Monday, May 15, 2006

Greenspan's Shame?

I was snowed-in, high in the Arlberg so I missed this gossip in Mark Thoma's Blog "Economist Voice" that Alan Greenspan, not more than two weeks retired as Chair of the FRB, was giving a private briefing for a few of Lehamn Bros privileged few. Fortunately, this subject was raised to my attention last night and I must admit to being rather astonished. More worryingly, I must admit to agreeing with Bloomberg's feisty conservative, columnist, Caroline Baum. Yes, I think that there is something wrong with the former Chairman of the Federal Reserve Board giving a private chat to the 10 or so largest gun-slinging hedge fund managers, including Moore Capital's Louis Bacon and Tudor's enigmatic namesake, Paul Tudor Jones.

First let me say, I have nothing against hedge fund managers, per se, since I AM one myself. And I must quickly dismiss the notion that I might be jealous, since I neither trade nor speculate in bonds or currencies. So what is it that Mr Greenspan has done by trying to earn a few honest quid that so gets my proverbial goat? After all, supporters of Mr Greenspan (as well as the priviliged few attending the private speaking engagement) will quickly point that no laws were broken (to which I argue not). And unlike other critics of his private briefing with the kings of hedgefundland, I do not think it is even against the spirit of the regulations and directives governing what he may or may not do.

But yet, a horrid taste remains in my mouth, for reasons not mentioned by Ms. Baum or by Dr Thoma & friends in the "Economists Voice" post. Dr. Greenspan should NOT have given a private briefing simply because he should not allow it to appear that markets are "rigged", "unfair", or "undemocratic", by holding private court with the wealthiest and most powerful investors in America, and possibly the world. This is a very unhealthy thing for a market economy predicated as it is by attempts to insure fair and uniform public disclosure of information. This directly relates to confidence of the people in the integrity of markets and money itself, and former government officials should have an obligation not to jeopardize THIS spirit in any way shape or form. They must be beyond reproach.

It is even more offending that Dr Greenspan has - whether intentionally or unintentionally - raised the spectre of unfairness in financial markets for the paltry sum of $250,000. I appreciate that this amount is greater than Dr Greenspan's ANNUAL salary as Chair of the FRB, but in relation to the worth and value of even insigfnificant mutterings in private, this amount is laughably small. This amount, split between the wealthy and powerful hedge-titans is a rounding error on a morning's interest. This is not meant to imply Dr Greenspan should sell private potentially valuable information to the highest bidder, but it is meant to put into perspective that *IF* he were to do it, the price should be much much higher.

I have no problem with Dr Greenspan speaking to capitalize upon his hard-earned notoriety after years of public service at an admittedly lower-than-market-value wage. But this should be honorary keynote stuff; graduation-day speeches, motivational lectures; academic philosophical discussion groups; or in the least televised, media-fed, OPEN lectures with open and transparent Q&A's for everyone's consumption. We don;t own Dr Greenspan, or his still lucid and keen mind, but he (and other public servants) with information that could remotely be construed as priviliged have a public repsonsibility to insure that the decorum of fairness and equal access to market information is upheld. This private "briefing" for a privileged few movers and shakers miserably failed THAT smell-test.

1 comment:

pi said...

Of all people, you should know AG as disciple of Ayn Rand. So why am I not suprised AG thinking like an ant on an ant-hill waiting to be squashed by an elephant.