payback for the trillions he helped shift to the rich and super-rich. They take care of their own, and Greenspan is one of them.
Mr. Lendman's stories are republished in the Baltimore Chronicle with permission of the author.
pRepublication or redistribution of Baltimore Chronicle content is expressly prohibited without their prior written consent.
This story was published on October 01, 2007.