I *told* you being on the same side of any issue with Greenspunk is nothing to brag about.

There's a typo in the post: "he would settle for tax HIKES as a means to balanced budgets"

Never let Greenspan forget his rationale for backing bush's tax cuts!! "Surplus bad.. what will world do without T-Bills? Me sure no unexpected expenses will show up in future. Future pretty. Bush goood. Surplus bad. Fire bad!"
(I dunno why but I'm envisioning this in a Phil Hartman Frankenstein voice.)

Why can't Greenspan just do his job? Cripes he doesen't owe Bush anything. Doesen't he care that saying contradictory things will make him look stupid and could have a damaging effect on the markets?
In the likely event of uber high interest rates in the coming years please continue to remind people of the 2001 comments of Alan Greenspan the flip flopper and Bush toadie. To bad.. if he had any conviction and backbone he could have been great.

Political hamck is too kind a name for Greenspunk. Obviously his brain has some aged disease.

In the early 80s he fixed social secuity. Under Clinton private accounts were bad. Deficits were bad.

Now defificits created by tax cuts are great. Socail security is a disaster.

Greenspan, shut up. Head to pasture, you no longer make any sense.

Another thing he is totally wrong on is the employment situation. It is a disaster period. Even the lastest figures are phoney. The jobs are upo 262,000 but the government invented 380,000 with that birth death model. What crap.

And of course no inflation is BS. A new furnace filter cost $45 that was $35 last year. A service call goes fro $79 t $89. A membership at the zoo goes fro $64 to $74. Here is Gerogia gas went from $.82 under Clinton to $1.89 today under Bush but there is no inflation. BS. Greenspunk is incompetant and Harry Reid is right.

It's actually RandIAN, not Randite.

[Robert A. Heinlein says "Randite." I say "Randite."]

Randian only if you want to be polite.

Economist after economist talks of building to severe problems in the economy. Stephen Roach is impossibly frightening to read. But, there is never a suggestion of how we can protect ourselves. What are we supposed to do?

Crediting Greenspan for the 1990's low inflation is a post-hoc argument. He was fortunate enough to serve as Fed chair in an era of low inflation. If he had lowered inflation in a time of high inflation, then I would be impressed.

I would take Volcker over the caretaker Greenspan as Fed chair in a heartbeat.

Is he really a Rando? It seems preposterous! After all, one can be concerned about the rights of individuals, and be concerned about government getting too big, without being a follower of Rand.

Alan Greenspan is yet another official who - to borrow a phrase - will have his reputation destroyed by his association with the Bush Junta.

He's on record as being a big Ayn Rand fan. Perhaps he's just Randy.

I wonder at the statement that Greenspan reduced unemployment to nearly unimaginably low rates and have wondered since reading Greider about the Feds role in depressing employment in service of avoiding wage inflation. Since the unemploment rates of the 90's were not a historical low, what changes have occurred to raise the unemployment rate?

Gee, Brad. I was having a nice evening.

I respect your courage in stating your views of Greenspan, though. Fair is fair.

Personally, I believe that it's important to separate his job performance from his character and personal views on the U.S. human race.

I'm disappointed in his character and his personal views. Period. I am of the opinion that he is an ass.

Some of his more recent statements are very revealing. Enough said for now.

Well...two more things. He can go to hell. And he's not invited to the dinner party on Saturday.

What about Greenspan the cheap-suit hustler, who talks out of both side of his mouth, promoting the social security tax hikes in the '80s explicitly designed to grow a Social Security, surplus in advance of the baby-boom retirement, and then holding the jackets of those who gave this same money "back" to the very wealthy, one of the greatest shell-game cons of our time?

Greenspan should take the arms length existence of the Fed (to prevent political interference) to heart and keep his randite opinions the hell out of the fiscal policy process. He has no business carrying water for the Bush administration.

"Economist after economist talks of building to severe problems in the economy. Stephen Roach is impossibly frightening to read. But, there is never a suggestion of how we can protect ourselves. What are we supposed to do?"

