Greenspan & Kanjorski Interviews on CNBC This Morning

CNBC's morning program from 6-9AM had an hour-long session featuring former Fed chairman Alan Greenspan.

These days, in the wake of the financial crisis which Greenspan's Fed's easy money policies helped create, any appearance by him is essentially an attempt to rehabilitate himself.

This morning was no different.

Among Greenspan's interesting remarks, though, were these.

Only now, after so many years at the helm of the Fed, he declares that the manner of financial sector regulation hasn't worked, and won't worked. I can't recall the exact words he used, but the former Fed chairman said something very close to,

'The best form of regulation is counterparty regulation.'

Meaning that all agency activities pale in comparison to the simple monetary vote by a counterparty to trade with, buy from or sell to a financial entity.

He went on to dismiss, out of hand, the recent FINREG bill as being written by a bunch of inexperienced, junior Congressional staffers with no sense of financial history or understanding of the implications of what they have wrought, stressing massive unintended, unanticipated consequences.

Through this particular remark, Greenspan implicitly derided Congress for having no direct role in writing or understanding the overly-complex bill. A bill, Greenspan intoned, would surely be re-written in another year, when the terrible consequences of this one have begun to become apparent.

When asked about the causes of the financial crisis, Greenspan punted and contended that we don't yet know. Of course he'd say this, because he desperately wants to now distance himself from the Fed's role under his chairmanship.

He was emphatic about economists' and regulators' inability to correctly identify and act upon bubbles-in-progress. And provided some convincing examples.

Despite his self-interest, I genuinely believe Greenspan's assertions that current regulatory approaches, no matter how differently dressed up, won't work any better in the future than they did in the past. He clearly recommended less governmental regulation, leaving more responsibility to counterparties, so they would take more seriously their commitment of capital at risk with their trading partners.

Following this rather interesting hour was a condensed period of about 5 minutes of outright lies from Pennsylvania's Democratic Representative Paul Kanjorski. This Congressman is a favorite liberal of the CNBC network, and is generally given a complete pass by the anchors from answering any tough questions, explaining his involvement in a rather serious, large-scale financial scandal, or really ever being accountable for his prior words or actions.

This morning, however, was a bit different. Two anchors assailed Kanjorski for the FINREG bill's complete absence of any mention of Fannie and Freddie.

His retort became a full-blown, purely political diatribe. All lies, by the way.

First, he claimed that Fannie and Freddie were in the bill by implication, because no financial institutions would ever be allowed to claim taxpayer cash, or become "too big to fail."

He then claimed that he had personally worked for nine years on underwriting standards, so he knew all about the mortgage industry, and that the cause of the problems were banks, not Fannie or Freddie.

Joe Kernen managed to ask a hardball question, inquiring how Congress, which had failed in its role, if it is its role, in oversight of the sector, would now, as a body make the correct estimation of when a financial institutions needed to be seized and liquidated.

Kanjorski then evaded this question by replying that the real failures of regulation occurred during 'ten years of Republican control of the White House and Congress,' but then said he didn't really blame them.

According to Kanjorski, the only reason Fannie and Freddie grew out of control was because of George W. Bush and a Republican Congress, who, according to the Democrat, did nothing to stop them. But, then, according to him, the Democratic-controlled Congress did move to put them under Treasury control, which, to him, I guess meant being regulated. Last time I looked, Treasury Secretary Geithner issued both GSEs a midnight, Christmas Eve reprieve to run unlimited losses at taxpayer expense.

It's true that Bush pushed for an 'ownership society,' which was misguided for low-end income families. But both Bush and his predecessor, Clinton, favored low-income home buying policies, leading to the problems we are now addressing.

This isn't true. It's a fact that Bush's administration pushed for tight limits on the two GSEs, but nobody in Congress would budge. This is because the two mortgage giants, as I noted in this post, have become like the old Banks of the United States, using federal money to grease so many Congressional palms, in various ways, that no majority of either party will touch them.

You couldn't have had two more divergent appearances this morning on CNBC's program. Greenspan dispensing some unvarnished, sensible insights, and Kanjorski simply lying about the past and rewriting history to absolve himself and other Congressional members and past presidents of all responsibility for starting the housing-related financial meltdown by letting Fannie and Freddie grow out of control.

