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Alan Greenspan

In office
August 11, 1987 – January 31, 2006
President Ronald Reagan
George H. W. Bush
Bill Clinton
George W. Bush
Preceded by Paul Volcker
Succeeded by Ben Bernanke

In office
President Gerald Ford
Preceded by Herbert Stein
Succeeded by Charles Schultze

Born March 6, 1926 (1926-03-06) (age 84)
New York City, New York, USA
Nationality American
Political party Republican
Spouse(s) Andrea Mitchell (1997–present)
Joan Mitchell (1952–1953, annulled)
Alma mater New York University
Columbia University
Profession Economist

Alan Greenspan (born March 6, 1926) is an American economist who served as Chairman of the Federal Reserve of the United States from 1987 to 2006. He currently works as a private advisor and provides consulting for firms through his company, Greenspan Associates LLC. First appointed Federal Reserve chairman by President Ronald Reagan in August 1987, he was reappointed at successive four-year intervals until retiring on January 31, 2006 after the second-longest tenure in the position.


Early life and education

Greenspan was born in 1926 in the Washington Heights area of New York City. His family was Jewish, with Herbert Greenspan, Alan's father, of Romanian-Jewish descent, and Alan’s mother, Rose Goldsmith, of Hungarian-Jewish descent.[1]

Greenspan is an accomplished clarinet and saxophone player who played with Stan Getz when they were in school together. He studied clarinet at The Juilliard School from 1943 to 1944, when he dropped out to join a professional jazz band.[2] He returned to college in 1945, attending New York University (NYU), where he received a B.S. in Economics (summa cum laude) in 1948[3] and an M.A. in Economics in 1950.[4] Greenspan went on to Columbia University, intending to pursue advanced economic studies, but subsequently dropped out. At Columbia, Greenspan studied economics under the tutelage of future Fed chairman Arthur Burns, who constantly warned of the dangers of inflation.[5]

In 1977, NYU awarded him a Ph.D. in Economics. His dissertation is not available from NYU [6] since it was removed at Greenspan's request in 1987, when he became Chairman of the Federal Reserve Board. However, a single copy has been found, and the 'introduction includes a discussion of soaring housing prices and their effect on consumer spending; it even anticipates a bursting housing bubble'.[7]


Prior to the Federal Reserve

From 1948 to 1953, Greenspan worked as an economic analyst at The Conference Board, a business and industry oriented think-tank in New York City.[citation needed] From 1955 to 1987, when he was appointed as chairman of the Federal Reserve, Greenspan was chairman and president of Townsend-Greenspan & Co., Inc., an economic consulting firm in New York City, a 33-year stint interrupted only from 1974 to 1977 by his service as Chairman of the Council of Economic Advisers under President Gerald Ford[citation needed].

In the summer of 1968, Greenspan agreed to serve Richard Nixon as his coordinator on domestic policy in the nomination campaign.[8] Greenspan has also served as a corporate director for Aluminum Company of America (Alcoa); Automatic Data Processing, Inc.; Capital Cities/ABC, Inc.; General Foods, Inc.; J.P. Morgan & Co., Inc.; Morgan Guaranty Trust Company of New York; Mobil Corporation; and The Pittston Company.[9][10] He was a director of the Council on Foreign Relations foreign policy organization between 1982 and 1988.[11] He also served as a member of the influential Washington-based financial advisory body, the Group of Thirty in 1984.

Chairman of the Federal Reserve

On June 2, 1987, President Reagan nominated Greenspan as a successor to Paul Volcker as chairman of the Board of Governors of the Federal Reserve, and the Senate confirmed him on August 11, 1987. After the nomination, bond markets experienced their biggest one-day drop in 5 years. Just two months after his confirmation he was faced with his first crisis — the 1987 stock market crash. Noted investor, author and commentator Jim Rogers has claimed that Greenspan lobbied to get this chairmanship.[12]

His terse statement that the Fed "affirmed today its readiness to serve as a source of liquidity to support the economic and financial system"[13][14][15] is seen by many as having been effective in helping to control the damage from that crash.

His handling of monetary policy in the run-up to the 1991 recession was criticized from the right as being excessively tight, and costing George H. W. Bush re-election. The incoming Democratic president Bill Clinton reappointed Greenspan, and kept him as a core member of his economic team. Greenspan, while still fundamentally monetarist in orientation, argued that doctrinaire application of theory was insufficiently flexible for central banks to meet emerging situations.

Another famous example of the effect of his closely parsed comments was his December 5, 1996 remark about "irrational exuberance and unduly escalating stock prices" that led Japanese stocks to fall 3.2%.[16]

During the Asian financial crisis of 1997—1998, the Federal Reserve flooded the world with dollars, and organized a bailout of Long-Term Capital Management. Some have argued that 1997-1998 represented a monetary policy bind — as the early 1970s had represented a fiscal policy bind — and that while asset inflation had crept into the United States, demanding that the Fed tighten, the Federal Reserve needed to ease liquidity in response to the capital flight from Asia. Greenspan himself noted this when he stated that the American stock market showed signs of irrationally high valuations.

