Alan Greenspan Interviewed By Evan Davis

[Tired of Waiting]

Surprisingly, Evan Davies does grill Greenspan a little about the bubble, but far from enough. It is still a painful listening, and may even be dangerous for some! Health warning here!

On BBC Radio 4 Today Programme yesterday: 2h48min in (7 minutes long) http://www.bbc.co.uk/programmes/b03dfc82

Full interview, 17min long: http://www.bbc.co.uk/iplayer/episode/p01jq25r/Business_Daily_Alan_Greenspan_on_Past_Crises_and_Future_Challenges/

Other edited versions and news about it:

Alan Greenspan: Financial crisis probability was small

21 October 2013 Last updated at 10:35 BST

http://www.bbc.co.uk/news/business-24606187

Ex-Fed Reserve Chairman Greenspan says eurozone crisis far from over

21 October 2013 Last updated at 00:55 BST

http://www.bbc.co.uk/news/world-24605296

Greenspan fears US government set for more debt stalemate

21 October 2013 Last updated at 00:53

http://www.bbc.co.uk/news/business-24602273

Edited October 22, 2013 by Tired of Waiting

[zugzwang]

"Why aren't you in jail?" is the only question worth asking Greenie.

[Tired of Waiting]

"Why aren't you in jail?" is the only question worth asking Greenie.

I'm not sure about that. You may be overestimating him. You are saying that he saw it coming, but did nothing to curb it. I'm still not sure.

.

Edited October 22, 2013 by Tired of Waiting

[Errol]

Clearly totally off his rocker.

[thecrashingisles]

I'm not sure about that. You may be overestimating him. You are saying that he saw it coming, but did nothing to curb it. I'm still not sure.

I'd say it's more the case that he saw it not coming and so took action to make it come. Then when it came he said it was a surprise.

[wonderpup]

The odd thing about Greenspan is that he more or less subscribed to the view that everyone should act in their own self interest and was then surprised when the bankers did exactly this and brought down the banking system.

He seems to have assumed that the interests of the individuals working in the system would align perfectly with those of the system itself- clearly he had never come across the acronym; IBGYBG*

*(finance) I'll be gone, you'll be gone. (I'll have gotten my commission; you'll have sold out to the next guy; neither of us will be held accountable).

http://en.wiktionary.org/wiki/IBG_YBG

So this acolyte of Ayn Rand made the interesting error of assuming that bankers et al. would place the long term interests of the institutions that employed them above their own short term personal gain- a most 'unrandian' assumption to make.

[zugzwang]

I'd say it's more the case that he saw it not coming and so took action to make it come. Then when it came he said it was a surprise.

Every time the casino economy threatened to implode the Maestro cut rates and drove up debt further still rather than question the sustainability of the model. He then tried to cover his tracks by claiming that bubbles are detectable only in hindsight, a position somewhat at odds with his longstanding espousal of efficient markets. Given the centrality of the role he played it's inconceivable that Greenspan was unaware of the accounting and security fraud at the heart of Wall Street's lending boom.

[tomandlu]

The odd thing about Greenspan is that he more or less subscribed to the view that everyone should act in their own self interest and was then surprised when the bankers did exactly this and brought down the banking system.

In fairness to Greenspan (and to Rand), I think his main mistake was thinking that bankers were part of Rand's producers of value. (I'm no fan of Greenspan or Rand btw).

[tomandlu]

Every time the casino economy threatened to implode the Maestro cut rates and drove up debt further still rather than question the sustainability of the model. He then tried to cover his tracks by claiming that bubbles are detectable only in hindsight, a position somewhat at odds with his longstanding espousal of efficient markets. Given the centrality of the role he played it's inconceivable that Greenspan was unaware of the accounting and security fraud at the heart of Wall Street's lending boom.

Yes, but it was only small-minded bureaucrats and leeches who wanted to stop all that clever accounting with their petty rules.

[Hail the Tripod]

I thought it was pretty amazing when he said that the derivatives market had been validated by the ultimate "stress test" of the 2008 banking crisis, because there were no defaults.

[tomandlu]

I thought it was pretty amazing when he said that the derivatives market had been validated by the ultimate "stress test" of the 2008 banking crisis, because there were no defaults.

Really?!? That's too wonderful for words.

[winkie]

Clearly totally off his rocker.

[Tired of Waiting]

Clearly totally off his rocker.

Or that. I had forgotten that third possibility.

BTW, we've had that discussion many times before in this forum ("incompetent, bonkers or b@astard"?) , when talking about Gordon Brown...

[Executive Sadman]

He always sounds half dead. Has done for about 10 years now.

[Tired of Waiting]

He always sounds half dead. Has done for about 10 years now.