Criminalizing Financial Sector Mortgage Finance-Related Activities of The Housing Boom

I happened to see a replay of CNBC's 2009 documentary House of Cards which aired last night. I first wrote posts about it last February, here and here. For fun, before writing the rest of this post, with my impressions from the program, post-Goldman Senate lynching, I am rereading my year-ago reactions to the excellent program.

After the re-read of the two prior posts, I can't say that I feel differently from last winter concerning House of Cards.

However, with the recent Senate star chamber event involving Goldman Sachs fresh in my mind, there are additional insights from viewing the CNBC documentary of the housing finance-led financial sector meltdown.

The first involves the obvious absence of regulators from the scene, as David Faber discovered in his on camera interviews. No federal watchdogs attempted to shut down Alt-A, a/k/a "liar loans," from being originated in the first place. No federal banking supervisors nor SEC personnel attempted to stop the firm which David Francis, a now self-employed mortgage banking consultant, back then a mid-level executive in the mortgage-backed security business, and his ilk from churning out CDOs backed by low-quality mortgages.

With so much hoopla over the FINREG bill, it's instructive to see, in the far-from-perfect, but fairly broad documentary, that the same agencies and people to whom sweeping new powers will be given failed miserably in the past decade to exercise their already considerable authority over the nation's financial system.

The CNBC documentary never went near the sins of Congress for mandating Fannie Mae and Freddie Mac to buy and securitize low-quality mortgages. Current NY AG, and odds-on favorite for the state's next governor, Andrew Cuomo, was culpable in this regard, during the Clinton years, as are several members of Congress- Barney Frank, Chris Dodd and Kent Conrad. The CNBC program, ever mindful of the parent network's need to remain on a friendly basis with these politicians, not to mention the parent company, GE's, being a convenient bedfellow of the administration, never dared to explore those governmental and quasi-governmental institutions which got the ball rolling.

The closest they came was in unedited footage of Alan Greenspan musing on what would have occurred, had he tried to pop the growing real estate bubble. I wrote of this in one of the two earlier posts, so I won't repeat it in this one.

What I found myself wondering aloud as I watched the bulk of the program was why, with all this on-air footage as evidence, the SEC and/or other governmental entities didn't pursue any of these other companies, as they have Goldman Sachs.

Specifically, many of the practices highlighted in the program occurred in dealing with mortgage borrowers, not professional investors. Why didn't the Senate choose to expose these people and institutions? Why not subpoena the CNBC documentary's producer, writers, researchers, etc.?

Another major reaction, different than last year's, was to Alan Greenspan's program-ending interview. In those closing moments, Greenspan responded to Faber's question regarding the need for new regulations and laws to prevent a repeat of the crisis.

Greenspan smiles and manages to stifle a laugh. However, he turns deadly serious when he utters words to the effect of either, 'good luck trying,' or 'don't bet on it,' when Faber asks, incredulously, again, if Greenspan really thinks better regulation wouldn't prevent a repeat?

Greenspan then assures Faber that, no matter what governmental actions are taken, a similar event will recur. Not in 10 years, but sometime in the future. Greenspan opines, quite serenely, that it's a function of greed, and is simply unstoppable when it gets going. See, again, my comments in one of last year's posts describing Greenspan explaining that, as Fed chairman, he would have been, actually was, intimidated by Congress into holding the regulatory reins loose during the housing bubble. This has largely been forgotten as Greenspan has been pilloried by Congress. But, back then, he confides, he knew the limits of his ability to intervene, lest Congress, with its populist bent, threaten him with a loss of Fed independence, should he attempt to stop the stampede to finance houses for lower-income Americans.

The House of Cards documentary billed itself as "the definitive" account of the mortgage-related economic crisis. But that's not at all true. It completely omitted any treatment of Clinton's HUD Secretary, Andrew Cuomo, Fannie Mae and its then-head, Franklin Raines, or Freddie Mac. All played key parts in starting the mess. And Congress urged them on.

Finally, the documentary showcased Kyle Bass as a sort of hero for doing his own homework in discovering the unbelievable bases on which rating agencies were classifying CDOs as AAA. Bass shared his concerns with the agencies and at least one investment bank, the now-defunct Bear Stearns.