In 2000, Greenspan raised interest rates several times; these actions were believed by many to have caused the bursting of the dot-com bubble. However, according to the Economist Paul Krugman" he didn't raise interest rates to curb the market's enthusiasm; he didn't even seek to impose margin requirementson stock market investors. Instead, he waited until the bubble burst, as it did in 2000, then tried to clean up the mess afterward."[17] In autumn of 2001, as a decisive reaction to September 11 attacks and the various corporate scandals which undermined the economy, the Greenspan-led Federal Reserve initiated a series of interest cuts that brought down the Federal Funds rate to 1% in 2004. His critics, notably Steve Forbes, attributed the rapid rise in commodity prices and gold to Greenspan's loose monetary policy which is causing excessive asset inflation and a weak dollar. By late 2004 the price of gold was higher than its 12-year moving average.

On May 18, 2004, Greenspan was nominated by President George W. Bush to serve for an unprecedented fifth term as chairman of the Federal Reserve. He was previously appointed to the post by Presidents Ronald Reagan, George H. W. Bush and Bill Clinton.

Greenspan's term as a member of the Board ended on January 31, 2006, and Ben Bernanke was confirmed as his successor.

After the Federal Reserve

On February 26, 2007, Greenspan forecast a possible recession in the U.S. before or in early 2008.[18] Stabilizing corporate profits are said to have influenced his comments. The following day, the Dow Jones Industrial Average closed at 12,216.24 dropping by 416 points and losing 3.3% of its value, the worst one day loss, at the time, since September 17, 2001, when the Dow Jones lost 684 points (7.1%) after reopening in the wake of the 9/11 terrorist attacks.[citation needed]

In mid-January 2008, hedge fund Paulson & Co hired Greenspan as an adviser on economic issues and monetary policy. This is the third private role given to Greenspan, the first two being given by Deutsche Bank and bond investment company Pacific Investment Management (PIMCO). Greenspan advises Paulson & Co on economics issues surrounding United States and world financial markets.[19]

Greenspan also counsels on monetary policy and falling housing prices and about a possible recession in the United States. Paulson & Co is famously known for its record profit making during 2007 by conducting bets against mortgage derivatives which earned the firm billions of dollars last year. The financial terms of the agreement were not disclosed and Greenspan must not, under the agreement, advise any other hedge fund manager while working for Paulson.[19]

Greenspan also now works as a private advisor making speeches and providing consulting for firms through his company, Greenspan Associates LLC. Directly following his retirement as Fed chairman, Greenspan accepted an honorary (unpaid) position at HM Treasury in the United Kingdom. In May 2007, Greenspan was hired as a special consultant by PIMCO to participate in Pimco’s quarterly economic forums and speak privately with the bond manager about Fed interest rate policy.[20] In August 2007, Deutsche Bank announced that it would be retaining Greenspan as a Senior Advisor to its investment banking team and clients.[21]

He has written his memoir, titled The Age of Turbulence: Adventures in a New World, published September 17, 2007.[22][23][24] Greenspan says that he wrote this book in longhand mostly while soaking in the bathtub, a habit he regularly employs ever since an accident in 1971, when he injured his back.[25] Greenspan discusses in his book, among other things, his history in government and economics, capitalism and other modes of economies, current issues in the global economy, and future issues that face the global economy. In the book Greenspan criticizes President George W. Bush, Vice President Dick Cheney, and the Republican-controlled Congress for abandoning the Republican Party's principles on spending and deficits. Greenspan's criticisms of President Bush include his refusal to veto spending bills, sending the country into increasingly deep deficits, and for "putting political imperatives ahead of sound economic policies".[26] Greenspan writes, "They swapped principle for power. They ended up with neither. They deserved to lose [the 2006 election]."[25][27] Of all the presidents with whom he worked, he praises Bill Clinton above all others, saying that Clinton maintained “a consistent, disciplined focus on long-term economic growth.”[28] Although he respected what he saw as Richard Nixon's immense intelligence, Greenspan found him to be "sadly paranoid, misanthropic and cynical". He said of Gerald Ford that he "was as close to normal as you get in a president, but he was never elected".[27]As for advice regarding future U.S. economic policy, one change Greenspan recommends is for the U.S. to improve its primary and secondary education systems. He asserts this would narrow the unusually large gap between the minority of high income earners and the majority of workers, whose wages have not grown proportionately with globalization and the nation's GDP growth.[29]

Greenspan and Objectivism

In the early 1950s, Greenspan began an association with famed novelist and philosopher Ayn Rand that would last until her death in 1982.[22] He wrote for Rand’s newsletters and authored several essays in her book Capitalism: The Unknown Ideal.[30] Rand stood beside him at his 1974 swearing-in as Chair of the Council of Economic Advisers.[22]

Greenspan was introduced to Ayn Rand by his first wife, Joan Mitchell. Although Greenspan was initially a logical positivist,[31] he was converted to Rand's philosophy of Objectivism by her associate Nathaniel Branden. During the 1950s and 1960s Greenspan was a proponent of Objectivism, writing articles for Objectivist newsletters and contributing several essays for Rand's 1966 book Capitalism: the Unknown Ideal including an essay supporting the gold standard.[32][33]

During the 1950s, Greenspan was one of the members of Ayn Rand's inner circle, the Ayn Rand Collective, who read Atlas Shrugged while it was being written. Rand nicknamed Greenspan "the undertaker" because of his penchant for dark clothing and reserved demeanor. Although Greenspan was once recognized as a proponent of laissez-faire capitalism, some Objectivists find his support for a gold standard somewhat incongruous or dubious,[citation needed] given the Federal Reserve's role in America's fiat money system and endogenous inflation. He has come under criticism from Harry Binswanger,[34] who believes his actions while at work for the Federal Reserve and his publicly expressed opinions on other issues show abandonment of Objectivist and free market principles. However, when questioned in relation to this, he has said that in a democratic society individuals have to make compromises with each other over conflicting ideas of how money should be handled. He said he himself had to make such compromises, because he believes that "we did extremely well" without a central bank and with a gold standard.[35] Greenspan and Rand maintained a close relationship until her death in 1982.[22]

