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Not exactly light reading. This is a serious book with some intense insights. It is clear, profound, serious, and esoteric. I think a background in economics would help with reading this endeavor from the former Federal Reserve Chairman.
Alan Greenspan is essentially writing three books within one.
One book is a personal history of his life. Another is the political history of his time working with every president since Nixon to George W. Bush, and the last, by the far the lengthiest, is a financial history of the World economy of the past thirty years with projections into the future. Each side has its own personality.
Alan, when speaking of himself, writes an endearing portrait of himself as a man who is both very emotional and very rational. He highlights mistakes in his life where being too rational or emotional had lead to the wrong decision. At best he is the embodiment of both simultaneously.
Alan Greenspan, born in New York City to a lower middle class Jewish family, grew up in the Washington Heights section of Manhattan. He really didn’t suffer through the depression, which I believe has a lot to do with his negative views of the social safety nets established by the Roosevelt administration. Although his parents divorced, his mother maintained a job as a secretary in the Bronx. His father worked on Wall Street. Alan received a 25 cent allowances growing up during the depression, which according to my grandfather was “pretty good.”
During this early period, he was more interested in music than in finance. He loved Jazz and played professionally in a band. At one point Alan got to jam with Stan Getz. While in the Jazz scene he read finance books during his downtime. He eventually left the music world got his degree at NYU, and then took a job in finance. He earned $48 a week in 1948, which again my grandfather said, “what I could have done with $48 a week in 1948.” So there you go.
Now, Greenspan took the job for $48 a week over another job for around $60 a week, because he felt he would learn more at the lower paying job than the higher. This is the kind of reasoning that he would display throughout his life.
In the 50’s, he would get married and divorced, and become part of a social group headed by Ayn Rand. Rand and her circle would up Greenspan’s game intellectually and socially. They would meet in Rand home on the East 30’s.
In the late 60’s he would meet and help out Richard Nixon in his presidential campaign. Although, he would admire Nixon for his intelligence, he grew to dislike Nixon for being a paranoid and vindictive person who would lose control.
Later Greenspan was brought on to the Ford administration. Ford was a man that Greenspan liked very much. He said was one of the most secure men he had ever met. He was not brilliantly intellectual like Nixon and Clinton, but he never had that sense of weirdness to him like so many people. There he would meet many people such as Dick Chaney, who would become part of the George W. Bush administration.
Never part of the Carter administration, he joined Washington again after a person phone from President Reagan at his dentist office. Reagan asked him to work for him and Greenspan couldn’t refuse.
Before Reagan made him Chairman of the Federal Reserve, Greenspan chaired the bipartisan committee that saved Social Security for the next thirty years. Although, Alan was impressed by Reagan convictions and personality, he didn’t think he was too smart. Like our current president, Reagan didn’t read much.
When Reagan did make Greenspan Fed Chairman, the 1988 stock market crash, the worst ever, happened. Not too long after there was the Savings and Loan sell off, and the death of the manufacturing industry in America.
Although Greenspan spoke the warmest about President Ford, the lengthiest and most enjoyable time was with President Clinton.
Although Greenspan was worried about Clinton, being that Alan was a life long Republican and campaiged for the other guy; he immediately was impressed with Clinton’s intelligence. For all the bad things that were said about Clinton Greenspan states firmly that he never saw them. Clinton was a financial conservative; more of a throw back to the Kennedy administration. It was the first president Bush’s and Bill Clinton’s economic policy of fiscal responsible that lead the economic boom in the nineties. President Reagan left the country leading to financial ruins. The deficit was the major killer. A third biggest expense to the United States government was the interest payments to its debt.
Clinton was never true of what he was called. He was not a tax and spend democrat. He cut from almost everyone, but used the money responsible and the country was on the path peace and property that the United States hasn’t known since the days Dwight D. Eisenhower.
At this period of time Alan Greenspan achieved rock star status. He would lead world into a new era; one of a technological revolution and another of pervasive globalization. The direction that he took the world will be debated for a long time. Greenspan maybe the most influential and respected American in finance since J.P. Morgan. Together with Rubin (now trying to sort of Citigroup’s finance troubles) and another colleague, Alan watched over the economy in judicious and pragmatic fashion.
The problem was that as much as Greenspan can analyze the past and near future, he had major failures in predicting the not too distant future.
Like many Republicans, Alan was very enthusiastic with the arrival of President George W. Bush. Many of Alan’s old friends from the Ford administration were coming along in the new President’s administration.
In the 2000 election, Al Gore also pledged a tax cut but a smaller one than George W. Bush. However, Gore pledged to continue to pay down the debt. Greenspan also agreed that debt should be paid down.
During the early years of the Bush Whitehouse, the surplus projections were large and spanning many years. Greenspan saw a danger of the Federal Government having too much money on their hands, so he supported a tax cut albeit smaller than the administration had outlined, and with check and balances in case the surplus didn’t hold. The administration threw out that idea.
The surplus was over almost as soon as Bush got into office. The Dot-com bust had effected tax revenue and hence no more surplus.
As time went on, Alan was dismayed by the lack of planning, reason or thought in which the current government ran. And he makes it perfectly clear over and over again that the real reason invading Iraq was oil and NOT weapons of mass destruction.
Greenspan spends the rest of his time speaking about the economy. He speaks highly of economist Adam Smith, who he admires the most. Then describes free market economies and gives economic projects for the rest of the World.
For the United States, he predicts an economy being exactly as it is right now going into 2030. Although, he admits that events unforeseen might occur, his projections mainly take world where nothing changes.
One thing we have learned over time is that things change.
Alan Greenspan takes a bird-eye view of economy. Somehow I don't get a sense that he understands the true nature of globalization in terms of the effects on the United States economy. Nobody I have heard really does. I think it is only those who are in the middle of it, in the trenches if you will, that can see what is really going on. Of course, those who negatively affected by it the most, feel it but may not know it. Those who have the most to gain, mainly foreign middlemen and those under them, give a rosy picture as do corporate executives who are profiteering from it. I would like to talk to Alan Greenspan about this and get his views. Maybe he will write another book where he will address these issues.
One my biggest criticisms of his work on free market economies is the foolish idea that social safety nets have never worked. It seems like an idea similiar to someone who doesn't take health insurance because they have never been sick before, which is taking a pretty big risk. Although, Greenspan can see the impact on the economy when huge hedge fund goes under that the Government has to bail it out in order sustain the overall health of the greater economy. He does not seem to keep in mind that if large amount of Americans go bankrupt, that too will have a far reaching negative impact on the greater economy too.
I certainly did love this book. I can’t say that it is for everyone. I think it is an important book given the times we live in. I am sure that Alan Greenspan will go down as one of the most influential economist in history.
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