Ironically, having aired in February of 2009, the now-famous hedge fund manager, John Paulson, wasn't even mentioned. Nobody knew who he was.

So much for the SEC's and Senate's focus on Abacus, ACA and Paulson. He wasn't even a public figure 15 months ago.

As for Kyle Bass, he was portrayed as diligent, honest and ethical for betting against fraud. His fund's 600% return wasn't met with horror or charges of unethical practices or poor sportsmanship for betting against the American dream or the economy.

Now, John Paulson is so reviled.

Where's the fairness in that?

If anything, viewing House of Cards now shows both how much it exposed, and how much it kept hidden, about the housing finance mess that exploded into a global financial crisis.

Today, over two years after Bear Stearns' demise, and nearly three years after the collapse of its two mortgage-backed securities-related hedge funds, we still have no complete, honest and objective account of how and where the housing finance-related financial debacle actually originated, grew and unfolded.

Only its end seems to be obvious, and that still isn't really well-understood.

More Reflections On The Economy, Growth & The Fed

Today's US equity market sell-off seems to be following my expectations, as expressed in these recent posts here, here and here.

Allegedly following foreign equity markets' reactions to Friday's dismal consumer confidence survey report, the S&P has fallen 2.3% as I write this just before the market close.

Suddenly, the fall swoon of which I had written could be nigh.

Or not. As one pundit on the floor of the NYSE put it today, it depends on volume. And I agree with that. But Lowe's tepid earnings report, coming after various analyses explaining why it should have been good, will probably go a long way to dampen investor expectations now.

Never mind last year's comparable quarter results. I think investors are smart enough to not dwell on that metric.

The real key seems to be the trajectory of the US economy. It's not enough to sustain a recovery rally that Bernanke thinks the economy is 'leveling.'

Printing money, borrowing it and having government spending it will do a lot in the short term, or could do so. But for long term equity gains, the private sector has to resume growth. And there's currently nothing presaging that.

I keep returning to the inventory situation. So many pundits simply assume inventories will be rebuilt, resulting in manufacturing activity, chain reactions among suppliers, higher payrolls, and, voila, growth and recovery!

So if that doesn't happen, what then?

Rely on some 'shovel ready' road projects? Not enough.

It's not clear that today's sell-off is the beginning of the next 'big one.' But it's having some observable, significant effects on our equity options signals already. Certainly altering their prior trends.

I wouldn't be betting on a much higher S&P very soon. The CNBC pundits who predicted such a market gain by later this year seem to be naively optimistic, in my opinion.

Sunday Odds & Ends

Here's the YouTube video of some 10 minutes of Alan Greenspan's testimony in front of a House committee on Thursday of last week. I wrote about his appearance here.

Of particular note is Greenspan's self-defense at minutes 3:45 and 9.




What's missing was Greenspan's ridiculous response to a question regarding his public support of ARM mortgages.

When asked about his public remarks, in the Q&A on Thursday, Greenspan actually said that, to understand his real feelings about ARMs, one should note that he personally has only ever held 30-year fixed rate mortgages. Thus, despite his public backing of ARMs as having the potential to lower borrowing costs for millions of other borrowers, the former Fed Chairman now claims you'd have to 'do as he did,' not 'do as he said.'

What's next? Will we learn that Fed board meetings were run like an 'Alan says' game?

In this weekend's Wall Street Journal, former senior Dow Jones executive and Pulitzer Prize winning author Paul Ingrassia wrote an extensive piece on the Detroit-based US auto maker's current straits.

Perhaps nothing conveys the trouble they are in as these two passages,

"It wasn't that American auto executives were always malicious and stupid while the Japanese were always enlightened and smart. Japanese car companies have made plenty of mistakes, most recently Toyota's ill-timed move into full-sized pickup trucks and SUVs. But just as America didn't understand the depth of ethnic and religious divisions in Iraq, Detroit failed to grasp -- or at least to address -- the fundamental nature of its Japanese competition. Japan's car companies, and more recently the Germans and Koreans, gained a competitive advantage largely by forging an alliance with American workers.

Detroit, meanwhile, has remained mired in mutual mistrust with the United Auto Workers union. While the suspicion has abated somewhat in recent years, it never has disappeared -- which is why Detroit's factories remain vastly more cumbersome to manage than the factories of foreign car companies in the U.S.