What I have done is increase the allocation of my portfolio in international stocks. Vanguard Europe Index, International Explorer and International Value Fund. Vanguard Value Index, Energy and Health Care funds. I reduced the holding in the REIT Index. I finally went from Vanguard Long Term Bond Index to GNMA fund.

Though this is a difficult time to invest, there has been an international bull stock market especially in value stocks such as energy and REITs, and long term bonds have been astonishing.

This is a time for caution in investing. Stocks seem reasonably priced, though not inexpensive by historical standards since 1970. Bonds are expensive by historical standards since 1970. Real estate is expensive by any standards. The Fed is well into a tightening sequence, while dollar can be expected to be under pressure indefinitely. A lot to worry about.

Greenspan appears to be another ancient sage who can't let go. He's fueled by the power of those he advises.

Brad, you were there in the Clinton administration -- why didn't Clinton replace Greenspan with Alan Blinder when he had the chance? Leaving him there seems like a mistake, in hindsight.

[Republican Congress]

Harry Stonecipher is a Randian. Alan Greenspan is a Randite. As mdf notes, it is possible to be both.

Me,

There was a 380k swing in the birth/death plug, but not a 380k add. The plug for February was just +100k, following a -280k for January. Between the two, that's still -180k.

Movie G,

Part of Greenspan's "job performance" has been to march up to Capitol Hill at every opportunity to tout his own views on fiscal policy, while disguised as a dispassionate economic bureaucrat. When he first made his "stop us before we run surpluses" tax cut pitch, he actually had to do a little shuffle the next day. By not saying otherwise, Greenspan gave the impression he was speaking for the Fed. Some of his colleagues demanded that he clarify that he was not speaking for the Fed. The pattern has been to obscure the two when it serves his purpose. An important for instance right now is his testimony on Social Security. There is another member of the Fed, Gramlich, with a pretty good claim to expertise in Social Security issues. He sees things rather differently than does the Chairman, but the Chairman manages to link the weight of the Fed to his own views. When Greenspan is so apt to tangle up his character with his job performance, it's difficult for the rest of us to separate them.

Greenspan fits very well with the current political culture, offering the advise that his political masters want. That didn't work out so well for the CIA.

Here is a link to an article outlining his devotion to the Rand cult

http://www.taemag.com/issues/articleid.16149/article_detail.asp

I had no idea that he was in that deep!

Brad wrote, "But let me point out that within Republican councils Greenspan has been one of the few relatively grownup voices: pointing out dangers, and asking for Plan Bs--his support for triggers to reverse the 2001 tax cuts back when they were proposed, and his recent call for caution in changes to Social Security which may have destructive effects on national savings, to give two examples."

I think you give Greenspan *way* too much credit. He's definitely going to burn in hell for his sins.

(kharris---good post...)

http://www.nytimes.com/2005/03/07/business/worldbusiness/07yuan.html

China Says It Won't Sell Dollars
By KEITH BRADSHER

HONG KONG - The Chinese official in charge of his country's huge foreign currency reserves said over the weekend that China had no plans to sell dollars, and also ruled out any 'large scale' appreciation of China's currency against the dollar.

The series of unusually blunt comments by Guo Shuqing, director of the State Administration of Foreign Exchange and a vice chairman of the central bank, may reassure currency traders that China will not push down the value of the dollar by dumping its holdings in favor of currencies that have been stronger in the last year or two, like the euro. With $609.9 billion in foreign exchange holdings at the end of last year, China has the world's second-largest reserves, after Japan.

But Mr. Guo's opposition to any significant appreciation of the Chinese currency, the yuan, is also a setback to efforts by the United States, the European Union and Japan to blunt China's growing share of global trade by urging that Chinese officials let the yuan's value rise.

Mr. Guo appeared to be trying to address an undercurrent of popular dismay in China over the rapid accumulation of dollar-denominated assets even as the dollar has weakened. Chinese media have published numerous articles in recent months asking if the country has lost money by investing so heavily in dollars.

