Greenspan's Bubbles

Greenspan's Bubbles

The Age of Ignorance at the Federal Reserve

Book - 2008
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No matter who you are-investor, trader, homeowner, 401(k) holder, or CEO-you are bound to feel the impact of Alan Greenspan's "Age of Ignorance" for years to come.

According to MSN Money columnist William A. Fleckenstein, Greenspan's nearly 19-year career as Federal Reserve Chairman is even worse than anyone imagined. Labeled "Mr. Bubble" by the New York Times , Greenspan was nothing less than a serial bubble blower with a long history of bad decision-making. His famous "Greenspan Put" fueled the perception of a Goldilocks economy-but, as this explosive exposé reveals, the bear has finally caught up with Goldilocks.

Using transcripts of Greenspan's FOMC meetings as well as testimony before Congress, this eye-opening book delivers a timeline of his most devastating mistakes and weaves together the connection between every economic calamity of the past 19 years:

The stock market crash of 1987 The Savings & Loan crisis The collapse of Long Term Capital Management The tech bubble of 2000 The feared Y2K disaster The credit bubble and real estate crisis of 2007

Fleckenstein explains just how far-reaching Greenspan's mess has been flung, and presents damning evidence that contradicts the former Fed chief's public naiveté concerning shifts in the market and economy. He also points to a disturbing fact, that throughout his career, Greenspan not only made costly mistakes, but made the same ones-over and over again. And not only was he never able to recognize or admit to those mistakes, he constantly rewrote his own history to justify them.

Greenspan's Bubbles offers a lock-stock-and-barrel portrait of a flawed but fascinating man whose words and actions have led a whole generation astray, and whose legacy will continue to challenge us in the years ahead.

Publisher: New York : McGraw-Hill, c2008.
ISBN: 9780071591584
Characteristics: x, 194 p. : ill. ; 21 cm.
Additional Contributors: Sheehan, Frederick


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Mar 30, 2015

Outstanding comments from the commenter below, baldand - - for the economics wonk - - but my criticism is more focused, although a good read, the author presupposes that Greenspan is doing this from his beliefs, rather than acting in concert with the major banks, following their marching orders: thus setting up events for the super bubble of bubbles, the SECURITIZATION BUBBLE, of which housing was but one component, as many other categories were also securitized. Still recommended, though.

Apr 06, 2014

This book was written in 2008 at the height of the financial crisis. Reading it five years later, it is strange how two of the strange beliefs of the US Fed in the years prior to the financial crisis, that the US was at risk of sinking into a deflationary spiral and that any inflation shown in the official indicators was likely due to statistical mismeasurement, seem to be common today in Europe and to a lesser extent here in Canada. Mr. Fleckenstein is clearly in favour of central banks leaning against bubbles rather than cleaning up after them. The cleaners, in whose ranks he puts Mr. Greenspan, only encourage moral hazard. He doesn’t criticize Mr. Greenspan for failing to make the US Fed an inflation targeting central bank, although he clearly thinks that price stability should have been the main goal of the US Fed. Nor does he criticize Mr. Greenspan for switching from one dysfunctional measure of inflation, the CPI, to another, the PCE deflator, a change that isn’t even hinted at in his book. The US Fed’s monetary policy from 2000 forward might have been tighter if they had been monitoring a consumer price series with a net acquisitions approach to owner-occupied housing, which would have been far more sensitive to house price increases than the PCE deflator, but this is unfortunately completely ignored in his book.


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