I am very much enjoying the Sebastian Mallaby biography of Alan Greenspan

by on September 29, 2016 at 2:39 am in Books, Economics, History | Permalink

Here are two notable excerpts:

The windows were usually clamped shut and the blinds were often drawn; one of Rand’s cats had jumped to an untimely death, condemning visitors thereafter to endure the stuffy air in her apartment.

Are cats that stupid?  (Did not Aristotle describe the cat as the rational animal?)  And:

…the fact that Greenspan was following the ways of Washington was precisely the point.  Half a year into his tenure, Greenspan had completed his journey from Ayn Rand’s outsider salon to the inner circle of power; he might still condemn the status quo from time to time, but in truth he was now part of it.  In voting against Greenspan’s confirmation, Senator Proxmire had misjudged the man.  Ideas were not what drove him after all; his courteous, clubbable, and nonconfrontational manner proved to be a better predictor of his conduct in office than his libertarian ideology.  However disarmingly Greenspan might portray himself as a sideman, he was only human, after all.  He wanted to be at the center.

I’m on p.194, more reports to follow.  You can buy the book here, it is one of the best of the year even from just the first 193 pp.

1 Ray Lopez September 29, 2016 at 2:44 am

Awesome, but what would spoil the book for me is knowing money is largely neutral, and the Fed follows the market. So Greenspan is hardly in control of anything.

2 Corporal Obvious September 29, 2016 at 2:50 am

No, cats are not that stupid. It knew exactly what it was doing.

3 Edm September 29, 2016 at 5:38 am


4 DJF September 29, 2016 at 6:48 am

I might think about jumping from a window if I had to listen to Rand everyday

5 Ricardo September 29, 2016 at 8:25 am

It is not uncommon….

6 charlies September 29, 2016 at 10:29 am

Cats can also generally survive falls from shockingly high up, often without injuries. They even have a way of flipping over mid-air if they begin the drop upside down.

The cat’s decision to flee via Rand’s window apparently turned out poorly, but would have likely passed a rigorous CBA before the fact.

7 Meets September 29, 2016 at 3:28 pm

A friend of mine’s dog jumped out the window.

It happens

8 Steve Sailer September 29, 2016 at 4:04 am

I looked up in his memoirs what explanation Greenspan offered about his long involvement in the Ayn Rand Cult. He said that he was attracted to it in part because as a math and science nerd he wasn’t very cultured and Rand knew far more about the arts and philosophy than anybody he had met before.

I found that disarming, although the more I think about it, the less sense it makes. It would be a good explanation if he had been 14 when he was active in the cult, but he got involved in his 20s and signed a group letter in a notorious Randian purge when he was in his early 40s (I believe).

It’s a curious story and I’d like to know more about it.

9 Art Deco September 29, 2016 at 11:52 am

It’s not all that curious. Rand was captivating to a certain sort. Greenspan’s also notable for a disinclination to build an ordinary domestic life. His 1st marriage was annulled after 1 year, he had no children, and when he eventually did marry, he was 72 years old and cadged a childless woman 20-odd years his junior who had lived alone for all but a few years of her adult life. What would be interesting to discover is whether Greenspan was attracted to Objectivism because of some basic inclinations or whether he was ordering his life according to Objectivist principles.

10 Art Deco September 29, 2016 at 11:59 am

Whittaker Chambers offered in a review of one of her works that he’s wager she would not know what to do with a kid. Ayn Rand and her husband, the Brandens, Harry Binswanger and his wife, Greenspan, and Leonard Peikoff and his wife. I think they had 1 child between them.

11 msgkings September 29, 2016 at 12:33 pm

Your childless self would have fit right in.

12 londenio September 29, 2016 at 6:14 am

“he wasn’t very cultured and Rand knew far more about the arts and philosophy than anybody he had met before”,

perhaps one of the main factors explaining Rand’s popularity in general.

13 prior_test2 September 29, 2016 at 6:16 am

It must be comforting to see that insiders are become people of little principle.

14 Ted Craig September 29, 2016 at 7:14 am

“Are cats that stupid?”

Cats and dogs fall from/jump out of windows with some regularity.

From Catster: “This happens to so many cats that vets even have a name for it: high-rise syndrome.”

From Dogster: “Summer is canine window jumping season. Windows are more likely to be open when it’s warm. Canine self-defenestration reaches its peak on July 4, when fireworks drive many dogs to such levels of terror that they not only jump out of open windows, but are known to even smash through closed ones.”

15 rayward September 29, 2016 at 8:29 am

“The windows were usually clamped shut and the blinds were often drawn. . . .” As were the minds of the occupants. Greenspan may have escaped but not by leaping to his death. Why are we drawn to cults and cult leaders? Most likely because simple explanations are easier to understand than complex ones. Why are we drawn to alternate history? Most likely because we either fail to understand reality or don’t want to. It is often stated that the winners write history, while the losers rewrite history. We’ve certainly had an abundance of rewrites over these past seven or eight years. Would Fed chair Greenspan have responded differently to the financial crisis and, if so, would we be better off or worse off? Of course, the answer is unknowable, unless one clamps the windows shut and draws the blinds.

16 CorvusB September 29, 2016 at 12:17 pm

“Ayn Rand Cult”?
“‘The windows were usually clamped shut and the blinds were often drawn. . . .’ As were the minds of the occupants.” . . .

I don’t think I’ve ever come here and found so many comments that I agree with.


17 carlolspln September 29, 2016 at 9:51 am

What’s the attraction?