But to thrive, instead of just survive, Detroit will have to use the brains of its workers instead of just their bodies, and the UAW will have to allow it. Two weeks ago some automation equipment broke down at the Honda factory in Marysville, Ohio, but employees rushed to the scene and devised a temporary solution. There were no negotiations with shop stewards, no parsing of job descriptions. Instead of losing an entire shift of production, Honda lost just 150 cars. The person overseeing Marysville's assembly operations is Brad Alty, still with Honda after nearly 30 years. These days, instead of a Gremlin, he's driving a Honda Pilot -- made at a Honda factory in Alabama."

Paul makes a caustic remark about how crisis often breeds mistakes, which explains GM's pursuing a merger with the remnants of Chrysler. I think he's right on target.

Instead, he favors what I have suggested, which is the dismantling of the better GM brands into pieces which more successful car companies can absorb.

Greenspan's Shocking Admission In Today's Congressional Testimony

This morning's business news featured live feeds of former Fed Chairman Alan Greenspan defending himself during testimony before a House Banking committee.


Although video of this historic moment is not yet on YouTube, I'd bet it is by tomorrow morning.


In a stunning series of remarks, Greenspan alleged surprise that individual, self-interested players in the financial markets did not have an explicit sense of, and desire to maintain, the overall health of those markets as they knowingly engaged in risky activities, e.g., securitizing subprime and Alt-A mortgages.


To cap off his inane comments, Greenspan defended his beliefs and inaction by claiming that his 40+ year "ideology" regarding capital markets turned out to be wrong.


According to Alan, his correctly-functioning model of how markets worked went wrong in the past few years, so it's not his fault.


Moreover, in earlier remarks this morning, he asserted that he believed the operating models of various financial markets competitors were correct, but they just used 'bad data,' and, when replaced with proper data, would result in appropriate decisions and actions regarding risks.


I will be the first one to say that anyone, especially a Fed Chairman, who believes that individual players in financial markets ever look out for the system, or the 'other guy,' is an idiot.


If any sector requires careful and effective regulation, it is our financial sector. My own recommendations for reforming the current financial mess, written on September 23rd of this year, featured three prescriptions for stiffer regulations concerning leverage, exchange-based trading, and retention of securities on an underwriter's balance sheet. Only one recommendation involved loosening a current regulation, and that was to reverse Congress' misguided mandate for all firms to strictly adhere to a narrow usage of 'mark-to-market' pricing of assets, while overlooking the real value inherent in a performing, if untraded security.

Nobody who has been involved with actual banking, securities or the markets can possibly believe they need no regulation, or that any player gives a hoot about systemic issues. That is always 'someone else's' problem.

Thus my posts regarding greed and stupidity, here and here.

Here's a good example.

Back in 1990, I ran a small internal consulting group at Chase Manhattan Bank. It was also given the task of commercializing the tools we used internally. With the forced retirement of my mentor and SVP of Corporate Planning & Development, I reported to the bank's CFO.

As such, I was included in a lunch for all the CFO's direct reports in late 1990 to discuss the brewing commercial real estate problems at the bank.

What I heard was shocking. The CFO wondered aloud if we could have afforded not to compete for all these soured loans, at the height of the lending frenzy. He was fixated on revenues and market share, and seemed genuinely ignorant of the looming large chargeoffs from the excessive lending.

Later, I learned from some colleagues working directly for the CFO that when a post-mortem on the Real Estate Finance division was conducted, many loan documentation folders were literally either empty, or contained a few mostly-blank pieces of paper.

The minimum necessary paperwork for review and approval by loan committees and internal credit audit functions was nonexistent.

Nobody could explain this violation and failure of basic internal bank lending practices. But we all knew why it had happened. Bonuses for the senior management and loan officers of the unit were huge for the last two years of the lending boom.

Nobody gave them back. The bank bore the losses, while the former employees walked off with millions of dollars of 'performance' bonuses.

It's simply human behavior. Salespeople and managers will maximize that behavior which pays them the most money. They will short-circuit, corrupt or remove any checks and balances they can which interfere with that profit-maximizing behavior.