In a congressional hearing on October 23, 2008 Greenspan admitted that his free-market ideology shunning certain regulations was flawed.[36]

Housing bubble

In the wake of the subprime mortgage and credit crisis in 2007, Greenspan admitted that there was a bubble in the US housing market, warning in 2007 of "large double digit declines" in home values "larger than most people expect".[37] However, Greenspan also noted, "I really didn't get it until very late in 2005 and 2006."[38] On a list of 25 people to blame for the financial crisis, Time Magazine placed him at # 3.[39]

Greenspan admitted that the housing bubble was “fundamentally engendered by the decline in real long-term interest rates”,[40] though he also claims that long-term interest rates are beyond the control of central banks because "the market value of global long-term securities is approaching $100 trillion" and thus these and other asset markets are large enough that they "now swamp the resources of central banks".[41]

Following the September 11, 2001 attacks, the Federal Open Market Committee voted to reduce the federal funds rate from 3.5% to 3.0%.[42] Then, after the accounting scandals of 2002, the Fed dropped the federal funds rate from then current 1.25% to 1.00%.[43] Greenspan acknowledged that this drop in rates would have the effect of leading to a surge in home sales and refinancing.

Besides sustaining the demand for new construction, mortgage markets have also been a powerful stabilizing force over the past two years of economic distress by facilitating the extraction of some of the equity that homeowners have built up over the years.[43]

However, Greenspan's policies of adjusting interest rates to historic lows contributed to a housing bubble in the US.[44] The Federal Reserve acknowledges the connection between lower interest rates, higher home values, and the increased liquidity the higher home values bring to the overall economy.

Like other asset prices, house prices are influenced by interest rates, and in some countries, the housing market is a key channel of monetary policy transmission. — Board of Governors of the Federal Reserve System, September 2005.[45]

In a speech in February 2004,[46] Greenspan suggested that more homeowners should consider taking out Adjustable Rate Mortgages (ARMs) where the interest rate adjusts itself to the current interest in the market.[47] The fed own funds rate was at an all-time-low of 1%. A few months after his recommendation, Greenspan began raising interest rates, in a series of rate hikes that would bring the funds rate to 5.25% about two years later.[48] A triggering factor in the 2007 subprime mortgage financial crisis is believed to be the many subprime ARMs that reset at much higher interest rates than what the borrower paid during the first few years of the mortgage.

In 2008, Greenspan expressed great frustration that the speech he made on February 23, 2004 was used to criticize him on ARMs and the subprime mortgage crisis, and stated that he had made countervailing comments eight days after it that praised traditional fixed-rate mortgages.[49]

In that speech, Greenspan had suggested that lenders should offer to home purchasers a greater variety of "mortgage product alternatives" other than traditional fixed-rate mortgages.[46] Greenspan also praised the rise of the subprime mortgage industry and the tools which it uses to assess credit-worthiness in an April 2005 speech:

Innovation has brought about a multitude of new products, such as subprime loans and niche credit programs for immigrants. Such developments are representative of the market responses that have driven the financial services industry throughout the history of our country … With these advances in technology, lenders have taken advantage of credit-scoring models and other techniques for efficiently extending credit to a broader spectrum of consumers. … Where once more-marginal applicants would simply have been denied credit, lenders are now able to quite efficiently judge the risk posed by individual applicants and to price that risk appropriately. These improvements have led to rapid growth in subprime mortgage lending; indeed, today subprime mortgages account for roughly 10 percent of the number of all mortgages outstanding, up from just 1 or 2 percent in the early 1990s.[50]

The subprime mortgage industry collapsed in March 2007, with many of the largest lenders filing for bankruptcy protection in the face of spiraling foreclosure rates. For these reasons, Greenspan has been criticized for his role in the rise of the housing bubble and the subsequent problems in the mortgage industry,[51][52] as well as "engineering" the housing bubble itself:

It was the Federal Reserve-engineered decline in rates that inflated the housing bubble ... the most troublesome aspect of the price runup is that many recent buyers are squeezing into houses that they can barely afford by taking advantage of the lower rates available from adjustable-rate mortgages. That leaves them fully exposed to rising rates.[53]

Stiglitz stated that Greenspan “didn't really believe in regulation; when the excesses of the financial system were noted, (he and others) called for self-regulation — an oxymoron.”[54] Greenspan, according to The New York Times, says he himself is blameless.[55] On April 6, 2005 Greenspan called for a substantial increase in the regulation of Fannie Mae and Freddie Mac: “Appearing before the Senate Banking Committee, the Fed chairman, Alan Greenspan, said the enormous portfolios of the companies — nearly a quarter of the home-mortgage market — posed significant risks to the nation's financial system should either company face significant problems.”[56] Despite this, Greenspan still claims to be a firm believer in free markets, although in the 2007 publication of his biography, he writes, "History has not dealt kindly with the aftermath of protracted periods of low risk premiums" as seen before the credit crisis of 2008.

