Alan Greenspan: Economist extraordinaire or hen-pecked husband?

By Rajneesh Narula

(another in my occasional essay series)

 

We live in an information society, and we are bombarded with more knowledge everyday. Although I firmly believe no knowledge is wasted, the pressures of existence requires one to waste considerable time separating the immediately useful from the possibly useless.  This, in my opinion is the reason why we have education: To acquire the capacity to extract the knowledge from all the background noise.

             information used to be hard to acquire, and technology has liberated us from the intellectual class system, the haves and the have-nots, if you know how to find it (and you have a decent internet connection). Any fool can see the employment trends in the Netherlands or Mozambique, at almost the same time as this information is available to their Central Banks.

Society therefore attaches great importance to electronically generated information. I think I am typical of your average individual. I watch all manner of TV programmes, read various internet sites with news content. I take particular interest in economics and business news, for obvious reasons. I think I qualify for the title of Well Informed Citizen.  But I am not exceptional in this. Large swathes of society are engaged in electronic information retrieval, and we should therefore be similarly informed.

However, I am forced to suspect that there is one place on the planet which is devoid of either the intelligence to decipher the information, or how to get it: Wall Street.. It is true that these Armani-wearing, martini-drinking breed have survived centuries in various guises, but it seems that they have done so in an information-free environment. Their extinction is imminent. 

Consider the evidence. Over the last 2 months, seemingly out of nowhere, there is talk of a global slowdown, a recession in the US, the implications for the rest of the world, etc. All this in contrast to a year ago, where all was peachy with the world, when Amazon was valued more than the Kingdom of Norway, and God was pitching for the NY Yankees.

In both cases the news was confirmed by the Great Greenspan, Godfather of the world economy, seer, psychic oracle, and economist, known in some circles as ‘The Great G’. At his slightest uttering, stock markets go into nosedives, or shoot up, Stockbrokers jump out of windows, women go into paroxysms of ecstasy at the briefest glimpse of his horn-rimmed glasses (this I admit is based on a rather small sample of one), and generally all hell breaks loose. 

So it has come to pass now that The Great G. has thrown his proverbial towel in, reversing his earlier optimism by saying, friends, time to tighten your buckles, growth may actually be negative. He may actually have used the dreaded ‘R’ word, I cannot recall exactly.

In both instances, stock markets tumbled, and a collection of Wise Men from Wall Street appeared on TV shows insisting they knew this all along, and it All Makes Sense, they’d seen the trend coming for some while now. But I ask myself, why did the stock markets wait to tumble so coincidentally and so immediately after Mr G appeared on TV, if they knew all along? The Great G’s pronouncement was clearly not a surprise, so there was no reason for the market to react as if were so. The associated figures are available to every living creature on the planet. And as we all know, there are more economists than fruit flies, all theoretically embodied with the knowledge to draw the same conclusion as the Great G., viz., the economy is slowing down. Why did not these wise men not speak sooner? Could it be that they had no clue, and that wall-street is a sort of informational black hole, which sucks in all knowledge, but none gets out?  Could all those perfectly manicured analysts be in the business of bluffing?

There are two other possible explanations here, both plausible. The first suggests that economists are as ignorant as dung beetles and other invertebrates in predicting economic crises. It’s the rain dance effect – the village chief invites a rain dancer because everyone becomes happier. The villagers get to see a first class show, and are diverted from their troubles. The rain dancer gets paid, so he’s happy, and the village chief is delighted because he can blame the rain dancer if there still isn’t any rain. The big G is our rain dancer, our global witch doctor.

The second explanation is that the Great G has a sixth sense tuned so finely to the economy in a way that no ordinary human can possess or hope to equal. His powers of deduction and analysis are a divine gift. This, at any rate, is the view of the US Senate. When his job came up a couple of years ago for renewal, the committee unanimously approved him, saying that (and this is absolutely true) even if Mr Greenspan were to keel over and die, they’d prop him up and nominate him for another term. The US Senate is full of pretty well-informed chaps. They have the CIA to check up on details, so one should assume they know something more about the Great G than the rest of us. The right Honourable Kerry, who uttered these words, in particular, is as honest as they come. So what he’s saying is a dead-as-a-door-nail Alan Greenspan is almost as good as a live Alan Greenspan. I say ‘almost as good’ because there has to be some small benefit from his being able to speak in public, otherwise the US senate would have saved itself the $200,000 a year or so in salary and perks by getting the Secret Service to send him to that Great Central Bank in the Sky, and embalm his body, wheeling him in for appropriate meetings.