To assume otherwise, either at the business-unit level, corporation level, or among players in banking and financial markets, is to be naive and stupid.

Greenspan Answers His Critics

Tuesday's Wall Street Journal contained a long piece focusing on Alan Greenspan's recent, continuing efforts to defend himself against mounting criticism of his reign as Fed Chairman.


Of course, last fall, it was a different story. Back then, I wrote two posts, here and here, which included this passage,


"Grant pulls no punches in questioning Greenspan's consistency as a libertarian, and acolyte of Ayn Rand, by ending up as the sole determiner of the economy's key interest rate. He makes clear Greenspan's lack of significant accomplishment as an economist or equity savant, prior to his role as Fed Chairman, and his misunderstanding of housing finance, after he took the position.


As Joe Kernen, an anchor on CNBC, articulated, Grant also seems to question Greenspan's motive in writing this book. Whereas Kernen opined that Greenspan wants back in the limelight, Grant suggests it's about trying to write his own legacy, before someone else writes a less flattering one."


And, in fact, Jim Grant, of Grant's Interest Rate Observer, was entirely correct. But it seems that Greenspan's pre-emptive effort has failed.


According to the Journal article,


"The criticisms that get under his skin are those from friends and former colleagues, many of them respected economists who backed his policies at the time but now say, in hindsight, that the calls were wrong. "I do take it seriously if my peers think I have misstated the facts," he says. "But where's the evidence? Too many people make accusations by assertion. I think it's improper." "


Which, as I noted last September in that second post, is true. There was insufficient objectivity about Greenspan back in the day. Too many people put him on a pedestal to begin with.


One subject on which I agree with Greenspan, which is vitally important right now, is the genesis of asset bubbles. The Journal article continues with,


"Mr. Greenspan now admits he was wrong about the improbability of a housing bubble. Yet he has long maintained that bubbles are an unavoidable feature of a dynamic economy. He pulls out a 1999 speech and shows, underlined in green marker, passages in which he warned of recurring but unpredictable patterns of overconfidence followed by investor panic. He does not share some foreign central bankers' belief that their job is to defend against excessive asset-price inflation: No sensible policy, he maintains, could have prevented the housing bubble.

"I am reasonably certain that I am right here," Mr. Greenspan says. If proved wrong, he says, "I will change. I do not have a vested interest in holding wrong ideas." "


But with Greenspan's last statement, I disagree. Obviously the former Fed Chairman has a very great, vested interest in having his actions sustained and generally regarded as correct. Who, after such adulation as Greenspan achieved, would not be worried that his image would be sullied afterward?


Greenspan's book and subsequent consulting deals smack of someone a lot less secure in his actions at the Fed than, say, Paul Volcker.


For instance, consider this passage from the Journal piece,


"Mr. Greenspan says many of the criticisms against him are unjust. He is particularly perturbed by attacks over a 2004 speech in which he suggested that more borrowers would benefit from adjustable-rate mortgages. Interest rates were at a historical low at the time, which means that those who held on to the mortgages would have seen rates adjusted upward.

Mr. Greenspan says the speech merely pointed out that many people who get a 30-year mortgage move or refinance long before it matures. Eight days after giving the speech, he says, he clarified his comments to say he didn't mean to disparage 30-year fixed-rate mortgages. "I find it profoundly disturbing" that critics cite the recommendation and not the retraction, he says, tapping his fingers on the table in front of him. "In all seriousness, this is really quite unfair." "


You can't say that Greenspan is unfamiliar with how the media treat public pronouncements by him. To complain that the headline got all the attention, and a minor clarification didn't, is to believe Greenspan is naive. But he's not. He was a longtime power player in Washington, and well knows how quotes can be misused.


Further, it's hard for Greenspan to now duck his explicit hesitancy to conduct closer supervision of specific, mortgage-related bank and bank-subsidiary lending practices.


For what it's worth, I don't really think we should rely on Federal regulators to take the place of commercial bank risk managers when it comes to lending practices, once guidelines are set. However, would it have been so bad for Greenspan to observe the rush to no-money-down mortgages and insist on 10% or 20% downpayments, instead?


This way, the Fed wouldn't have second-guessed bank risk management, so much as simply aligned housing purchases with those of financial assets, which the US long ago put on a higher-margin basis.