In Congressional testimony on October 23, 2008, Greenspan finally conceded error on regulation. The New York Times wrote, "a humbled Mr. Greenspan admitted that he had put too much faith in the self-correcting power of free markets and had failed to anticipate the self-destructive power of wanton mortgage lending. ... Mr. Greenspan refused to accept blame for the crisis but acknowledged that his belief in deregulation had been shaken." Although many Republican lawmakers tried to blame the housing bubble on Fannie Mae and Freddie Mac, Greenspan placed far more blame on Wall Street for bundling subprime mortgages into securities. [57]

Late 2000s recession

In March 2008, Greenspan wrote an article for the Financial Times' Economists’ Forum in which he said that the 2008-financial crisis in the United States is likely to be judged as the most wrenching since the end of World War II. In it he argued: "We will never be able to anticipate all discontinuities in financial markets." He concluded: “It is important, indeed crucial, that any reforms in, and adjustments to, the structure of markets and regulation not inhibit our most reliable and effective safeguards against cumulative economic failure: market flexibility and open competition.” The article attracted a number of critical responses from forum contributors, who, finding causation between Greenspan's policies and the discontinuities in financial markets that followed, criticized Greenspan mainly for what many believed to be his unbalanced and immovable ideological suppositions about global capitalism and free competitive markets. Notable critics included J. Bradford DeLong, Alice Rivlin, Richard Werner, Christopher Whalen, Michael Hudson, and Willem Buiter.[58]

Greenspan responded to his critics in a follow-up article in which he defended his ideology as applied to his conceptual and policy framework, which, among other things, prohibited him from exerting real pressure against the burgeoning housing bubble or, in his words, "leaning against the wind". Greenspan argued, "My view of the range of dispersion of outcomes has been shaken, but not my judgment that free competitive markets are by far the unrivaled way to organize economies." He concluded: "We have tried regulation ranging from heavy to central planning. None meaningfully worked. Do we wish to retest the evidence?"[59] The Financial Times associate editor and chief economics commentator, Martin Wolf, responded to the discussion with an article defending Greenspan primarily as a scapegoat for the market turmoil. Several notable contributors in defense of Greenspan included Stephen Roach, Allan Meltzer, and Robert Brusca.[60]

An October 15, 2008 article in the Washington Post analyzing the origins of the economic crisis claims that Greenspan vehemently opposed any regulation of derivatives, and that Greenspan actively sought to undermine the office of the Commodity Futures Trading Commission when the Commission sought to initiate regulation of derivatives. Meanwhile, Greenspan recommended improving mark-to-market regulations to avoid having derivatives or other complex assets marked to a distressed or illiquid market during times of material adverse conditions as seen during the late 2000s credit crisis.[61]

Greenspan was not alone is his opposition to derivatives regulation. In a 1999 government report that was a key driver in the passage of the Commodity Futures Modernization Act of 2000--legislation that clarified that most over-the-counter derivatives were outside the regulatory authority of any government agency—Greenspan was joined by Treasury Secretary Lawrence Summers, Securities and Exchange Commission Chairman Arthur Levitt, and Commodity Futures Trading Commission Chairman William Ranier in concluding "that under many circumstances, the trading of financial derivatives by eligible swap participants should be excluded from the CEA" (Commodity Exchange Act). Other government agencies also supported that view.[62]

In Congressional testimony on October 23, 2008, Greenspan acknowledged that he was "partially" wrong in opposing regulation and stated "Those of us who have looked to the self-interest of lending institutions to protect shareholder's equity — myself especially — are in a state of shocked disbelief."[36] Referring to his free-market ideology, Greenspan said: “I have found a flaw. I don’t know how significant or permanent it is. But I have been very distressed by that fact.” Rep. Henry Waxman (D-CA) then pressed him to clarify his words. “In other words, you found that your view of the world, your ideology, was not right, it was not working,” Waxman said. “Absolutely, precisely,” Greenspan replied. “You know, that’s precisely the reason I was shocked, because I have been going for 40 years or more with very considerable evidence that it was working exceptionally well.”[63] Greenspan admitted fault[64] in opposing regulation of derivatives and acknowledged that financial institutions didn't protect shareholders and investments as well as he expected.

Political views and alleged politicization of office

Greenspan describes himself as a "lifelong libertarian Republican".[27]

In March 2005, in reaction to Greenspan's support of President Bush's plan to partially privatize Social Security, Democratic Senate Minority Leader Harry Reid attacked Greenspan as “one of the biggest political hacks we have in Washington”[65] and criticized him for supporting Bush's 2001 tax cut plan.[66] Then-Democratic House Minority Leader Nancy Pelosi added that there were serious questions about the Fed's independence as a result of Greenspan's public statements.[67] Greenspan also received criticism from Democratic Congressman Barney Frank and others for supporting Bush's Social Security plans in favor of private accounts.[68][69][70] Greenspan had said Bush's model has "the seeds of developing full funding by its very nature. As I've said before, I've always supported moves to full funding in the context of a private account."[71]

Others, like Republican Senator Mitch McConnell, disagreed that Greenspan was too deferential to Bush, stating that Greenspan “has been an independent player at the Fed for a long time under both parties and made an enormous positive contribution”.[72]

Economist Paul Krugman wrote that Greenspan was a “three-card maestro” with a “lack of sincerity” who, “by repeatedly shilling for whatever the Bush administration wants, has betrayed the trust placed in the Fed chairman”.[73]

Republican Senator Jim Bunning, who opposed Greenspan's fifth reconfirmation, charged that Greenspan should comment only on monetary policy, not fiscal policy.[74] However, Greenspan had used his position as Fed Chairman to comment upon fiscal policy as early as 1993, when he supported President Clinton's deficit reduction plan, which included tax hikes and budget cuts.[75]


Greenspan has married twice. His first marriage was to an artist named Joan Mitchell in 1952; the marriage ended in annulment less than a year later.[76] He dated newswoman Barbara Walters in the late 1970s.[22] In 1984, Greenspan began dating journalist Andrea Mitchell. Greenspan at the time was 58, and the also divorced Mitchell was 20 years younger. In 1997, they were married by Supreme Court Justice Ruth Bader Ginsburg.[23][77]


President George W. Bush presents the Presidential Medal of Freedom to Alan Greenspan, on November 9, 2005 in the East Room of the White House.

