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ACCORDING TO LIZ - lan Greenspan died on June 22 at the age of 100.
As Shakespeare says, “I come to bury Caesar, not to praise him. The evil that men do lives after them.”
Our Caesar’s century was scarred with economic policies that were skewed by his personal vision, shaped by Ayn Rand’s uplifting of the most selfish.
Occidental College political professor and urban policy analyst Peter Dreier, called him a monster, the Henry Kissinger of economic policy.
In writing on his passing, Robert Reich who once was President Clinton’s Secretary of Labor, skewered Greenspan as the Darth Vader of the American economy, a force for evil who could not be persuaded that public investments in education, infrastructure, government-supported research and the social safety net were far more important to the American public than reducing the federal deficit or inflation.
And thus triggered the financial calamities of subsequent decades.
Greenspan’s influence extended far longer than 1987 to 2006, the years he headed the Federal Reserve. From his time as an aggressively rising Wall Street analyst, through the Black Monday stock market crash shortly after he took over as chair of the Fed, to the reeling recovery from the Great Recession, he was a malevolent eagle overseeing the destruction of the economic powerhouse that propelled the American economy from the Second World War through the rise of Reagan uber-conservatism.
His iron fist drove the drop in individual prosperity for middle- and working-class Americans, gutted opportunities for poorer people to improve their lot, and set the stage for the escalation of inequality that defines our age by gross deregulation of Wall Street and the banking industry.
And there is little question that the endemic racism in lending practices of the time, accepted with little question, magnified the impact on the marginalized communities of Los Angeles, Chicago, and elsewhere around the country.
The neighborhood blight created by the housing collapse was far worse for African-Americans and Hispanics because they were the primary victims of subprime loans and twice as likely as whites to lose their homes to foreclosures.
Which fueled the mortgage meltdown and implosion of the real estate markets and helped lay the ground for today’s affordable housing crisis.
Zealous lobbying by the banking industry seeking the vast profits that sober government regulations had denied them in the past led directly to the binges of mergers, speculation, and risky lending targeting less sophisticated investors. Under Greenspan’s watch, the Great Recession saw Americans lose $7 trillion in wealth, while more than five million families lost their homes.
Greenspan may have been an extremely charming, intelligent and thoughtful gent in person. But, early in life, he adopted as his holy grail the purging of the devil of inflation and the removal of all temptation for government profligacy and debt even if the consequences would be high unemployment, slow growth, stagnant wages, and drastic cuts in federal programs to help working people and the poor.
His single-minded obsession with maintaining high interest rates to keep the boogeyman of inflation at bay directly caused the 1990 recession, cost Bush the Elder his re-election… and gave Greenspan the leverage to intimidate Clinton into doing what was best, not for the country, but for Wall Street.
Greenspan persuaded Clinton and Congress to repeal the Glass-Steagall Act which, in the wake of the Depression, separated investment banking from commercial banking and prevented banks from gambling with people’s savings. He also opposed any regulation of derivatives – essentially financial bets on financial bets – that ended up as the weapons of mass financial destruction that took down Wall Street at the start of the twenty-first century.
Greenspan, along with other Clinton economic advisors, eviscerated the power of Brooksley Born of the Commodity Futures Trading Commission to regulate those derivatives as well as credit default swaps and other exotic financial investments she correctly called out as too risky.
As a committed capitalist, Greenspan placed the interests of the well-heeled who pushed paper and traded futures on Wall Street to make money in the market above those of ordinary people who physically worked for a living.
And who suffered from every turn of the Fed’s screws.
Can’t politicians and the media stop gushing over Greenspan’s accomplishments as if he had walked on water instead of falling through the ice?
He’s dead.
He was an ambitious Wall Street Republican, leveraging connections to gain appointments in the Nixon, Ford, Reagan, and Bush administrations.
He personally profited as part of the corporate ruling class before, during, and after his time at the Fed as a self-serving corporate director of many Fortune 500 companies including Alcoa, Automatic Data Processing, Brinks (pka the Pittston Company, a Pennsylvania coal giant), Capital Cities/ABC, General Foods, J.P. Morgan, and Mobil Oil.
Greenspan eventually admitted to a congressional committee: “I made a mistake in presuming that the self-interest of organizations, specifically banks and others, were such that they were best capable of protecting their own shareholders and their equity in the firms… I was shocked.”
Shocked? Shocked that the free market would succumb to greed, self-dealing, betting and fraud? Shocked that decades of deregulation of Wall Street would plunge the country and the world into crisis? Puh-leaze!
Early in his life, Greenspan absorbed Ayn Rand’s cockamamie belief that selfishness was the premier principle of modern man. And that misguided perception guided his economic decision-making on Wall Street, as President Gerald Ford’s chief economic advisor, and as head of the Fed.
This inspired his core conviction that government should not have any part in regulating business. He believed that corporations could police themselves without any government rules. He believed, erroneously in hindsight, in Rand’s faith that corporate self-interest and greed would shape responsible business behavior.
Historically, big corporations have not behaved responsibly unless forced into it by strict and enforced government regulation. With the removal of restrictions and expedited expansion of the banking sector under Greenspan’s libertarian theology, millions of Americans lost their homes, their jobs, and their businesses.
The Fed head’s conversion to reality came too late.
Although repeatedly warned that irrational subprime lending and predatory mortgage speculation would jeopardize the dream of home ownership and the wealth-building it promised Americans, Greenspan refused to implement recommendations for increased financial oversight.
Action was never his forte, “Our type of economy is far removed from where I would like to see it, but you have to be careful about moving from one type of society to another.”
Sadly, Greenspan was fodder for antisemitic conspiracy theorists including Hutton Gibson, extremist father of Hollywood star Mel Gibson, who placed Greenspan at the center of his fantasies of Jewish malign influence and once said Greenspan should be hanged.
One of Greenspan’s guiding principles in life was the Jewish value of l’dor v’dor, passing ethical mores forward from generation to generation. That decisions made today should not mortgage our children’s future.
Too bad he let his Ayn Randian admiration for selfish strongmen blind him.
Greenspan’s career demonstrated the danger of giving one person control of complex economic dynamics… and gave Trump the idea that, even without the dead Fed head’s decades steeped in economics, he too could efficaciously manipulate the markets by shaping monetary policy to his own benefit.
So, for now, the rich keep getting richer, leaving most Americans coughing in their dust.
(Liz Amsden is a former Angeleno now living in Vermont and a regular CityWatch contributor. She writes on issues she’s passionate about, including social justice, government accountability, and community empowerment. Liz brings a sharp, activist voice to her commentary and continues to engage with Los Angeles civic affairs from afar. She can be reached at [email protected].)