The guy drove the world economy off a cliff, and you pant after his hagiography like some dull lagomorph?

Its people like you that make economics into an increasingly dull, brackish backwater.

18 Art Deco September 29, 2016 at 11:45 am

The guy drove the world economy off a cliff,

He did nothing of the kind, but it’s useful for a certain sort to pretend he did.

19 CorvusB September 29, 2016 at 12:14 pm

Well, actually, under the aegis of Bush 2, he did. But that was after he had driven the economy to stellar heights of prosperity and well-being under the aegis of Clinton.

So which one was the real Greenspan?

And I do have to add that he wasn’t really doing all the driving. We typically give the President the honor of the title of driver, but you could say Greenspan was certainly on the navigating committee.

20 msgkings September 29, 2016 at 12:36 pm

And in reality both aren’t very relevant. The Fed chair is more so than the president, but neither matters a whole lot to the business cycle and demographics.

21 Art Deco September 29, 2016 at 4:31 pm

I assume he’s peddling Steve Hanke’s Austrian claim that the Fed generated the housing bubble with ‘their disastrous policy of inflation targeting’ and we need a currency board now. (That the Federal Funds rate was abnormally low only from the fall of 2002 to the fall of 2004 while annual increases in housing prices exceeded annual increases in nominal personal income from 1997 to 2006 does not faze them).

Greenspan did not induce Joseph Cassano & co. to write $400 bn worth of credit default swaps on mortgage backed securities derived from pools about which they knew nothing. Greenspan did not insist Freddie Mac slash its underwriting standards in 2003. Greenspan didn’t approve Kerry Killinger’s mergers while nixing others. Greenspan did not sweet talk Angelo Mozilo and Kerry Killinger into the idea that subprime borrowers were an underserved market (IIRC, 46% of Countrywide’s portfolio eventually went sour). Greenspan wasn’t at the Comptroller of the Currency’s office running interference for shizzy banks contra state inspectors. Greenspan wasn’t loading up Citigroup and Lehman and Bear, Stearns with toxic assets. I’m not sure Greenspan was implicated in the push to torpedo Brooksley Born’s efforts to flush out the market in over-the-counter derivatives (IIRC, Messers. Rubin, Levitt, and Summers were behind that caper, about which Levitt has been contrite).

22 Heorogar September 29, 2016 at 4:16 pm

If Albert Greenspan is in some fashion guilty for the 2008 debacle, he didn’t do it alone. He/the Fed had huge assists from FHA, HUD, FNMA (largest Washington lobbying money, unduly increased lending limits, weakened underwriting standards, 50% of purchases needed to be low-to-moderate income loans, etc.) , FHLMC, FHLB’s, OCC, OTS, FDIC, CRA, HMDA, Congress, Clinton (regulated institutions became regulators’ stakeholders), Cuomo (see FHA and FNMA actions during C’s chairmanship), Obama (see Citibank CRA/Fair Lending lawsuit and terms of settlement), et al.

However, the 2000 to 2006 housing bubble wasn’t the first national financial fiasco he missed. As consultant/lobbyist/hired gun, Greenspan (see Congressional hearing testimony) helped inflate the costs to tax payers of the S&L Crisis. In his defense, likely he could not have foreseen how S&L managements and regulators would resort to over extend on new lending powers, and pursue gargantuan accounting and financial insanities. Such craziness resulted in far worse unsafe and unsound credit conditions and gigantic over-leverage positions which when added to the S&L’s negative interest margins and operating losses eventually collapsed the S&L industry.

23 Art Deco September 29, 2016 at 4:37 pm

It’s Alan Greenspan. IIRC, he offered congressional testimony endorsing a move by S & Ls into commercial real estate, a business in which they then lost their shirts. Commercial banks ca. 1991 also had large portfolios of delinquent commercial real estate loans.

24 Hadur September 29, 2016 at 10:18 am

Did they really use the word “clubbable”

25 Ethan Bernard September 29, 2016 at 10:20 am

Cats will sometimes leap for a bird or a bug from extremely high places. One suspects nearsightedness.

Children are also “that dumb.”

26 BC September 29, 2016 at 11:00 am

The job of the Fed is to ensure nominal (monetary) stability. Greenspan’s tenure is most identified with the Great Moderation, a period of unusually high nominal stability. After he left, NGDP collapsed under his successors’ watch. One might have thought that his successors’ difficulties would have elevated Greenspan’s status but, instead, it has had the opposite effect. Even more strangely, his detractors blame him for keeping interest rates too low for too long even though the subsequent problem has been too little NGDP growth not too much inflation.

27 Art Deco September 29, 2016 at 11:43 am

Why didn’t she move into a building which had screens on its windows?

28 Edm September 29, 2016 at 12:33 pm

I am very much amused being by Tyler’s new Yoda style diction.

29 Private Obvious September 29, 2016 at 8:05 pm

I’m afraid I have been demoted again because cats can be that stupid. Or rather, that unskilled and unaware. Cats that are used to hunting outdoors at great heights can make a mistake and fall to their death. Hunting rodents and birds is a dangerous job.

Cats that are indoors from the time they are kittens don’t have the necessary experience to know what they are doing and can get killed that way. That high rise apartment is their world and they learn that at the distance from floor to ceiling gravity is at worst a mild inconvenience for them and leaps of faith are never fatal. The open apartment window is a freaking stargate to them. They get curious, or simply aren’t cautious, and it kills them. Instead of a benevolent chain smoking ape on the other side, there is just the uncaring physics of a 120 foot drop.

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