Greenspan was awarded the Presidential Medal of Freedom, the highest civilian award in the United States, by President George W. Bush in November 2005.[78] His honorary titles include Knight Commander of the British Empire, bestowed in 2002 and Commander of the Légion d'honneur (Legion of Honor). In 2006, Greenspan was awarded the Department of Defense Medal for Distinguished Public Service.[79]

In 2004, Greenspan received the Dwight D. Eisenhower Medal for Leadership and Service, from Eisenhower Fellowships. In 2005, he became the first recipient of the Harry S. Truman Medal for Economic Policy, presented by the Harry S. Truman Library Institute. In 2007, Greenspan was the recipient of the inaugural Thomas Jefferson Foundation Medal in Citizen Leadership, presented by the University of Virginia.

On December 14, 2005, he was awarded an honorary Doctor of Commercial Science degree by NYU, his fourth degree from that institution.[80]

See also


  1. ^ Greenspan, Alan (2007). The Age of Turbulence: Adventures in a New World. New York: Penguin Press. p. 19. ISBN 1-59420-131-5. 
  2. ^ Martin, Justin (2000). Greenspan: The Man behind Money. Cambridge, Massachusetts: Perseus. pp. 11–13. ISBN 0-7382-0275-4. 
  3. ^ Martin, Justin (2000). Greenspan: The Man behind Money. Cambridge, Massachusetts: Perseus. p. 27. ISBN 0-7382-0275-4. 
  4. ^ Greenspan, Alan (2007). The Age of Turbulence: Adventures in a New World. New York: Penguin Press. p. 33. ISBN 1-59420-131-5. 
  5. ^ Martin, Justin (2000). Greenspan: The Man behind Money. Cambridge, Massachusetts: Perseus. pp. 27–31. ISBN 0-7382-0275-4. 
  6. ^ McTague, Jim (March 31, 2008). "Dr. Greenspan's Amazing Invisible Thesis". Barron's. Retrieved October 17, 2008. 
  7. ^ McTague, Jim (April 28, 2008). "Looking at Greenspan's Long-Lost Thesis". Barron's. Retrieved July 25, 2009. 
  8. ^ Ambrose, Stephen (1987). Nixon. New York City: Simon & Schuster. ISBN 0-671-52837-8. OCLC 14414031. 
  9. ^ Wharton School of Business (April 19, 2005). "Alan Greenspan, Chairman of the Board of Governors of Federal Reserve, Receives Dean’s Medal at Wharton School MBA Commencement". Press release. Retrieved October 17, 2008. 
  10. ^ Bloomberg News (February 1, 2000). "U.S. Senate Panel Votes for 4th Term for Fed Chairman Greenspan". Deseret News. 
  11. ^ Grose, Peter (1996). "Historical Roster of Directors and Officers". Continuing the inquiry: the Council on Foreign Relations from 1921 to 1996. New York City: Council on Foreign Relations. ISBN 0-87609-192-3. OCLC 35280546. 
  12. ^ Rogers, Jim (2004 isbn=0-8129-6726-7). Adventure Capitalist: The Ultimate Road Trip. New York: Random House. ISBN 0375509127. 
  13. ^ Carlson, Mark (November 2006). A Brief History of the 1987 Stock Market Crash with a Discussion of the Federal Reserve Response. Washington, DC: Federal Reserve Board. 
  14. ^ Tamny, John (07.02.08). "In 2008, Shades of October 1987". Forbes,com. Retrieved June 22, 2009. 
  15. ^ "Central Banks promise support". BBC News. September 12, 2001. Retrieved June 22, 2009. 
  16. ^ "The Market Shaker". Online NewsHour. December 6, 1996. Retrieved June 22, 2009. 
  17. ^ Paul Krugman (2009). The return of depression economics and the crisis of 2008. W.W. Norton. ISBN 978-0-393-33780-8. , page 142
  18. ^ Associated Press (February 26, 2007). "Greenspan warns of U.S. recession risk". MSNBC. Retrieved October 17, 2008. 
  19. ^ a b Monaghan, Angela (Jan 15, 2008). "Greenspan joins hedge fund Paulson". Daily Telegraph. Retrieved June 22, 2009. 
  20. ^ "Pimco hires Greenspan as consultant: report". Reuters. May 16, 2007. Retrieved June 22, 2009. 
  21. ^ Deutsche Bank (August 13, 2007). "Alan Greeenspan to consult for Deutsche Bank Corporate and Investment Bank". Press release. Retrieved October 17, 2008. 
  22. ^ a b c d e Kinsley, Michael (October 14, 2007). "Greenspan Shrugged". The New York Times. Retrieved November 8, 2007. 
