Saintly Alan Greenspan

Those who attended the lecture by Chomsky will remember his rile about St. Alan. Greenspan has been in the news this week because of the comments he made about tax cuts, social security and more.
Whiskey Bar takes a serious look at the two faces of St. Alan.

Like the comic book villain, Chairman Al presents two distinct faces to the world --- two different personalities, really. One is the career civil servant who keeps watch over the economy -- raising or lowering interest rates as needed to keep both inflation and unemployment in check -- and regulates (along with the Comptroller of the Currency and the FDIC) the U.S. banking system.

But being Fed Chairman is just Al's day job. His other role is to act as a critical behind-the-scenes player in every major economic decision made in Washington -- and some non-economic decisions as well. This is Greenspan the fixer -- partisan Greespan, enforcer of conservative free-market orthodoxy (unless, of course, a politically well-connected hedge fund and its creditors are in dire need of a federally arranged bailout.)

Billmon ,as usual, does a fine job of dissecting the news story and revealing the bloody guts.

Comments

[APB]

Well, sorry for what seems like just a promotion of Billmon, but he has got more stuff on Saint Alan, here and here. Billmon seems happy with Steven Pearlstein of the Post, but really happy with David Cay Johnson. Adam, if you are reading this, can you post your thoughts on the Perfectly Legal, please?

[Mike]

While this may not come as a surprise to most of you, I don't buy most of what Billmon has to say. While he immediately lost credibility with me calling Ayn Rand "kooky," I have to say I did finish reading his entry and the two follow-up entries Anup posted and must say I did not find any good evidence that swayed me to agree with him.

He paints Greenspan as a "crazed" libertarian chasing policies that shrink government and enrich the wealthy. He really focuses on Greenspan's latest testimony in which he said a lot more than warning about the disparity between the large deficit amounts and the upcoming run on Social Security. But Billmon only talks about the piece of the testimony that lends itself well to his "two-faced" argument.

Throughout his post he alludes to past Greenspan policy suggestions given during testimonies before Congress. The reader is given the illusion that Greenspan has been on a the Conservative payroll for years. I, however, recall a patient Greenspan willing to pay down the debt to the point of surpluses back in the 90's. I remember a cranky, fun-spoiling Greenspan who called out the stock market bubble as "irrational exuberance." I also remember Greenspan just last year offering arguments against further Bush tax cuts over worries about the deficit. None of these policy suggestions are referenced by Billmon.

Instead he focuses on two of Greenspan's decision. As mentioned before he criticizes the most recent testimony. Second, he criticizes Greenspan's support of Bush tax cuts back in 2001. To me, whether or not the initial tax cuts were "bad" is arguable at best. I would argue that the tax cuts have helped make the recent recession much less painful, as we've already discussed here with reference to unemployment being at levels still much better than most developed countries and better than previous recessions. To me, Greenspan he is only guilty of a difference of opinion.

While I like Billmon's point about the possibility that Fed Reserve Chairman have an incentive to keep deficits high so has to maintain fiscal control, I would say that evidence about Greenspan would not paint this portrait of him. I also am anxious to hear more about what David Cay Johnson is saying about the Social Security taxes benefitting the rich.

I do not think Greenspan is holy or infallible. I am always and forever a skeptic. But I do like opinions to be based on whole truths, not just the piece of truths that fits with ones own agenda. Billmon even says the "nobody knows" Greenspan, and concedes that "which Greenspan you get, I suppose, depends on which one you go looking for." I am humbly reminded now that everything read in blogs needs to be taken with a grain of salt.

...And I always thought that conservatives were more suspectible to conspiracy theories.