Presidents come and go, but America’s lord and savior Sir Alan of Greenspan is forever. For the sake of full disclosure, the photo above comes courtesy of respected money manager Bill Fleckenstein, who does not worship at Greenspan’s altar the way I do. I have to give Mr. Fleckenstein credit. His slogan based on his years of experience predicting stock market movements is “Often wrong, but never in doubt.” For Alan Greenspan, it should be “Often right, but always doubted.” I have never seen a man face so much criticism from people who were not as smart as him, and admitted they had no idea what he was saying.
Alan Greenspan spoke in such cryptic language that it became known as “Greenspeak.” Senators would grill him, tell him he was wrong, and he would politely address their concerns. The one irony is that for all the senatorial bluster, they could not do anything about it. Greenspan would politely respond to their idiotic questions all the while thinking that the imbeciles questioning him had most likely flunked economics 101.
His successor Ben Bernanke got off to a rough start by answering questions in a clear manner that was easy to understand. If the answer was deemed unsatisfactory, the markets would be roiled. Greenspan was ambiguously confusing enough to not cause too much damage.
One of his famous phrases “irrational exuberance” was meant to warn that the buying frenzy of the 1990s was spinning out of control. Now had he just said that the buying frenzy was spinning out of control, people would infer a coming collapse, and there would be panic selling. Instead, traders and brokers worldwide turned to each other and asked “Did this guy just say irrational exuberance?”
Never has a guy with such a perceived lack of charisma been treated like such a rock star. When I worked on a trading floor, and Bill Clinton would speak, the traders would laugh, knowing that some meaningless proclamation would be announced. It would be said in a serious voice to convey gravity, as if the fate of the free world depended on school uniforms. When Alan Greenspan spoke, the Earth shook. The traders would stand quietly, hang on every word, and then run around in confusion. They did not understand exactly what he said, but they knew he said something of consequence.
What most people do not know is that Alan Greenspan saved America. In 1987, after the stock market crash, the entire United States financial system was dangerously close to a nervous breakdown. To prevent 1987 from becoming 1929, he took decisive steps, including triggering stock market circuit breakers. When the market had another violent down day in 1989, the system was much stronger. Even after 9/11, the economy and the financial markets responded and rebounded. Yes, it took time, but it did happen.
While I do not agree with Greenspan on every issue, and still disagree with him over his arguments against “dynamic scoring, (supply side economics),” one cannot deny that for 20 years, the American economic engine was in full party mode. Our economic expansions are getting longer and our recessions are getting milder and shorter. No, we have not defeated the business cycle, but the Phillips curve myth has been shattered (the idea that the economy cannot have low inflation and low unemployment).
As hard as this may be for some to believe, Alan Greenspan even had a wry sense of humor. Before one critical senate committee meeting, a senator found Greenspan in the hallway and asked him how he was doing. Mr Greenspan responded “I can’t tell you.”
For those of you who think that a monkey could do his job (and I do concede that the monkey above does look ready to give a serious lecture on monetary policy), the Chairman of the Federal Reserve Board, aka the Central Banker (in case you wondered what his titel was) is always one mistake away from destroying the world economy. In 20 years, through stock market crashes, the Asian Flu of 1997 and 1998, the internet bubble and subsequent collapse, and of course 9/11, his steady hand guided the world to a better global financial well being.
As we celebrate the 20th anniversary of the year he was hired by Ronald Reagan (yet another fabulous decision by the Gipper), it is important to recognize him for the wealth he has helped bring to this nation…not just in real dollars, but in economic knowledge.
If a monkey can do this job, then I want that simian to be blindfolded and given darts to throw at the Wall Street Journal so that I know what stocks to trade. Yes, this experiment did beat most S & P 500 mutual fund money managers, but they were not Sir Alan of Greenspan.
The next time you get that first home with an affordable mortgage, or your stock portfolio provides you with dividend income, or you get a higher paying job because the rising tide does lift all boats, thank Alan Greenspan.
He may not be that charismatic, and he may not be a rock star, but this guy sure knows how to throw a great 20 year party.
Good luck Mr. Bernanke. You have gigantic shoes to fill.
As for Mr. Greenspan, the day something happens to him, the financial markets will be fine for only one reason. He will be kept alive like the character in “Weekend at Bernies” that was not allowed to ever die…he pumped up the health of the US economy, so the least we can do is return the favor.
Mr. Greenspan may be retired, but make no mistake about it. Every respected economist and politician (perhaps an oxymoron) had him on speed dial.
Thank you Mr. Greenspan. Thank you very much indeed. One day it would be an honor to know what you actually “did.” I could even pretend to understand, which would make me qualified to be a US senator. Then again, I might be bored to tears with the explanation. I don’t have to understand it. Just know I am appreciative.
eric