The official New China News Agency on Sunday carried a rare defense of Chinese currency policies by Mr. Guo. 'We will not adjust the structure of our foreign exchange reserves according to short-term fluctuations,' he was quoted as saying Saturday on the sidelines of a meeting of the Chinese People's Political Consultative Conference, an advisory group. 'If we sell U.S. dollars now when it is tumbling, it means we lose money. If we do sell them, we have to buy other currencies such as the euro. But what if the euro drops?' ...

lise wrote, "What I have done is increase the allocation of my portfolio in international stocks. Vanguard Europe Index, International Explorer and International Value Fund."

I think a better play is BEGBX. You're not exposed to equity risk (it's mostly European gov bonds), and the fund mostly doesn't hedge back into dollars. (Disclaimer: I own BEGBX but have no association with it.)

"Vanguard Value Index, Energy and Health Care funds. I reduced the holding in the REIT Index."

Health care might be a good play, since the pharmas seem to own Congress.

REITs have been great, but to me and others it looks like investors chasing yields. Can't see that picnic going on forever. I reduced also, though in pot of $$ too early.

"I finally went from Vanguard Long Term Bond Index to GNMA fund."

I don't know enough to say, but I'm not touching the mortgage-backed market with a 10 foot pole.

"Though this is a difficult time to invest, there has been an international bull stock market especially in value stocks such as energy and REITs, and long term bonds have been astonishing."

Yeah, though we both know the bull market in bonds ain't gonna last.

anne wrote, "Stocks seem reasonably priced, though not inexpensive by historical standards since 1970."

I wouldn't agree about domestic stocks. Especially since some reasonable people still question the quality of earnings.

KHarris

"Part of Greenspan's 'job performance' has been to march up to Capitol Hill at every opportunity to tout his own views on fiscal policy, while disguised as a dispassionate economic bureaucrat."

Clever, as usual, discussion of economic policy by Alan Greenspan is meant to give the impression this is Federal Reserve thinking. This has been especially damaging when the subject is fiscal policy, and may become as damaging about Social Security and Medicare.

China's leadership should be taken seriously on matters of economic development and fiscal and monetary policy. This is a well advised and competent leadership as can be seen in the "smoothness" of the development surge. As Bill Gates pointed out there is a fresh capitalist development model being fashioned. This means expect China not to sell dollars, and to maintain the currency peg within a reasonably close range. There will be little interest rate pressure on America from China.

Robert A. Heinlein says "Randite."

Speaking as a veteren Heinlein reader, I say he should not be taken to be authority on anything.

commenters on greenspan being a "hack" or providing advice only because that's what his bosses want...

listen to the host. Greenspan honestly holds very different policy prescriptions and preferences than you do. it doesn't make him a hack.

as for him being a randi[te/an]... he was actually part of Ayn's circle as a [much] younger man. that's why he is so trusted by those of us with policy preferences/prescriptions that aren't deemed "acceptable" in berkeley: we know he isn't going to go wobbly. see this from the american enterprise http://www.taemag.com/issues/articleid.16149/article_detail.asp

Just because we're "evil" in wanting a government with as small a share of GDP as possible doesn't mean that we're stupid, or being bribed by somebody.

Liberal

Well done. All bonds in the Vanguard GNMA Fund are government assured. The credit quality is as for Treasury bonds. Duration of the GNMA fund is 2.5 years, so the fund will fare well even if interest rates rise sharply. The yield is about 5.1%, but GNMA yields are always overstated in late February and early March. So, I would consider this a highly defensive domestic bond fund.

Large volumes of debt should be written off at the lower exchange rate before the center does anything spectacular about raising it. I would watch for that.

this is an easy one. the last time gross CPI was 3.5% (as it is today, even using the Fed's laughably low estimation of inflation) was in 2000. but the Fed Funds rate then was 6.5% vs today's 2.5% (after 3 yrs of only 1%). the only explanation, and it's an obvious one: the G-man was actively subverting Gore's chance of reelection in 2000 while he has been actively underwriting Bush's chances since, not to mention subsidizing creation of a 1-party Republican state. he's raising rates now, but only in telegraphed "measured" amounts, because to do otherwise would crash the markets (like 2000) just as he and the Republicans are on the verge of finally destroying Social Security and the safety net, something a 20% market decline would make impossible.