What other reason does he need to be alive to be of use, my razor-sharp mind asks? Because people believe him. He takes the same data as every other economist (not an endangered species, alas) and draws conclusions that are opposite of wall street (despite what the brilliant analysts on CNN say to the contrary. Why else would shares tumble?). What additional information does he have?

One remote possibility is the x-files explanation: He is not One of Us, but from another world. He can sense things better because people from Alpha Centauri have a special gene tuned to the price of crude oil and the state of consumer confidence. 

But my very being rejects this explanation. I hear myself say, No, no, a thousand times no! people from Alpha Centauri are an evolved species. They are rarely follically challenged, and have more dress sense (have you seen his suits?). Besides he wouldn’t know Zaphod Beeblebrox if he sat on him. Ergo, our man cannot be an alien.

I see the culprit, clear as day. The Great G in fact has no unusual powers. He is exploiting the utter stupidity of economists and Wall Street, and the gullibility of the American people, all in the name of love. Love, I hear you exclaim? Yes, folks, its Mrs Greenspan. Yes, that’s right. The ‘little woman’ so easily ignored, is the real power behind his abilities. I mean, have you seen the prices at Macy’s? Picture this. Shopping all day. Frustrated with the low salary hubby is pulling despite being the Emperor of the Economy (does that make her the Empress?). Come home, nag, nag, nag, bitch, bitch, bitch, cant afford to put our grand children through state college for godsake, look what I’ve had to put up with, Alan,, the sacrifice for 40 years. Besides, I so wanted to buy that cute little hat, but prices are so high, but everybody’s shopping.

The Great G has had enough. He sees his future, clear as day. Lumpy mash potatoes, blackened steaks, curfew at 9. He doesn’t want to run away with any of the blonde bimbos pursuing him, sex god that he is. He loves her, goddammit, orthopaedic shoes and all!

How can he possibly expect to get a little tender lovin’ from a woman who’s upset by prices, and is sulking that Hillary’s wardrobe is way cooler. The answer suddenly appears to him as an epiphany: Declare a recession!  So he comes up on TV and says, you know, perhaps, maybe, on the other hand, recession, prices up inflation down, expansion, contraction, maybe not, I don’t know, wait and see.  It was after all the Great G who once said, if my remarks seem clear and succinct, you must have misunderstood me (no I’m NOT making this up!). But the ‘R’ word has been uttered, its out there, from his lips to wall street’s ears!

People stop shopping because they’re suddenly afraid of losing their jobs in the slowdown, consumer confidence slips, and suddenly malls have going-out-of-business sales, and Mrs G is happy as a hyena in an English abattoir after a little foot-and-mouth disease.

It seems clear to me that the term ‘well-informed wall street analyst’ is an oxy-moron. They’re all making it up as they go along. Economics is the only profession with such strong diametrically opposed dogmatic beliefs that they might be religions, none agreeing with the other.  It’s a case of the one-eyed leading the blind.

            Having so astutely having honed in on the cause of the recession, I am happy to recommend a remedy. The solution to a global crisis? First, increase Mr G’s salary, raising it whenever he mumbles recession, and decreasing when he says ‘overheating economy’. Perhaps pay this directly into Mrs G’s account. In other words, employ Mrs G as an agent provocateur, a counter cyclical to the economy.

As a more pro-active intervention exploit the ‘Pinar manoeuvre’. When my friend Pinar and her posse go shopping -recession or not – it  increases the GDP of a small nation by almost half a percentage point. Can we not release a number of ‘packs’ of highly trained, professional and talented shopping professionals (sort of like a commando raid, only more precise, and much, much more loud. Stealth has no place when wardrobes are at stake), making lightening raids on shopping malls everywhere, unleashing a fury of acquisitions, and disappearing just as suddenly? Picking of course only purchases that have high domestic value added to maximise effect on GDP. This stimulates the local economy, and suddenly persuades people (aka other women) that there ISN’T a recession after all.  Fashions suddenly change, because the commando’s (fashion goddesses all) appear at social events wearing these purchases. They set new standards, new fashions, demand rises. Particular sector over-heating? Send in the shopping commando’s who scorn in public the appropriate products. Pooh-pooh the style, denigrate the quality. With a little fine tuning this would work for other sectors other than fashion. Cost to society for the programme: amazingly low. I suspect there will be long queues of women offering to do this sort of work for free.

 

I await my Prize from the Nobel Committee.

Budapest 010307