In keeping with Fridays History theme, I'd like to say a few things about Dr. Alan Greenspan. He holds a special place in the history of Wall Street and he is one of the biggest Jack-Asses that I know of. He is more than just the April Fool. He is a multi decade fool. I really hate how this old relic still has any street credibility.
If there is one person who can be blamed for the markets collapse in 2008-2009 its him. They talk about the banks and shadow banking, and credit default swaps, and housing and hedge fund and so forth and so on. Republicans blame democrats, democrats blame republicans, and the idiots on CNBC pretend they have a clue.
But the reality is that all of this was a result of the fact that Greenspan held interest rates artificially through-out the 1990s. The bubble was on and it was the "new economy". He relished in his celebrity status and his head became the size of a blimp. But instead of doing what he should have done...let the forces of free markets determine what interest rates should be he decided that he was "The Maestro" and he held interest rates WAY too low.
Think about it. Throughout history bubbles in markets occurred about once every thirty year. That is because people have to die off and a new generation with no memory of the prior bubble has to come along. If they in fact had a memory of the previous bubble they wouldn't be susceptible to the irrational behavior that causes the bubble to occur.
So then Greenspan comes along, and in just 10 years there are three Bubbles! There was the Internet Bubble, then the Commodities Bubble, and then the Housing Bubble...all the result of interests being held too low for too long. It's hard to believe anyone still pays attention to this guy. It reminds me of Marcia Clark...the Prosecutor in the OJ Simpson case. She couldn't convict a guy who was obviously guilty, and yet the media still treats her as this great legal mind.
Greenspan is no financial guru or hero. He is a Jack-Ass who almost single handily ruined the economy and caused a tremendous amount of pain for millions and millions of people.