"In the early 80s he fixed social secuity."

Then why does it need to be fixed again?

To be consistent with other derogatory derivations of political ideologies, I prefer "Randist".

BTW, Brad I like the insert of your comments in brackets - very interactive.

[peBird, you are an excellent commenter, but a bit too much of a clown]

[I did not do that!]

"Then why does it need to be fixed again?'

It doesn't. There's a difference between tuning up a car and rebuilding the engine.

Hey, hey!: Thank you for indicating the American Enterprise article! It reads like "Sex Lives of the Sophists." But it rather undermines your other points: (1) How does reference to the ideas of these people prove that "smaller government" is a smarter preference? And, (2) we trust him, we "know he isn't going to go wobbly," because he once swallowed a rickety intellectual framework, bolstered by emotional juvenility? (or did it, just to get girls?) ...Do you think I'M stupid? I'm all for individual liberty (isn't every half-dunce?), --but I would stay away from Rand, in trying to argue for it, or to find ways to make it consistent, i.e. to make it work for everybody.

Also: by the dictionary, Greenspan is not a "hack." He is a "shill."

Don't believe Greenspan's hype. You and the the Clinton administration did the hard work to make a budget deal that set the course for the 90s boom. Rubin got on the phone to do the hard work to calm the markets after Mexico and Asia blew up in 94 and 97. Remember how unpopular those guarantees were? Greenspan pointedly (read the WSJ series) refused to do anything.

Volcker did the hard work on inflation.

Here's my guess on why Greenspan gets the credit - because the Republicans refused to believe that the Democrats were ever right - and they consistenly fed the myth.

Well don't believe it - you did it - he didn't.

Hev,

Most of us understand that Greenspan holds the views he holds in all sincerity. That's not what makes him a hack. The problem is that he is "first among equals" at the Fed, but has parlayed his position and reputation into an opportunity to present his own views while speaking as Chairman of the Fed. The fact that others at the Fed disagree on fiscal policy, on the extent of risk to Social Security, on lots of matters outside of monetary policy, is not evident in Greenspan's testimony – as Fed Chairmen. Therein lies the sin, and it is a bad one. As I pointed out, he has been sufficiently egregious in that sin to be called on it by other members of the Fed board. The fact that Greenspan supports policies you support doesn't mean his methods are honest.

And on the point of "knowing" this or that about Greenspan by his association with some prior event? So there was this French general, see, who did great service to his country in WWI, so everybody thought they know what kinda stuff he was made of. Then along comes WWII, see and, well, he ended up running France for the Germans. Not everybody who has a good reputation deserves it.

Greenspan what wisdom, consider this: "Regulators eased off Charles Keating after intervention from the senators. The senators say that they interceded on behalf of Keating because they were persuaded by a letter written by Alan Greenspan, now chairman of the Federal Reserve and then a private consultant, vouching for Lincoln's health. And Greenspan was paid to write the letter by a law firm that was representing Charles Keating. " from "How Did It Happen?" -Steve Waldman and Rich Thomas

Actually there was a good case for some kind
of a tax cut in 2001, although I did not support the details of what was done. Greenspan remained
silent on the less defensible later ones.
BTW, Robert Shiller spoke at the EEA meetings
in New York and claims to have inspired Greenspan's use of "irrational exuberance," which
Shiller used later in his book. Second edition is out claiming we have a housing price bubble.

a screaming comes across the sky....

Bubbles can only be recognized in hindsight. This includes the bubble that I recognized in its early stages. That is all.

"The Greenspan we saw for the most part in the 1990s was the superb monetary technocrat--the person who maintained low inflation and yet nudged the U.S. economy closer to full employment than I would ever have believed possible, and the person who was desperate for a balanced budget because persistent unbalanced budgets generate enormous pressure on central banks to allow inflation."

