“Alan’s Bubbles” by ChrisCo and [insert front man/woman author here]. We’ll take care of the catchy subtitle later (maybe “And the Chairman’s New Clothes”?). Yes, there will be scores of books written about Alan Greenspan and his legacy, but ours will be the one written for independent thinkers by independent thinkers. The conventional wisdom will be unmasked, the fallacies that built these bubbles, and ultimately lead to their demise, will be exposed. Of course it’s already too late to prevent the coming rinse cycle, but it must be written about nonetheless. We’ll cover Sir Alan’s entire life, with special attention to how his avoidance of minor bumps lead him to create excess liquidity, which combined with other factors to enable excess confidence and risk taking by everyone from the president on down to the college kid on his third investment property who thinks real estate prices can only go up and interest rates can only go down. Sprinkle in some fraud and a rogue president and you really have a recipe for disaster. I think the cover of our book will have a picture like the one above, which is from Reuters and Yahoo.com. In any event, just give me an email if you’re qualified and want to be a part of this project. Cheers!
PS: Here’s what Alan Ableson of Barron’s / The Wall Street Journal / Dow Jones had to say about Bubbles this week:
UP AND DOWN WALL STREET
By ALAN ABELSON
A Medal for Messups
SO WHAT DO THEY GIVE WINNERS?
We know what they give losers — the Presidential Medal of Freedom.
Last Wednesday, by way of illustration, Alan Greenspan, the present and impending former chairman of the Federal Reserve, received one of these coveted metallic decorations. He thus joined two other prominent ex-civil servants, Paul Bremer and George Tenet, who were similarly honored last year.
In the four decades since its inception, the medal has undeniably been awarded to persons of true distinction and the selected this year were no exception, including the likes of the great heavyweight champ Muhammad Ali; the comedienne (we trust we won’t be accused of being hopelessly sexist by not calling her a comedian, but we’re meekly bowing to the official designation) Carol Burnett; the historian Robert Conquest; and the renowned golfer Jack Nicklaus.
But we fear that Mr. Bremer, Mr. Tenet and Mr. Greenspan lay claim to a different order of achievement. Mr. Tenet, late of the CIA, became famous, you may recall, for his conviction that it was a “slam dunk” that Saddam still had weapons of mass destruction, thus paving the way for the invasion of Iraq. And Mr. Bremer during his disastrous stint as proconsul, made such a botch of the occupation as to ensure that the dream of turning that woebegotten nation into a prosperous, peaceful democracy would metamorphose into a nightmare without end.
For his part, Mr. Greenspan created two of the greatest speculative bubbles in all of history, one in stocks and one in housing. Just as a measure of how remarkable an accomplishment that is, none of his dozen predecessors stretching back over nearly a century, including such formidable figures as William McChesney Martin and Paul Volcker, can legitimately be credited for creating even so much as a bubblette.
It’s almost as if Mr. Bush — who is certainly not without his playful side — in awarding the medal to this trio was aiming for a trifecta of the messups. A kind of sly payback for the pain they’ve caused him, both at home and abroad. Or, it could be, a profoundly forgiving soul, he adheres to the dictum that no bad deed goes unrewarded.
We want to be fair. Mr. Greenspan’s unrivaled bubble-blowing talent is by no means his only call on recognition. Equally noteworthy is his critical contribution to making this proud nation the world’s leading debtor and his key role in enabling Americans to become the world’s most remorseless borrowers, ravenous spenders and reluctant savers. Nor should we slight his essential participation in the magical transformation of lush budget surpluses into historic budget deficits.
The Presidential Medal of Freedom, for all its status as a vaunted symbol of appreciation for service to the citizenry, is by no means Mr. Greenspan’s only tangible evidence of the esteem he so widely enjoys. Over the years, he has earned innumerable honors for his outstanding performance in behalf of the commonweal.
Thus, in our mind’s eye, we can see him dusting off a place on his award-laden mantelpiece for the Medal of Freedom right next to the Enron Prize for Distinguished Public Service bestowed on him back in November 2001.
If memory serves, he accepted the prize a mere handful of days after Enron disclosed it had filed five years’ worth of phony financial reports. Ah, well, for all his heralded virtues, Mr. G’s timing has always left something to be desired.