  23. ^ a b Kotkin, Stephen (October 7, 2007). "The Boy Behind the Global Theories". The New York Times. Retrieved November 8, 2007. 
  24. ^ Henderson, Nell (November 7, 2006). "Greenspan Unconcerned About Housing". The Washington Post. Retrieved October 17, 2008. 
  25. ^ a b Hagenbaugh, Barbara (September 17, 2007). "Greenspan takes center stage in 'Age of Turbulence'". USA Today. Retrieved November 9, 2007. 
  26. ^ Felsenthal, Mark (September 15, 2007). "Greenspan criticizes Bush policies in memoir". Reuters. Retrieved November 9, 2007. 
  27. ^ a b c Ip, Greg; Steel, Emily (September 15, 2007). "Greenspan Book Criticizes Bush And Republicans". Wall Street Journal: p. A1. 
  28. ^ Andrews, Edmund L.; David E. Sanger (September 15, 2007). "Former Fed Chief Attacks Bush on Fiscal Role". The New York Times. Retrieved November 8, 2007. 
  29. ^ Greenspan, Alan (2007). "Chapter 21, Education and Income Inequality". The Age of Turbulence: Adventures in a New World. Penguin Press. ISBN 1594201315. 
  30. ^ White, Deborah (March 9, 2005). "Explaining Greenspan — Disciple of Ayn Rand or George Bush?". Retrieved October 17, 2008. 
  31. ^ Greenspan, Alan (2007). The Age of Turbulence. New York: Penguin Press. ISBN 1-59420-131-5. OCLC 122973403. 
  32. ^ Greenspan, Alan (July 1966). "Gold and Economic Freedom". The Objectivist 5 (7). Retrieved October 16, 2008. 
  33. ^ Rubin, Harriet (September 15, 2007). "Ayn Rand’s Literature of Capitalism". The New York Times. Retrieved January 5, 2008. 
  34. ^ Binswanger, Harry (August 30, 2002). "Greenspan on 'Infectious Greed'". Capitalism Magazine. Retrieved October 17, 2008. 
  35. ^ Alan Greenspan on FOX Business Network. Fox Business Network, YouTube. October 15, 2007. Retrieved June 22, 2009. 
  36. ^ a b Lanman, Scott; Matthews, Steve (October 23, 2008). "Greenspan Concedes to 'Flaw' in His Market Ideology". Retrieved June 22, 2009. 
  37. ^ Guha, Krishna (September 17, 2007). "Greenspan alert on US house prices". Financial Times. Retrieved October 17, 2008. 
  38. ^ Felsenthal, Mark (September 13, 2007). "Greenspan says didn't see subprime storm brewing". Reuters. Retrieved June 22, 2009. 
  39. ^ "Full List - 25 People to Blame for the Financial Crisis - TIME". Time.,29569,1877351,00.html. Retrieved February 16, 2010. 
  40. ^ Guha, Krishna (September 16, 2007). "A global outlook". Financial Times. Retrieved October 17, 2008. 
  41. ^ Greenspan, Alan (December 12, 2007). "The Roots of the Mortgage Crisis". Wall Street Journal. Retrieved June 22, 2009. 
  42. ^ "Monetary Policy Report to the Congress". February 27, 2002. Retrieved June 17, 2009. 
  43. ^ a b "Economic Outlook Hearing before the Joint Economic Committee, Congress of the United States" (PDF). U.S. Government Printing Office. November 13, 2002. Retrieved June 17, 2009. 
  44. ^ Ritholtz, Barry (2009). Bailout Nation. New York: Wiley. ISBN 0470520388. 
  45. ^ Ahearne, Alan G. et al. (September 2005). House Prices and Monetary Policy: A Cross-Country Study. Board of Governors of the Federal Reserve System. 
  46. ^ a b Greenspan, Alan (February 23, 2004). "Understanding household debt obligations". Credit Union National Association 2004 Governmental Affairs Conference. Federal Reserve Board. Retrieved June 22, 2009. 
  47. ^ Kirchhoff, Sue; Hagenbaugh, Barbara (February 23, 2004). "Greenspan says ARMs might be better deal". USA Today. Retrieved June 17, 2009. 
  48. ^ Martenson, Chris (January 23, 2007). "Connect the Dots". Atlantic Free Press. Retrieved June 17, 2009. 
  49. ^ Ip, Greg. "His Legacy Tarnished, Greenspan Goes on Defensive". The Wall Street Journal. pp. A1. Retrieved April 8, 2008. 
  50. ^ Greenspan, Alan (April 8, 2005). "Consumer Finance". Federal Reserve System’s Fourth Annual Community Affairs Research Conference. Federal Reserve Board. Retrieved June 22, 2009. 
  51. ^ Stephen Roach (March 16, 2007). "The Great Unraveling". Morgan Stanley. 
