Testifying today [April 7, 2010] before the Financial Crisis Inquiry Commission, former U. S. Federal Reserve chairman Alan Greenspan defended his 21-year tenure at the Central Bank, saying it wasn't he who inflated the housing bubble that caused the Great Recession. While mistakes were made, Greenspan admitted, he claimed to have been correct 70 percent of his time at the Fed, which sounds pretty good. The unanswered question in all this finger-pointing and next-day quarterbacking, though, is whether being right 70 percent of the time is good enough.Alan Greenspan is the poster boy for the libertarians. He was an early acolyte of Ayn Rand and has remained loyal all his life (except for very slight hint of uncertainty when he was put on the hot seat in Congressional investigations this last year).
It isn't, at least not for a Fed chairman.
A money manager whose trades make money 70 percent of the time for 21 years might be a star. A venture capitalist with a. 700 batting average would be a genius. But in each of these cases what we are talking about is the deployment of a commodity -- plain old money -- and not the management of a process or a system. Replace the money manager with an airline pilot, for example, or the captain of an oil tanker, or even just a traffic cop. Is being 70 percent right good enough in those occupations? Not even close.
Nor is 70 percent a good grade for Greenspan, who might modestly claim these days to have been just one of the gang down at the Fed, but that’s not the way he came across in Bob Woodward’s book about the Fed chairman, tellingly titled Maestro.
Greenspan blew it. He mismanaged the Fed and -- worse still -- apparently didn’t even know he was mismanaging it.
Tuesday, April 13, 2010
Here's a bit from a Robert X. Cringely article on the incompetence of former Federal Reserve Chairman Alan Greenspan: