Thursday, May 22, 2008

Gross: Greenspan Made us Billions!!

Bloomberg reported yesterday that according to Bill Gross, AG's sagely advice "has made billions of dollars" for PIMCO's investors. Which begs the obvious question: what did he reveal as a private citizen and adviser to asset management companies that he couldn't reveal to the public, and the other branches of government during his tenure as Chairman of the FRB? Gross elaborated that
During a 30-minute discussion on banks several months before the global credit crisis, Greenspan's ``brilliance in terms of forecasting the potential for exactly what happened was a big money saver for us
Ummm. OK. IF we accept that AG is a brilliant forecaster of possible, but yet-to-emerge, crises, then why the fuck was he silent to Congress on rising budget deficits and role of the Bush Admin tax-give-aways that made it worse? Why did he mimic a blind, organ-grinding monkey when house prices were vaulting relative to incomes, productivity growth and GDP, and EVERYONE was removing equity from overvalued assets and further goosing prices by encouraging anyone and everyone to roll their 30yr fixed mortgages into ARMs?? Why did he hold his tongue on Bush admin neglect of energy policy - despite the sizable share of oil imports in the nation's trade deficit and the obvious fat-tailed negative impact this would have on all thinks financial should prices rise? Why if term funding mis-matches were an issue, or he was concerned about bank use of off-balance sheet vehicles for gaining additional leverage with greater fee income and their potential unraveling did he never mention the shadow banking system, or the need to scrutinise it or supervise it in a single phrase before congress? Are we to believe that Mr Greenspan, upon leaving his official role had an epiphany about the future outcome of his life-work as FRB chief that he was oblivious to when he was the Man With The Plan? I think the whole thing is implausible and STINKS, and lawmakers should consider the creation of an eponymous 'Greenspan Law' preventing senior civil servants from conducting and advising related business for reasonably longer periods than currently existing, to avoid the inherent conflicts his bond market sojourn has revealed.

1 comment:

Anonymous said...

Fly-on-the-wall reports the brilliant advice was: "Shave off the mustache!"