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GREENSPAN'S BUBBLES: THE AGE OF IGNORANCE AT THE FEDERAL RESERVE
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Average Rating:  out of 39 Reviews
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Price: $21.95
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Sale: $11.67
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Manufacturer: McGraw-Hill
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EAN (European Article Number): 9780071591584
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Number of Items: 1
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Binding: Hardcover
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Author: William Fleckenstein::Fred Sheehan
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Publisher: McGraw-Hill
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Edition: 1
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Dewey Decimal Number: 332.11092
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Publication Date: 2008-01-16
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Reading Level: 208
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Description: 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 expos� 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 And 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 naivet� 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. . . .
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Customer Reviews
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Review Summary: Feels like a personal vendetta |
Date: 2008-11-30 |
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Details: This book is a disappointment. For the happy few it might be an interesting read, but for someone intereted in the general ramifications of the Greenspan era it is a huge dissappointment.
The book seems to be a blow-by-blow vendetta of the author against Alan Greenspan. And while the author clearly has an authority on the whole subject, he fails to engage his reader by not clarifying the details on why he rants againts Greenspan. Sometimes too much knowledge can be a hindrance. |
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Review Summary: Devastating indictment of Alan Greenspan's ineptitude |
Date: 2008-09-23 |
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Details: This is a truly invaluable book. Fleckenstein shows,beyond any doubt, that Alan Greenspan has been a disaster for the country and the economy. Even before becoming Fed chairman, Greenspan had demonstrated his incompetence (Read the beginning where Greenspan's predictions as one of President Ford's advisers would drastically miss the mark). Unfortunately, Greenspan would be confirmed as Fed chairman and begin a nearly twenty year career of gross mismanagement.
Fleckenstein quotes Greenspan repeatedly, demonstrating the Fed Chairman's inability to predict the stock market or housing bubble (or anything else for that matter). Greenspan comes off as completely incompetent in Greenspan's Bubbles. Perhaps some day the Federal Reserve will be abolished and the economy will not be subject to the whims of mediocre men like Greenspan and Bernanke. If that day comes, it will be because of thoughtful experts like this book's author. I also recommend Ron Paul's analysis of Greenspan in his recent book--Paul points out that Greenspan once supported sound money but changed his views as the lure of great power as a central planner seduced him. |
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Review Summary: The 1 trillion $$$ bailout is Greenspan's legacy |
Date: 2008-09-20 |
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Details: Greenspan will be forever linked to the global financial meltdown of 2008. History will not be kind to the Bubble Boy. |
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Review Summary: Brilliant study of a failed system |
Date: 2008-09-12 |
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Details: In this fascinating book, financial journalist William Fleckenstein studies the record of Alan Greenspan, chairman of the Federal Reserve from 1987 to 2006.
Between 1937 and 1987 there were no bubbles, but Greenspan helped to create two bubbles in ten years - in stocks and then in real estate - by holding interest rates too low, punishing savers. He helped to make the American people worse off by redistributing wealth to the rich, the bubbles' boosters and sponsors.
Greenspan viewed new technology expenses as assets. So he thought that productivity and profits were higher than they really were, that inflation was overstated and that stocks were understated. In 1998 firms spent $95 billion on computers. After Greenspan's `hedonic adjustment', this came out as $352 billion, adding 2% to US GDP.
Governments want to understate inflation and overstate growth, productivity and incomes. So now, most price rises seem to be way above the rate of inflation.
Greenspan's rate cut of 15 October 1998 triggered the stock market bubble. By 1999 the stock market was valued at 180% of US GDP. (In the last bubble, in 1929, it was 85% of GDP.) In 2000-01 this bubble burst - the new technology miracle proved to be a mirage. In 1992-99 there was zero productivity growth in 99% of the US economy, and growth only in 1%, computer hardware.
In 2001-03, housing `saved' the US economy from the aftershock of the stock bubble. De-regulation led to lower lending standards with more `creative' financial instruments, like the $500 trillion worth of derivatives, which Warren Buffett described as `financial instruments of mass destruction'.
So from 2003 to 2007 there was a real estate bubble, based on huge debts. Mortgage-equity withdrawals created half US GDP growth between 2001 and 2007. By 2006, household debt was 97% of GDP: mortgage debt was $13.3 trillion. Total US debt in 2007 was 325% of GDP.
This ocean of debts rested on a falling real estate market, a sinking economy and a weak currency. Where could the next economic rebound come from? Capitalism has destroyed production and destroyed the housing market: it is running out of options.
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Review Summary: Bad forecaster attacks FOMC's failure to forecast |
Date: 2008-09-02 |
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Details: The author attacks Alan Greenspan for setting interest rates too low and thus causing all out economic problems. Why did Greenspan do this? He did not see the bubbles (that he himself created) because he was blinded by the "concept of technological driven productivity miracles." The author repeats this idea many many times. But from reading the first five pages you might wonder if Mr. Fleckenstein is the best person to launch a bubble attack like this. On page 3 the author leads you to note 2 (page 189) where he writes: "Determining that a bubble exists is somewhat subjective, though not terribly difficult." A couple of pages later on page 5, the author admits: "I saw the stock market bubble building and concluded it would end in disaster -- about four years too soon!" Should Fleckenstein not have disqualified himself from documenting forecasting failures at the Fed at this point? Taking strong action to stop a bubble based on the author's forecast could have driven us into a deep recession. In these first pages Fleckenstein proves with personal experience the validity of Greenspan's statement on page 99: "I don't think we can know there's a bubble until after the fact. To assume we know it presupposes that we have the capacity to forecast a imminent decline in prices." On page 162 in a confusing paragraph Fleckenstein seems to agree with this by writing: "What would be correct to say is that one can't exactly know what action might be required to stop a bubble." This not say that Mr. Greenspan is blameless.
The author quotes his column from 1999 to judge Greenspan without the benefit of hindsight. In this column he writes that the increases in stock prices are "breathtaking" but never uses the word, bubble, before it burst. He uses the word, bubble, in column on September 17, 2001 after it is bust. Even I did better than that. In my book, "How to Invest in Condominiums" I use bubble twice and tell my readers how to to avoid them (I finished writing the book in 1999). Yet Fleckenstein is the one who has the nerve to attack the FOMC for not using the word often enough. This book is all about criticism with the benefit of hindsight. There are no lessons learned. We have to take it on faith that tighter money applied here and there would have been better. He does not attempt to demonstrate his forecasting ability and help Chairman Ben Bernanke by telling him how big the bursting real estate bubble is and when it will hit bottom, so that the Fed can set the "correct" rate. But no, on page 184 the author indicates that Ben Bernanke would make the same decisions as Greenspan. When we finally know how big and bad the real estate bubble was, say in 2013, Ben Bernanke (if he is still there) and the FOMC are sure to get flack from Fleckenstein for allowing the bubble to end so badly. The FOMC will be unaware of this incoming flack or wisely ignore it. This negative evaluvation (or well documented rant) deserves three stars for providing an insight into how difficult the task the FOMC has is and why in the long run the value of our paper money will always erode.
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