Feb 01 2012

Michael Hudson: The Man Who Once Fired Alan Greenspan

Posted by: Nick Shaxson in: Thoughts

This headline is from Naked Capitalism, in a piece describing how the respected but controversial U.S. economist Michael Hudson once fired Alan Greenspan, way back in 1966, 21 years before he became chairman of the U.S. Federal Reserve.

Hudson told me this exact same story himself; in fact you can read about it in Treasure Islands, where Hudson recalls the incident and said he remembered Greenspan as a ‘nasty little twit.’

Hudson explained a bunch of other interesting stuff, which I put in a chapter entitled ‘the Fall of America’ describing how the U.S. deliberately turned itself increasingly into a tax haven from about the 1970s. Anyway, the thrust of Hudson’s story here is that Greenspan:

“was known as a hack that always gave …his clients what they wanted instead of something actual.”

He was fired basically because he faked some numbers: instead of doing the real research, he saved himself a lot of time by extrapolating (wrongly) from something else.

Greenspan was a kind of libertarian policy-maker, and I guess that libertarian policy-making can be a form of intellectual laziness, a sort of ‘don’t bother trying to regulate or control anything much, the market will take care of itself, let’s go to lunch instead’ kind of attitude. (Update: we should call it “Lazy-Faire” – thanks to Brian on the comments underneath for that reminder)

And look how that all turned out.

6 comments so far

Bill Kruse 2st February, 2012 12.17 pm

You could argue though that if the markets had been left alone they would indeed have sorted themselves out, point is, they weren’t left alone. Banks which because of dishonesty and incompetence should have succumbed to market forces are kept alive by the intervention of law. In Greenspan’s original vision (and I assume this as I read it into reportingof the apocryphal chat he had with Brooksley Born on the subject) this wouldn’t have happened and the bad banks would have fallen, leaving the good banks to prosper. By coincidence, I write this on my way to lunch – make of that what you will 🙂

Brian Campbell 2st February, 2012 3.33 pm

Greenspan is just another Aryn Rand wannabe. He modeled his whole belief system after her “laze faire” B.S. This works if you are a castaway on your own island. They tried running Wall St. with this behavior along with their “exotic instruments”(derivatives, which are nothing but fake insurance policies), and then cover their ass with mark to model acct. rules ( second set of books). They found out that Wall St. returns are leveraged from six degrees of collective separation. No shock there. But wait, it’s the UNIONS fault! Us workers had pre tax dollars taken out of paychecks to be “invested”(laugh), on Wall St. thru pensions, IRA’s and 401K’s, forcing us to take them at face value and then driving our economy off the cliff from their phony instruments. And none of these clowns go to jail because both Bush and Obama keep the office of thrift closed that generates refferals to the Att. General for prosecution. More proof that ALL politicians regardless of party, are bought off by Goldman Sachs and J.P. Morgan and forced to run our economy thru their “colusion club” ( shaking head staring at office floor and sticking finger down throat).

Nick Shaxson 2st February, 2012 4.51 pm

Hah – laze faire – good one, will incorporate that in the article

paulette humanbeing 4th April, 2012 3.50 pm

I only care about myself. I don’t care about you at all. I don’t care if what i do hurts you in any way. I am better than you, more deserving than you, more important than you, and you’re lucky that I let you exist in my world at all.

paulette humanbeing 4th April, 2012 4.40 pm

Hi Nick,

In case any explanation is needed for my previous comment, i was channeling, pretending to be a sociopathic financial services industry professional.



[…] couple of months ago I wrote that the term laissez-faire might be replaced with the term ‘lazy-faire,’ explaining: […]

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