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April 18, 2010

Alan Greenspan: Still A Lying Sociopath After All These Years

Most people would rest on their laurels after creating the greatest economic catastrophe since the Great Depression. And the remaining few might figure that that, PLUS being an enthusiastic supporter of mass murder for oil, would be enough. But not Alan Greenspan.

A few weeks ago Greenspan was interviewed on Bloomberg TV.

GREENSPAN: Everybody missed it—academia, the Federal Reserve, all regulators...

HUNT: I’ve just been reading Michael Lewis’ book. There were people who saw it coming...Why were they so prescient and the people here in Washington were not?

GREENSPAN: Now you have to ask yourself why would they make that judgment. The problem that you’re raising is a statistical illusion...In every crisis, you will always find a group of people after the fact who got it right...

HUNT: So they were just lucky. It was a broken clock, right, price of day with them.

GREENSPAN: Well, let me put it this way, I know most of the people who’ve done well here...they are a handful. People who can consistently call a turning point are very rare. The vast proportion of economists, myself included, have records which are average...

But the problem here is that there’s a failure to understand what would happen, if you took 1,000 people and you split them into two and you had them toss coins against each other, when you get down to the last two guys, tell them that they don’t know how to toss coins.

1. Do you noticed what Alan Greenspan left out here? It's not just he "knows" most of the people who profited off this crisis. HE'S WORKING FOR THE RICHEST ONE. John Paulson made literally billions of dollars by betting against the housing bubble, and hired Greenspan in January, 2008 before everything completely collapsed. (And not just that: Paulson also took a fraction of his billions and endowed an Alan Greenspan Chair in Economics at NYU.)

In other words, either Greenspan just called his boss a man who's not particularly insightful and just got lucky...or Greenspan (and Paulson) know this is the line of crap you have to peddle to the rubes. I'm going to guess it's the latter.

2. Greenspan is conflating two very different things. Yes, it's hard to call when a bubble will collapse, which is necessary to do in order to make lots of money. In fact, if Dean Baker—who'd been pointing out the bubble since 2002—had been a hedge fund manager, he might well have lost all his clients' money by betting that the bubble would collapse before it did. But it's not difficult to know if a bubble exists. And that's what matters for the Chairman of the Federal Reserve.

EXTRA CREDIT: Alan Greenspan is also extremely worried that we won't have the political will to slash Social Security and Medicare.

—Jonathan Schwarz

Posted at April 18, 2010 07:16 PM

that's pretty much his job description isn't it? ( i believe the ads for the Fed go something like: lying socio-path needed, must serve rich exclusively, proven ability to screw regular people preferred)

Posted by: almostinfamous at April 19, 2010 12:21 AM

What on earth does the last highlighted section mean? Tell the last two guys that they don't know how to flip coins? Huh?

Posted by: Aaron Datesman at April 19, 2010 08:29 AM

What on earth does the last highlighted section mean? Tell the last two guys that they don't know how to flip coins? Huh?

I think what he means is that in such a situation, the last two guys would have been there purely due to luck—but it would be hard to make them believe that that was the reason, rather than their incredible coin-flipping skill

In any case, you should cut him some slack. It's hard to communicate clearly when every word out of your mouth is a lie.

Posted by: Jonathan Schwarz at April 19, 2010 08:56 AM

Speaking of the sado-monetarist attack on SS and medicare, TR readers probably know about the Peterson "deficit summit" scheduled for next week.

More importantly, they should also know about the counter-summit being organized by the excellent blogger "letsgetitdone".

Information is here:

Perhaps ATR would like to sign on as an "associated blog".

We need more of this kind of thing, IMO.

Posted by: John Halle at April 19, 2010 11:13 AM

What astounds me is that Greenspan expounds on everything (exs: healthcare, SS, energy, housing) with absolute certainty yet claims to have little knowledge of economic patterns, his area of expertise. Ditto for corporate execs who claim they require millions in compensation because their knowledge & management skills are indispensable in running the firm but when things go badly are the first to claim limited knowledge or involvement.

Posted by: Carter S at April 19, 2010 03:22 PM

Wait, a devotee of Ayn Rand is a lying sociopath? Shocking!

No one could have predicted that Greenspan's dogmatic encouragement of reckless greed and corruption would lead to disaster. Really, at best there was only a 50-50 chance that would happen, like a coin flip.

Actually, if we're talking gambling and chance, rather than coin flips, the best metaphor is probably that Alan Greenspan was persistently playing Russian roulette with somebody else's head. No one could have predicted...

Posted by: Batocchio at April 19, 2010 04:05 PM

"What is a baby saying when it asks for a bottle? it's saying, 'i am a leech.'" overheard at the ayn rand school for tots, where "A=A".

Posted by: anon at April 19, 2010 07:42 PM

Longtime lurker. Hi! The DFHs at The Economist knew the score, even if Greenspan didn't.

Posted by: Greg at April 20, 2010 05:37 AM

The Randians have brought ruin again. After the failed attempts everywhere else around the globe, you'd think they would have learned the lesson.

Oh my, the smartest men in the room turn out to be just another bunch of greedy clowns after all.

Who could have seen that one coming?

Posted by: poochie at April 20, 2010 01:53 PM

An Alan Greenspan Chair in Economics? And all this time I thought academe was pure and good. Now I'm beginning to wonder.

Posted by: grimmy at April 20, 2010 10:04 PM

"It's hard to communicate clearly when every word out of your mouth is a lie."

Nonsense. Just listen to Henry Kissinger sometime.

I was surprised to see in Bill Black's VERY smart book The Best Way to Rob a Bank Is to Own One that Greenspan was a wolf pretending to be a sheep during the S&L crisis in the 80s too. Feigned stupidity is a cultural phenomenon. I sometimes wonder whether it's as common elsewhere as here.

Posted by: N E at April 21, 2010 05:23 PM

The beauty of organization and principled solidarity for a common _________?

What lesson? The who the fuck are we lesson? Or the numb sensations of the way things are? Yeah, plenty of WTF to go around.

Posted by: go solidarity, go figure, go pee in the chamber pot. Fuck REFORM! at April 23, 2010 06:10 AM

Given his infatuation with Ayn Rand, being a sociopath is probably a deliberate philosophical choice.

The corporatisation of almost every aspect of life over the past three decades has created a situation where the news media treat anyone who *isn't* a lying sociopath as if they were a raving lunatic.

Posted by: Kevin Daly at April 24, 2010 12:25 AM