+ 1

[winkie]

He is of an age and standing that he can say it as he thinks....no hidden agenda, protecting his job or position, not answerable to anyone...his true colours are flying....more than can be said for many with power that think something and speak another, to be caught out later when their actions are the total opposite of the words they think we have forgotten about.....not everyone has short memories.....the honest truth however bad has to be better than a wolf in sheep's clothing.

[Bloo Loo]

He is of an age and standing that he can say it as he thinks....no hidden agenda, protecting his job or position, not answerable to anyone...his true colours are flying....more than can be said for many with power that think something and speak another, to be caught out later when their actions are the total opposite of the words they think we have forgotten about.....not everyone has short memories.....the honest truth however bad has to be better than a wolf in sheep's clothing.

even then he is still a total fracktard

[Tired of Waiting]

Crony capitalism, 13min into the full interview: http://www.bbc.co.uk/iplayer/episode/p01jq25r/Business_Daily_Alan_Greenspan_on_Past_Crises_and_Future_Challenges/

[wonderpup]

In fairness to Greenspan (and to Rand), I think his main mistake was thinking that bankers were part of Rand's producers of value. (I'm no fan of Greenspan or Rand btw).

If I was being kind to the man I would probably point out that his world view was shaped in a different era, when some vestige of moral responsibility remained in the minds of the people who ran the banking system- it simply did not occur to him that their modern incarnation would willingly take down the system in an orgy of short sighted greed.

He seems to have thought he was dealing with honorable men. An error of truly gigantic proportion as it turns out.

[interestrateripoff]

If I was being kind to the man I would probably point out that his world view was shaped in a different era, when some vestige of moral responsibility remained in the minds of the people who ran the banking system- it simply did not occur to him that their modern incarnation would willingly take down the system in an orgy of short sighted greed.

He seems to have thought he was dealing with honorable men. An error of truly gigantic proportion as it turns out.

Having read the age of turbulence I do feel he has a good grasp of economic reality, however whilst being Fed chairman he simply ignored reality and just did everyone possible to keep the punchbowl flowing. In his book he admits his charts which he's followed for years screamed there was a major problem in the late 90's he just ignored it.

His actions over LTCM/Asian crisis speak volumes he bailed out the bankers and slashed rates and created the problem that finally started to blow in 2007.

[Tired of Waiting]

I'd say it's more the case that he saw it not coming and so took action to make it come. Then when it came he said it was a surprise.

Every time the casino economy threatened to implode the Maestro cut rates and drove up debt further still rather than question the sustainability of the model. He then tried to cover his tracks by claiming that bubbles are detectable only in hindsight, a position somewhat at odds with his longstanding espousal of efficient markets. Given the centrality of the role he played it's inconceivable that Greenspan was unaware of the accounting and security fraud at the heart of Wall Street's lending boom.

Yes, I know, he's been blowing bubbles / or stopping them from bursting, for many years, I agree. BUT, I really don't think he understood the DIMENSION of the problem he was sowing.

I don't know how, or why, but somehow he managed to not see what was coming - if you know what I mean (hopefully you do, coz, to be honest, I am not sure I do.)

It just doesn't make sense. I can't believe he didn't see it coming, but I also can't believe he saw it and did nothing.

.

Edited October 23, 2013 by Tired of Waiting

[Tired of Waiting]

The odd thing about Greenspan is that he more or less subscribed to the view that everyone should act in their own self interest and was then surprised when the bankers did exactly this and brought down the banking system.

He seems to have assumed that the interests of the individuals working in the system would align perfectly with those of the system itself- clearly he had never come across the acronym; IBGYBG*

*(finance) I'll be gone, you'll be gone. (I'll have gotten my commission; you'll have sold out to the next guy; neither of us will be held accountable).

http://en.wiktionary.org/wiki/IBG_YBG

So this acolyte of Ayn Rand made the interesting error of assuming that bankers et al. would place the long term interests of the institutions that employed them above their own short term personal gain- a most 'unrandian' assumption to make.

Very good post.

[Tired of Waiting]

Having read the age of turbulence I do feel he has a good grasp of economic reality, however whilst being Fed chairman he simply ignored reality and just did everyone possible to keep the punchbowl flowing. In his book he admits his charts which he's followed for years screamed there was a major problem in the late 90's he just ignored it.

His actions over LTCM/Asian crisis speak volumes he bailed out the bankers and slashed rates and created the problem that finally started to blow in 2007.

Why did he ignore it? Why?! FFS, why?!

I don't get it.

[zugzwang]

Why did he ignore it? Why?! FFS, why?!

I don't get it.

Hubris. Narcissism. Ideological bias. It's worth recalling that as late as 2005 the central bank mafia were still congratulating themselves over The Great Moderation, the goldilocks combination of above-trend growth and negligible inflation they believed had been brought about by open markets, financial deregulation and globalisation.

[zugzwang]

Nice tweet from Marc Faber.

“The lifetime achievement of Greenspan and Bernanke is really that they created a bubble in everything…everywhere.” - Marc Faber