Review of The Age of Turbulence: Adventures in a New World (Hardcover)

Greenspan calls "The Age of Turbulence" a "psychoanalysis of himself."It begins (first half) with his early life, describing the events that provided his learning experiences (including his desire to become a baseball player, then a jazz musician), and then goes to his life of implementing those lessons.

Undoubtedly the most interesting material included Greenspan's evaluations of the Presidents he had worked with. His observations were not the platitudes one might have expected."Nixon was very smart, paranoid," and was an equal-opportunity disparager of all ethnic groups. Ford was the most normal, and sometimes looked past politics to focus on the ethics of an issue.Reagan's ability to spout seemingless endless one-liners and stories was an "odd form of intelligence," according to Greenspan.Greenspan felt his relationship with Bush I was a disaster, with the President eventually blaming Greenspan for his losing the election to Clinton.Clinton, however, was most like a soul-mate to Greenspan - very intelligent, and one constantly working to soak up knowledge and understanding.Greenspan also labeled Clinton's '93 economic plan that focused on reducing the deficit as an "act of political courage."Finally, Greenspan's assessment of Bush II was that he was incurious about the effects of his own economic policy, and that Greenspan's biggest frustration with Bush II was his failure to veto any spending bills.

Greenspan was told that Bush thought he could better control Speaker Hastert and Whip Delay by signing the spending bills; they, however, were never reticent to spend more money to help assure more Republican congressmen.Greenspan also added that he disagreed with Bush II's supply-side economic thinking, and that his endorsement of "A" tax cut during 2001 was just that - not an endorsement of Bush's plan.Another problem was that the plan had no adjustment mechanism in the event assumptions did not pan out and the deficit began to rear up again.

On the other hand, Greenspan does not tell the whole story.According to Paul Krugman (New York Times, 9/17/07), he could have clarified himself a few weeks later when he appeared before a Senate committee on the same topic and evaded questions on whether the proposed tax cuts were too large.Two years later when more cuts were proposed, Greenspan did not object, and in 2004 he expressed support for making the Bush cuts permanent - accompanied by cuts in Social Security beneifts that he assured Congress in 2001 would not be threatened by the cuts.

The most incendiary comment in the book was clearly Greenspan's conclusion that the Iraq War II was all about oil.However, Greenspan is now "clarifying" his statement to Greenspan having told the White House that removing Saddam was "essential" to secure world oil supplies, and now stating (Washington Post interview, 9/17/07) that securing global oil supplies was "not the administration's motive."

Greenspan was initially elated when Bush II won, and brought in his old friends Cheney and Rumsfeld.However, he noted that "they changed," and that he did not agree with Cheney's "deficit's don't matter." There also seemed to be little value placed on rigorous economic policy debate or weighing long-term policy consequences - policy-making was firmly in the hands of White House staff (Rove, et al).A result was that Bush II's first two Treasury Secretaries (O-Neill, Snow) were essentially powerless.Summarizing, Greenspan saw the Republicans in '04 as having swapped principle for power, ending up with neither, and deserving to lose in '06.The "good news" was that they did not try to interfere with monetary policy.

Greenspan has come under increasing criticism himself for the current housing collapse and preceding bubble.His defense, in "The Age of Turbulence," was that the risk of broadening home ownership was worth the risk, that he didn't realize shady practices had grown so prevalent, and had tried raising mortgage rates in '04 and '05 by hiking rates on ten-year Federal notes (no impact).

Finally, looking to the future, Greenspan sees a need to raise taxes on energy to encourage conservation, and a risk of increased inflation - already prices are rising in China.As for ethanol, even if all U.S. corn was converted to ethanol, it would only provide less than 20% of our current oil usage.

An interesting and timely book!



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