  52. ^ Nouriel Roubini (March 19, 2007). "Who is to Blame for the Mortgage Carnage and Coming Financial Disaster? Unregulated Free Market Fundamentalism Zealotry". RGE Monitor. 
  53. ^ Coy, Peter, et al. (July 19, 2004). "Is A Housing Bubble About To Burst?". BusinessWeek. Retrieved June 22, 2009. 
  54. ^ Stiglitz, Joseph (September 17, 2008). "How to prevent the next Wall Street crisis". 
  55. ^ Calmes, Jackie (September 17, 2008). "In Washington, Financial Furor Is a First-Rate Chance to Assess Blame". New York Times. 
  56. ^ Labaton, Stephen (April 7, 2005). "Limits Urged in Mortgage Portfolios". New York Times.,%202005%20Greenspan&st=cse. Retrieved June 22, 2009. 
  57. ^ Andrews, Edmund L. (October 23, 2008). "Greenspan Concedes Error on Regulation". New York Times. Retrieved February 16, 2010. 
  58. ^ Greenspan, Alan (March 17, 2008). "We will never have a perfect model of risk". The Economists' Forum. Retrieved June 22, 2009. 
  59. ^ Greenspan, Alan (April 6, 2008). "A response to my critics". The Economists' Forum. Retrieved June 22, 2009. 
  60. ^ Wolf, Martin (April 8, 2008). "Why Greenspan does not bear most of the blame". Retrieved June 22, 2009. 
  61. ^ Faiola, Anthony; Nakashima, Ellen; Drew, Jill (October 15, 2008). "What Went Wrong". Washington Post: p. A01. 
  62. ^ Summers, Lawrence; Alan Greenspan, Arthur Levitt, William Ranier (1999-11). Over-the-Counter Derivatives Markets and the Commodity Exchange Act: Report of The President’s Working Group on Financial Markets. Retrieved August 15, 2009. 
  63. ^ Leonhardt, David (October 23, 2008). "Greenspan’s Mea Culpa". Economix (blog). New York Times. Retrieved June 22, 2009. 
  64. ^ Pearson, Noel (July 2009). "Comment: The Corporate Fallacy". The Monthly. 
  65. ^ "Reid sticks by Greenspan comments". The Washington Times. March 5, 2005. Retrieved October 24, 2008. 
  66. ^ Andrews, Edmund L. (March 3, 2005). "Greenspan says Federal Budget Deficits are 'Unsustainable'". New York Times. Retrieved June 22, 2009. 
  67. ^ "Transcript: Nancy Pelosi on 'FOX News Sunday'". March 6, 2005.,2933,149556,00.html. Retrieved June 22, 2009. 
  68. ^ "Greenspan Supports 'Ownership' Concept in Social Security". February 17, 2005.,2933,147972,00.html. Retrieved June 22, 2009. 
  69. ^ Balz, Dan (March 4, 2005). "Senate Democratic Leader Blasts Greenspan". Washington Post: p. A06. Retrieved June 22, 2009. 
  70. ^ Tapper, Jake (October 7, 2008). "Barney Frank Says Race a Factor in Subprime Blame Game". Political Punch Blog. ABC News. Retrieved June 22, 2009. 
  71. ^ "Greenspan Likes Social Security Private Accounts, But Urges Caution". February 17, 2005. Retrieved June 22, 2009. 
  72. ^ "Transcript for March 6". Meet the Press (NBC News). March 6, 2005. Retrieved June 22, 2009. 
  73. ^ Paul Krugman (February 18, 2005). "Three-card Maestro". The New York Times. Retrieved November 10, 2007. 
  74. ^ "Greenspan Says U.S. Must Adjust Retirement Programs (Update1)". Bloomberg L.P.. August 27, 2004. Retrieved October 26, 2008. 
  75. ^ Bob Woodward (2001). Maestro: Alan Greenspan and the American Boom. Simon & Schuster. ISBN 0-7432-0412-3. , page 110
  76. ^ Martin, Justin (2000). Greenspan: The Man behind Money. Cambridge, Massachusetts: Perseus. p. 34. ISBN 0-7382-0275-4. 
  77. ^ "Alan Greenspan, Andrea Mitchell". New York Times. April 6, 1997. 
  78. ^ White House Press Secretary (September 9, 2005). "Citations for Recipients of the 2005 Presidential Medal of Freedom". Press release. Retrieved October 17, 2008. 
  79. ^ United States Department of Defense (January 23, 2006). "Alan Greenspan Receives Defense Department Distinguished Public Service Award". Press release. Retrieved December 29, 2008. 
  80. ^ "Alan Greenspan and Gordon Brown Receive Honorary Degrees From NYU". NYU Office of Public Affairs. December 16, 2005. Retrieved June 22, 2009. 