Reviewing the history of Greenspan's tenure as Fed Chairman, it's probably fair to say that he handled specific crises well. He showed flexibility with rate movements in response to various challenges to the economy, but was probably slow to return low interest rate levels to more appropriate ones consistent with a stronger dollar. And, finally, he didn't exercise as much influence over safe lending terms for mortgages as he could have, given the Fed's inherent ability to do so.


It's too bad that Greenspan is pouting about the changing sentiment regarding his Fed reign. It's not like he is being viewed as a failure. But, after last fall's public coronation of the man as the 'best central banker' of all time, it's understandable that he's suffering from a reduction in public esteem.


It may well be that, with more time, either Volcker or Bernanke will more fittingly be judged worthy of the title that Greenspan so clearly wants to keep.

Greenspan's Book & A Week of Reactions

Last week's business media was filled with news of and interviews with Alan Greenspan, retired Chairman of the Federal Reserve.

Appearing on CBS' 60 Minutes, NBC's Monday morning talk show, and numerous CNBC interviews, Greenspan was plugging his just-published book, "The Age of Turbulence."

Monday's Wall Street Journal had an 'official' staff article reviewing the book. It was pretty standard fare, recounting Greenspan's comments concerning various Presidents, how he handled the 1987 and 1998 market crises, his views on the current President and various economic affairs.

I think it's fair to say that the initial 48 hours of 'shock and awe' at Greenspan's apparently magisterial disrobing of his past obfuscations contained an almost-uniform measure of reverence. As if the various pundits and interviewing heads were saying,

"Alan said it, so it must be so. He was so awesome as Fed Chairman, we're lucky to get these nuggets of wisdom for only $35."

Then James Grant, editor of Grant's Interest Rate Observer, and noted monetary conservative, weighed in on Tuesday. In a Wall Street Journal review of the book, he panned Greenspan's consistency, credentials, and motives.

This passage aptly illustrates Mr. Grant's tone and perspective on Greenspan, and his book,

"The fantastic irony of Mr. Greenspan's career path -- from gold-standard libertarian to federal interest-rate fixer -- seems hardly to have registered on Mr. Greenspan himself. The closest he comes to acknowledging it is his description of how the Fed looked to him from the outside. It was, he writes, a "black box." Having watched his mentor, Arthur Burns, struggle with the chairmanship, Mr. Greenspan notes, "it did not seem like a job I felt equipped to do; setting interest rates for an entire economy seemed to involve so much more than I knew." A deeper kind of libertarian might have added: "Maybe nobody can know enough to set interest rates for an entire economy." "

He goes on to write,

"So Mr. Greenspan, a consulting economist of no special attainments (on the eve of the 1974 stock-market collapse, he was quoted in the New York Times saying "it is rare that you can be as unqualifiedly bullish as you can now"), agreed to perform the impossible. Succeeding Paul A. Volcker, he became America's monetary central-planner-in-all-but-name. Mr. Greenspan ruled the roost in 74 fiscal quarters, of which recession darkened only five.

Nobody can identify a bubble as it is inflating, Mr. Greenspan has long insisted -- though, as you will not read in these pages, Mr. Greenspan was so certain that he detected a stock-market bubble in 1994 that he tried to prick it by pushing interest rates up. Strangely, the author's bubble-sensor failed him later in the decade. He did, in 1997, utter the innocuous phrase "irrational exuberance," but that was as far as he went in attacking sky-high equity valuations.
Mr. Greenspan now writes that the enlightened central banker will let speculation take its course. Following the inevitable blow-up, he will clean up the mess with low interest rates and lots of freshly printed dollar bills -- thereby gassing up a new bubble.

Only one of the troubles with this prescription is that it requires an enlightened central banker to carry it out. Nowhere in this book does Mr. Greenspan own up to his role of underestimating the severity of the credit troubles of 1990, or of cheering on the tech-stock frenzy in 1998-2000, or of dangling the most beguiling teaser rate of all during the mortgage frolics of 2004 -- i.e., that 1% federal-funds rate. In February 2004, only months before the Fed started to raise its rate, in a speech titled "Understanding Household Debt Obligations," Mr. Greenspan demonstrated next to no understanding. His advice to American homeowners was not that they lock in a fixed-rate mortgage while the locking was good, but rather that they consider an adjustable-rate model. He who set the rates got it backward."

