Bob Woodward’s Maestro, a history of Alan Greenspan’s regime at the Fed through the turbulent 90’s, was written 10 full years ago, yet reading it today, it is startlingly familiar territory. All the issues, arguments, and solutions which we think are new to the financial market since the collapse were actually rehearsed – over and over again – during various Financial crises while Greenspan was the Fed’s Chair. It’s all there – bailouts, “too big to fail”, threats to the vulnerable global economy, taxpayer rescues – everything except any mention of derivatives.
From the morning in August 1987 when Greenspan chaired his first FOMC meeting (the Fed board’s actual name is, significantly, the Federal Open Market Committee) he seemed to be dealing with one crisis after another. When he took over the economy was in the dumper brought about by the first Bush; when he was finally replaced by Ben Bernanke 3 years ago, he left having watched over the second Bush while he flushed the vibrant Clinton economy down the toilet, an economy that Greenspan – according to himself as reported by Woodward, at least – did a great deal to help create. And in each of those instances – from the savings & loan crisis to the currency crises of Mexico, Asia, and Russia to the LTCM crisis – there was a single cause: exceedingly dangerous financial speculation, not by fly-by-night hucksters and shady traders but by the biggest financial instutions in the world.