When I read this cogent important passage several times, I realize how sad it is that Alan Greenspan supported massive tax cutting from 2001 at a time when the federal budget was finally in surplus. By staying with a budget at least near balance we could have changed the potential of the economy to grow at a relatively rapid rate with minimal inflation for an indefinite period. How could Greenspan not have understood that part of the surplus was a result of the stock market boom, that the baby boom generation really was growing older, that there are economic swings that limit revenue. Remember, a recession was beginning as Greenspan spoke of supluses forever. Alas.

Can anyone cite specific Congressional testimony which was requested of Alan Greenspan as a mere citizen since the time he was selected as Fed Chairman.

I can't recall any such requests.

His testimony is as the Fed Chairman and his personal viewpoints on matters outside of that assigned role should be identified clearly each time he steps across the communication line.

Period.

hey wrote, "Just because we're 'evil' in wanting a government with as small a share of GDP as possible doesn't mean that we're stupid, or being bribed by somebody."

By "we," I assume you mean some variant of modern, so-called libertarianism (of the right).

The problem isn't a desire for small government. Rather, the problem is that most right-libertarian philosophies are grossly incompatible with freedom and justice. This is described well in the essay "Are you a real libertarian or a ROYAL libertarian?"
URL: http://geolib.pair.com/essays/sullivan.dan/royallib.html

kharris wrote, "The problem is that he is "first among equals" at the Fed, but has parlayed his position and reputation into an opportunity to present his own views while speaking as Chairman of the Fed. The fact that others at the Fed disagree on fiscal policy, on the extent of risk to Social Security, on lots of matters outside of monetary policy, is not evident in Greenspan's testimony – as Fed Chairmen. Therein lies the sin, and it is a bad one."

I would think it's worse than that. The Fed doesn't have any business making pronouncements on fiscal policy. If they want their independence from the more political bodies of the government, they should stay on their side of the fence.

Patrick -

"In the early 80s he fixed social security."
"Then why does it need to be fixed again?"

I think the "fix" Greenspan has in mind for Social Security is somewhat like the "fix" my parents had a vet perform on the family dog. Funny thing - the dog never sang baritone again, only mezzosoprano.....

"I think the "fix" Greenspan has in mind for Social Security is somewhat like the "fix" my parents had a vet perform on the family dog. Funny thing - the dog never sang baritone again, only mezzosoprano....."

or,

the fix is in.

What Sir Alan needed was a Sir Humphrey.

Greenspan really has the press fooled. It's unbelievable to me that people are just now talking about Greenspan's hackery. I thought it was obvious in 2001 when he spoke for tax cuts.

Hey,

Wish I'd known about that about twenty five years ago. So, Greenspan was a right wing nut before right wing nut was cool. Sure explains a lot.

Brad,

I disagree. I think that after being a superb technocrat, Greenspan was always a maneuvering politician; or perhaps you can call him a careerist. But a Randian ideologue? No.

Greenspan always takes care to not contradict the person who controls his next appointment, i.e. the President and allows his personal opinion (which is usually closer to the truth) to get out through carefully crafted public pronouncements and leaks. Greenspan has survived this long in Washington not only because he's good at his job, but because he knows his limits.

Let me also add another two points that support my position.

1. Greenspan was pretty supportive of Clinton and quite a few Republicans showed their displeasure over him and his monetary policy. I specifically remember Steve Forbes berate him for his monetary policy that was going to put the US in a deep recession.

