The Finanser LogoThe Finanser Logo

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...

Best Financial Services Blogger

Chris’s latest book

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

Global Awards

Best CEO of the Year UK 2022

Best Digital Finance Provider of the Year UK 2022

Best Financial Markets Adviser of the Year UK 2022

Portal to the Knowledge Base of the Financial Services Club UK 2022

Financial Markets Advisor of the Year UK 2022

Corporate America Today Annual Awards

Best Financial Markets Adviser of the Year UK 2022

Portal to the Knowledge Base of the Financial Services Club UK 2022

Financial Markets Advisor of the Year UK 2022

Nominee of MAD33 2021

Kids creating the future bank | TEDxAthens

Join me on Linkedin

Follow Me on Twitter!

UK’s most influential person in technology

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!

TheNextWeb – #tnw

Learn more about Chris

About Chris Skinner

Digital Bank Presentation

Digital Bank, May 2014 from Chris Skinner

Alex at the Financial Services

Gaping Void's Hugh MacLeod worked with the Finanser