Grant pulls no punches in questioning Greenspan's consistency as a libertarian, and acolyte of Ayn Rand, by ending up as the sole determiner of the economy's key interest rate. He makes clear Greenspan's lack of significant accomplishment as an economist or equity savant, prior to his role as Fed Chairman, and his misunderstanding of housing finance, after he took the position.

As Joe Kernen, an anchor on CNBC, articulated, Grant also seems to question Greenspan's motive in writing this book. Whereas Kernen opined that Greenspan wants back in the limelight, Grant suggests it's about trying to write his own legacy, before someone else writes a less flattering one.

As the week went on, the Fed cut rates half a point, and the market surged, more people were beginning to wonder if perhaps Greenspan was being rather too self-important by writing his book.

By comparison, Greenspan's predecessor, Paul Volcker had a much harder job to do, and left things in far better shape than he found them. Yet, in over twenty years, Volcker has never spoken out about his Fed tenure, told tales out of school, nor, to my knowledge, even remarked on either Greenspan's or Bernanke's performances and policies as Fed Chairmen.

Instead, being, obviously, incredibly secure, Volcker moved on and continued his career of public service, assisting in cleaning up the Arthur Andersen mess, and hunting out graft and corruption in the recently-retired UN Secretary General Kofi Annan's troubled administration.

Were that Alan Greenspan were possessed of similar self-esteem, that he would not have needed to attempt another run into the public spotlight which he so recently left, when he retired as Fed Chairman. In some sense, he reminds me of Jack Welch, now-retired CEO of GE, who seems to have to pop up on business talk shows with now-annoying regularity, spouting little of current relevance.

I've always thought that Paul Volcker received far too little acclaim or gratitude for the heroic, difficult job he performed, taming the roaring inflation of the 1970s, left to us by Lyndon Johnson's fiscal policies during the Vietnam War, and compounded by economic mismanagement and taxation policies during the ensuing decade.

Compared to him, Greenspan seems to have performed capably, steering a large ship on, for the most part, calm seas. However, this summer's debt market troubles suggest that perhaps Greenspan's legacy won't be sterling, because it's now becoming evident that he owns the source of this latest marke.....ahhh.... turbulence.

Greenspan's Non-Monetary Opinions

I was going to write this post in a few more days, but given all the hoopla surrounding Greenspan's weekend tour of the media, I think I'll post it today.

Let's face it, Alan Greenspan is an economist. He was a Fed chairman. He's a monetary guy.

Why do we care what he thinks about fiscal policy, more than any other economist who is not a sitting Fed member? Granted, Greenspan is a good economist. But we don't need him to tell us that the Republican Congresses of the past few years failed to restrain spending. And that President Bush might have used his veto more than he did.

I already knew this, Alan.

Frankly, who really cares what he thinks about Congress and the Fed?

And, further, why do I care what Greenspan thinks about Iraq? He happens to agree with Bush, and, therefore, with my own views. But I honestly do not care. He wasn't Secretary of Defense. He was Fed Chairman.

Do I look to Don Rumsfeld to remark on the Open Market Committee's actions? I do not.

Now there's even discussion that Greenspan botched the handling of LTCM. Greenspan is on the record as re-writing his reactions to that debacle. He was never as 'pre-emptive' in his own chairmanship as pundits now criticize Bernanke and his Fed for not being now, amidst a credit market turbulence.

Further, as Joe Kernen remarked pointedly this morning on CNBC, Paul Volcker never did what Greenspan is now doing- breaking silence with his retrospective, and forward-looking, views on the Fed, the economy, etc. Kernen noted Greenspan's response to Leslie Stahl, that he 'has to make a living,' as the reason why he's written the book he is now touting on the talk show circuit.

But, as Kernen further observed, Greenspan doesn't need the money. Both he and his wife, Andrea Mitchell, have done very well in private industry- he as an economics consultant, she as an on-air media personality.

I think Greenspan is doing the country, and himself, a great disservice with his book and outspoken second-guessing of current monetary policies. It seems to me to be a lot of hand-wringing and excitement over nothing.