"In the beginning, there was Alan Greenspan"

[Joanne98]

Exclusive to Gregpalast.com

In the beginning there was Alan Greenspan. Appointed by Ronald Reagan in the late 1980s as chairman of the Federal Reserve, Greenspan was a Master of the Universe, a title he earned by working for decades on Planet Wall Street. Greenspan took office as Fed chairman while the Evil Empire of Moscow was collapsing; after years of ruthless conflict, known as the Cold War, the Confederation of the Free World gained victory and Greenspan was tasked with helping Western capitalism colonize Planet Earth. Worshipped by Western high finance - the Supreme Council of the Free World - Greenspan was considered the High Priest of future profits.

Greenspan eagerly got to work. His most popular move was to pursue a deflationary policy. He began cutting interest rates, which reduced the cost of capital. This was music to Wall Street ears. Victory over the Evil Empire had opened its borders for workers who had until then been trapped inside; these workers quickly joined the Western Europe labor force. In the space of a few years, the West’s labor supply doubled and salaries began falling. As labor costs shrank, profits rose.

Each time the storm of a crisis linked to globalization gathered on the horizon, Greenspan dismissed it by cutting the interest rate. This happened in the late 1980s with the Mexican peso crisis, in the mid 1990s with the Asian market crisis and again in the post- 9/ 11 economic slump. Wall Street was happy, very happy, that interest rate charts looked like ski slopes, because when the cost of money falls, banks and financial institutions always make a profit. So began the rush to market cheap loans. From Citigroup to J.P.Morgan, banks aggressively competed with each other in selling credit. Demand for credit was strong and grew stronger as people were lured to believe that easy credit was the solution to all their problems. With the constant reduction in interest rates, banks periodically refinanced their outstanding loans at lower rates and pocketed the profits. It was a sure thing.

Making money in the galaxy of global finance was so easy that several Masters of the Universe, CEOs of large banks, set up new private equity businesses to maximize returns. Thus the Blackstone Group was born from a rib of Lehman Brothers. Blackstone is a hedge fund, an enterprise that gathers liquidity in the market to invest it where the returns are the highest. With the cost of capital and labor falling, the market was awash with money from corporations and shareholders, all eager to make even more money, it soon became apparent that the best sector in which to invest was the growing US mortgage industry.
http://www.gregpalast.com/in-the-beginning-there-was-alan-greenspan/

[sui generis]

1. Greenspan is everything that is wrong with cults

As someone who has worked his entire career at the very highest levels with companies like Blackstone, TPG and Lehman, we got the result of having a market overly fixated on the Fed out of sheer quantitative laziness and we are living the results today of having a "master" economist whose august opinions were as much the result of blackmail and graft by the republican administration as any other flunky they ever bought.

He certainly does not deserve canonization when any first year B school student who didn't outright flunk could have told you what the outcome of the last eight years of this administration's fiscal policies would be today. It is time to stop listening to the grand poobahs of wall street. Every time they have something to say, do not ever ever forget that they have something to profit by saying it, at your expense.

[truedelphi]

3. yet you can turn your TV on right now and watch any number of talking heads

Who pretend that nothing has changed -- that we are all okay.

[rhett o rick]

2. Wasn't Greenspan a favorite of Ayn Rand? In high school I was enamored

with Ayn Rand and subscribed to the Objectionist (I think that was the name). To my old memory seems like Greenspan often had articles in there. Anyone old enough to help me??

[rhett o rick]

4. Maybe there isn't anyone old enough to remember. nm