Chris Skinner's blog

Shaping the future of finance

Alan Greenspan caused this crisis

Chris Skinner Author Avatar
by

Back in November 2007, when Alan Greenspan was running around promoting his book, the Age of Turbulence, his kudos was high and standing was great.  It was just a year after leaving office and subprime had hit, but folks thought it was just a $300 billion hole ... a mere drop in the ocean.

I heard him speak on the public stage back then, and he made many points all of which came back to : "it's not my fault".

Now the crisis is a lot bigger with trillions of dollars involved, and many blame Alan Greenspan for it.  For example:

  • 1987, Alan Greenspan assumed office and total outstanding US home mortgages was $1.82 trillion;
  • 1999, total outstanding mortgages in the US was $4.45 trillion;
  • 2004, US home mortgages rose to $7.56 trillion; and in
  • 2005, Greenspan's final full year as Fed chairman, home mortgage debt outstanding increased to $9.1 trillion.

In particular, Alan Greenspan was a fan of the free market system and loose self-regulation, as well as a staunch defender of the use of leverage and derivatives to fuel commerce.  He now recognises that there was a flaw in that approach, although some would say he could concede such a point when he has made millions out of the free market system personally. 

For example, after leaving office, three firms - Deutsche Bank, Hedge Fund Paulson & Co and bond investment company Pacific Investment Management (PIMCO) - hired Alan Greenspan as an adviser on economic issues and monetary policy.  Paulson & Co is known for its record $3.7 billion profit making out of the credit crisis, some of which must have flown the Greenspan way.

With Alan Greenspan's bubble burst, everyone now lays the blame at his feet.  This is clearly demonstrated by the media and online rants and raves, with the latest to prompt such outcry coming from two UK newspapers that ran a poll this week to find out who we all think is to blame for this crisis.  Alan Greenspan comes out #1 in both.

The Guardian gives him 31.9% of their public vote, George W. Bush gets 16.7% and Gordon Brown 14.1%.  Fourth place went to the American Public ... doh!

In a similar poll in the Times, Greenspan comes first with 31.2% and Gordon Brown comes second with 20.8%, whilst George W. gets 16.7%.

Equally, in a USA Poll by Institutional Investor, those who should know, 53% blame Greenspan, 28% Geroge W. Bush and, interestingly, 16% Bill Clinton.

What such polls serve to achieve I have no idea, but it does show that Mr. Greenspan might be advised to avoid walking down the street on his own at night for a while.

Chris Skinner Author Avatar

Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...

What is the future?

Learn more

Learn more about Chris

About Chris Skinner

The Past, Present And Future Of Banking, Finance And Technology

Fintech expert Chris Skinner: countries need digital transformation to remain competitive

Join me on Linkedin

Follow Me on X!

Hire Chris Skinner for dinners, workshops and more

Learn directly from from one of the most influential people in technology, gain insights from the world's most innovative companies, and build a global network.

Chris’s latest book

Chris Skinner’s ‘Digital For Good’ Book Launch Event – CFTE

Top 50 Global Thought Leaders and Influencers on FinTech 2023

Chris Skinner
Commentator, CEO of The Finanser and best-selling author at The Finanser

Thinkers360 Thought Leader

Contact Me

Global Awards

Lifetime Achievement Award

Global 100 - 2024 Winner

Chris Skinner - Financial Markets Advisor of the Year - The Finanser - UK 2023

Best Financial Markets Advisor of the Year 2023

30 Best Regtech Blogs and Websites 2023

Kids creating the future bank | TEDxAthens

Captain Cake and the Candy Crew

Captain Cake Winner of a Golden Mom’s Choice Award

TWO-TIME WINNER OF A MOM’S CHOICE GOLD AWARD!

Alex at the Financial Services

Gaping Void's Hugh MacLeod worked with the Finanser