Review of GREENSPAN'S BUBBLES: THE AGE OF IGNORANCE AT THE FEDERAL RESERVE (Hardcover)

"The reason I wrote this book was so that the average person could understand the scope of the housing bubble, and what its bursting was going to mean and...where blame should be placed...at Greenspan's Fed, specifically," posits William Fleckenstein, who has keenly observed Mr. Greenspan's comments and actions in lucid daily commentary on the economic environment and investing practice for over a decade. By the end of Fleckenstein's crisp account, I craved that "The Maestro" had succeeded a fraction as well in HIS calling: Fleckenstein makes the story accessible to the average American, and his clarity stands in bold contrast with Greenspan's oft-obfuscating "Greenspeak."

Given the current state of the housing market, readers of 'Greenspan's Bubbles' might be prompted to ask whether Greenspan feels any culpability for luring unsuspecting homeowners into adjustable mortgage rates. Fleckenstein observes, "Greenspan was extolling the virtues of floating rate mortgages when interest rates were at the lowest they had been in over 50 years," suggesting that Greenspan ought to, even if he does not.

Certainly, today Greenspan expects Americans to believe he really didn't mean what he said when he endorsed ARMS. However, this book asserts that Greenspan blew serial bubbles in the stock market and real estate by keeping rates too low too long, thereby inviting reckless speculation.
Fleckenstein likens normal cycles of economic ups and downs to going to a party, imbibing in a few drinks, and feeling kind of shaky the next day. However, Greenspan's take on the economy was to entice Americans to throw down fifty metaphorical shots of tequila to keep the party going.

There's got to be a morning after, and 'Greenspan's Bubbles' helped me connect the dots between Greenspan's career at the Fed and the pain of duped Americans losing their homes, well-qualified hopeful homebuyers being shut out from credit, and the lowering status of the U.S. dollar- which has been the world's reserve currency for almost one-hundred years.

"Lucky" for him he squeaked through his tenure right before the tequila hit the fan.



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