Further reading

External links


Government offices
Preceded by
Paul Volcker
Chairman of the Federal Reserve
Succeeded by
Ben Bernanke


Up to date as of January 14, 2010

From Wikiquote

Alan Greenspan (born March 6, 1926) is an American economist and was Chairman of the Board of Governors of the Federal Reserve of the United States from June 2, 1987 until his retirement on January 31, 2006.



  • But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade?
    • Francis Boyer Lecture of The American Enterprise Institute for Public Policy Research, Washington, D.C., December 5, 1996 [1]
  • Once stock prices reach the point at which it is hard to value them by logical methodology, stocks will be bought as they were in the late 1920s not for investment but to be unloaded at a still higher price. The ensuing break could be disastrous because panic psychology cannot be summarily altered or reversed by easing money policies.
    • Greenspan in 1959. [2]
  • The world of antitrust is reminiscent of Alice’s Wonderland: everything seemingly is, yet apparently isn’t, simultaneously. It is a world in which competition is lauded as the basic axiom and guiding principle, yet "too much" competition is condemned as "cutthroat." It is a world in which actions designed to limit competition are branded as criminal when taken by businessmen, yet praised as "enlightened" when initiated by the government. It is a world in which the law is so vague that businessmen have no way of knowing whether specific actions will be declared illegal until they hear the judge’s verdict—after the fact.
    • "Antitrust", essay at the National Association of Business Economists (25 September 1961); published in Rand, Capitalism: The Unknown Ideal
  • An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense - perhaps more clearly and subtly than many consistent defenders of laissez-faire - that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other.
  • That said, there can be little doubt that exceptionally low interest rates on ten-year Treasury notes, and hence on home mortgages, have been a major factor in the recent surge of homebuilding and home turnover, and especially in the steep climb in home prices. Although a 'bubble' in home prices for the nation as a whole does not appear likely, there do appear to be, at a minimum, signs of froth in some local markets where home prices seem to have risen to unsustainable levels.
    • Greenspan on June 9, 2005 [3]
  • The resolution of our current account deficit and household debt burdens does not strike me as overly worrisome, but that is certainly not the case for our fiscal deficit, which, according to the Congressional Budget Office, will rise significantly as the baby boomers start to retire in 2008. Our fiscal prospects are, in my judgment, a significant obstacle to long-term stability because the budget deficit is not readily subject to correction by market forces that stabilize other imbalances.
    • March 10, 2005 [4]
  • Capitalism is based on self-interest and self-esteem; it holds integrity and trustworthiness as cardinal virtues and makes them pay off in the marketplace, thus demanding that men survive by means of virtue, not vices. It is this superlatively moral system that the welfare statists propose to improve upon by means of preventative law, snooping bureaucrats, and the chronic goad of fear.
    • The Assault on Integrity, 1963
  • I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I said.
    • 1988 speech, as quoted in The New York Times, October 28, 2005
  • Since becoming a central banker, I have learned to mumble with great incoherence. If I seem unduly clear to you, you must have misunderstood what I said.
    • Speaking to a Senate Committee in 1987, as quoted in the Guardian Weekly, November 4, 2005
  • The reason there is very little support for the gold standard is the consequences of those types of market adjustments are not considered to be appropriate in the 20th and 21st century. I am one of the rare people who have still some nostalgic view about the old gold standard, as you know, but I must tell you, I am in a very small minority among my colleagues on that issue.
    • Speaking to a Hearing before the U.S. House of Representatives' Committee on Financial Services in 7/22/1998
  • "Rising interest rates have been advertised for so long and in so many places that anyone who has not appropriately hedged this position by now obviously is desirous of losing money." - Novermber 2004 in a speech in Frankfurt
  • History has not dealt kindly with the aftermath of protracted periods of low risk premiums.
    • At a symposium sponsored by the Federal Reserve Bank of Kansas City, Jackson Hole, Wyoming, August 26, 2005 [5]
  • Those of us who have looked to the self-interest of lending institutions to protect shareholder's equity – myself especially – are in a state of shocked disbelief.[6]

Quotes on the Housing Bubble

  • American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional fixed-rate mortgage.
    • February 2004, in a speech praising the benefits of adjustable-rate mortgages.
  • While local economies may experience significant price imbalances, a national severe price distortion seems most unlikely in the United States, given its size and diversity.
    • October 2004, playing down the threat of a national housing bubble.
  • Without calling the overall national issue a bubble, it's pretty clear that it's an unsustainable underlying pattern.
    • May 2005, Greenspan said in a speech that he did not believe there was a national housing bubble similar to the bubble in the stock market. But he said there was "froth" in housing and he called the pace of housing price increases unsustainable.
  • A decline in the national housing price level would need to be substantial to trigger a significant rise in foreclosures, because the vast majority of homeowners have built up substantial equity in their homes despite large mortgage-market financed withdrawals of home equity in recent years.
    • July 2005, in testimony to the House Financial Services Committee.
  • [There are] signs of froth in some local markets where home prices seem to have risen to unsustainable levels.
    • July 2005, in testimony to the House Financial Services Committee.
  • I was aware that the loosening of mortgage credit terms for subprime borrowers increased financial risk. But I believed then, as now, that the benefits of broadened home ownership are worth the risk.
    • September 2007, Greenspan's memoir The Age of Turbulence: Adventures in the New World.
  • Cash is available and we should use that in larger amounts, as is necessary, to solve the problems of the stress of this.
    • December 2007, in an interview Sunday on ABC's This Week. Greenspan suggested the government should boost support to homeowners facing the prospect of losing their homes because their mortgages are resetting to higher interest rates.


  • I know you believe you understand what you think I said, but I am not sure you realise that what you heard is not what I meant.
    • Attributed to Greenspan by Rupert Cornwell, "Alan Greenspan: The buck starts here", The Independent, 27 April 2003, citing an unspecified Capitol Hill hearing. However, as Ralph Keyes notes in The Quote Verifier (2006, p. 233), "This popular tongue twister gets attributed to the obfuscator du jour." The earliest known print attribution is to Robert McCloskey, U.S. State Department spokesman, by Marvin Kalb, CBS reporter, in TV Guide, 31 March 1984, citing an unspecified press briefing during the Vietnam war.

About Greenspan

  • If you want a simple model for predicting the unemployment rate in the United States over the next few years, here it is: It will be what Greenspan wants it to be, plus or minus a random error reflecting the fact that he is not quite God.
  • Greenspan doesn't get out of bed before examining the political consequences.
  • I would not only reappoint Mr. Greenspan -- if Mr. Greenspan should happen to die, God forbid -- I would do like was did in the movie, 'Weekend at Bernie's.' I'd prop him up and put a pair of dark glasses on him and keep him as long as we could.
  • "The Fed, in effect, has become a serial bubble blower." —Stephen Roach, 2004 [10]
  • [He is] one of the biggest political hacks we have in Washington.
  • If you look at the speeches he gave just before he left the Fed, it's pretty much “After me - the Deluge. I'm getting out while my reputation's intact”.

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