Jewish World Review June 39, 2003 / 30 Sivan, 5763
Who says Al's our pal?
http://www.jewishworldreview.com | So Alan Greenspan and his buddies on the Federal Reserve Board lowered interest rates again this week. Another quarter-point bone to the masses, for which we're to be eternally grateful. Pardon me, but I don't think so.
First off, it should have been a half-point cut. That would have sent an unequivocal message to the markets and the rest of us that this Fed gets it. Things are still dicey, so there's no time for fooling around.
By moving as conservatively as they did, Al and his pals sent quite the opposite message: that things are fine, just you wait. Well, for better than three years' worth of rate cuts, we've been waiting, and the Fed has been dithering. This latest cut only continued the trend, and was one of the big reasons why the Dow fell 98 points the day the Fed moved. Too little, too late.
What amazes me is despite the disappointment, few criticize Al himself. He's held in remarkably high regard almost everywhere. Wall Street loves him. Congressmen trip over themselves praising him. And even the Bush administration is afraid to say boo to him. Why? What has this guy done to warrant such unanimous love?
I'll tell you, in one word: nothing.
Everyone's praising the 13 rate cuts we have seen, but no one says anything about the fact we should have seen them months earlier when the economy clearly was slowing.
Wall Street applauds how Greenspan got us out of the '91 recession. I argue his rate hikes at the time got us into the recession, and his tentative and late response cost a lot of people their jobs, including the first President Bush.
Consider how he handled the 1987 stock market crash, flooding the banking system with money and providing the cash it and the rest of us needed, even though his stinginess in the months leading up to the crash led to the problem in the first place.
It's true that Al has put out a lot of fires. What a lot of people miss is the fact he started them! Look, if we're going to make a deity out of a guy -- news flash -- make sure he's a deity. He's not, and it's time to wake up. This financial emperor has no clothes, and it's not pretty.
Note to Alan Greenspan:
It's not pretty when you say, after the fact, stocks were in a bubble in the late 1990s, yet you did nothing to address that bubble at the time.
It's not pretty when you say you're fighting inflation at one meeting, then alarmingly discover deflation's the big bugaboo and you've done nothing to address it.
And it's not pretty when all of Washington hangs on your every word, when every one of your economic predictions has been wrong.
Don't get me wrong. I find Alan Greenspan to be a congenial and smart guy. But so was Jimmy Carter, and we know the financial horrors that occurred under his watch. All I'm saying is be fair and be right. We pilloried Carter for the ills of the late 1970s. We should hold Al accountable for the hangover of the post-1990s.
What's both galling and surprising is . . . we don't. It's as if Al is a modern-day Elvis. We remember the thin guy and forget the fat guy. We define him more by the good press and headlines he generated 16 years ago when he became Fed chairman than by the havoc he's created since he became Fed chairman.
It's very risky in life, and in politics, to put people on pedestals. We're all human, after all. All I'm saying is, see Al for the very "human" human being he is: a good economist and a hardworking guy who made bad economic bets and hurt a lot of working guys.
They say J. Edgar Hoover hung onto his job heading up the FBI for so long because everyone was afraid to confront him, and presidents, maybe in fear for what he had on them, never dared to cross him.
Hoover looked to the world like a saint, even though we know he wasn't.
Alan Greenspan looks to the world like a saint, even though I
know he isn't.
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