2. In the Paul O'Neil book, O'Neil talks about how he conspired with Greenspan to put the sunset provisions in the tax-cuts. I don't know if this was a leak approved by his fried Alan or O'neil talking out of his ass and embarassing his friend, but it was quite obvious from the reading that Greenspan was working behind the scenes to ameliorate the effects of the tax-cuts while being careful in public to offer his measured support.

how about Greenspan's endorsement (although somewhat hedged) of ARMs'?

being an ex-AynRandian objectivist cult... freak, i've known for years that greenspan was a radical hack. for crying out loud, he wrote an essay for... what was it? Capitalism: the Unknown Ideal? and what was his essay about? about how anti-trust laws are fundamentally opposed to basic human rights.

the problem with rand and her ilk? well, lots... but also, the fundamental belief in the idea that a corporation (or institution really) has the same rights as a person. this seems to have helped the evolution into corporations having more rights than people. rand is a serious problem and often isn't taken seriously enough to be rebuked. i think that's a problem. i thought that at USAFA when a philosophy instructor laughed at another cadet who asked about her. see, if he'd taken it seriously, maybe that cadet wouldn't be a radical republican captain in the air force today... like most officers in the air force

Nick Kaufman wrote, "Greenspan has survived this long in Washington not only because he's good at his job..."

You really think he's good at his job?

What about
(1) The current asset bubble;
(2) His failure to see the second half (if not the first half) of the late 1990s stock market bubble, even if it was obvious to such casual observers as myself;
(3) Some thing he did (credit bubble) in the early 1990s which wasn't so hot...

Nick Kaufman wrote, "In the Paul O'Neil book, O'Neil talks about how he conspired with Greenspan to put the sunset provisions in the tax-cuts."

I thought the sunset provisions were put there to make it harder for the tax bill to be filibustered/whatever in the Senate. (I.e., due to Republican desires to insulate the bill against particularities of the Congressional budget process.)

Surely Bush and the Congressional Republicans put the sunset provision in as some sort of tactic, given their burning desire to ensure the wealthy pay no taxes.

"particularities" should be "pecularities"

I think Brad has a fairly balanced analysis of Greenspan. He always was fearful of inflation and deficits. And he was the consumate technocrat. But he's also highly ideological, and yes, he has been a follower of Ayn Rand's philosophy for over thirty years, at least. I heard about that in the seventies. And he's a Republican team player.

I think Harry Reid was right to call him a hack. New York Times columnist Paul Krugman has done the same. Greenspan's support for the tax cuts in 2001 clearly gave Democrats in Congress the cover to vote for them. He is a contributor to the deficits we are having. But then, he always said, even while supporting the tax cuts, that he thought we would need to cut benefits in Social Security to sustain the cuts for the wealthy. Most people just didn't listen to that part of what he said back then.

And I agree with the posters who said that it was the Clinton administration, especially Robert Rubin, who were responsible for low inflation, a budget surplus and high employment rates. Yes we did have the dot.com bubble. But there was a lot of real growth that came from cutting the deficits from the last time the Republicans were in office (Bush's father). And I stil believe that if we had had Clinton and Rubin, or Gore and his economic team (whoever they might have been) in office when the bubble burst, they would have handled the economy far differently. Fewer people would have been hurt by it.

Liberal,

Greenspan cannot be accused of being responsible for the asset bubble. Accusing him that he is, assumes that the Federal Reserve obtains an extra goal other than constraining inflation and this isn't really its mission.

Greenspan did try to put some break when he cautiously warned of irrational exuberance.

Moreover, the fear in the 90s was that if Greenspan had put the brakes on the economy the landing might have been much harder.

All and all and despite the pain of 2001-2002, the recession and the bear stock market have been much softer than our worst fears.

As for the sunset provisions, they didn't pass, because they would have make tax cuts expire after a while and it would require a whole new political calculous to pass them again. (I could be mistaken, but I think that was the substance of the proposal).

The sunset provisions didn't pass however and I think that congress has to vote to rescind them instead of voting to reenact them. If I am not mistaken, so take it with a grain of salt pending verification by another poster.

You posted

First the very low inflation rates should be no surprise. Greenspans objectivist roots and his past as a banker would lead him to serve his own banker's self interest and seek very low inflation rates.

As to the low unemployment rate, the order of event is different as I remember it. Greenspan under the theory of the Non-inflationary-rate of unemployment was keeping unemployment at or above 6%. This was until the Asian crises caused him to loosen the money supply. Only then did unemployment fall, as a side effect of preventing the Asian money problems from causing even more problems.