It was nearly two decades as the most powerful policymakers in the world at the top of the Fed -. And was the celebrated Maestro markets , But the 2008 financial crisis battered even Alan Greenspan’s reputation.
The genius, seemed to obey the economy and inflation, was the scapegoat. Greenspan’s name is on his 90th birthday this Sunday especially for a negligent low interest rate policy, which paved a devastating crash the ground.
“The greatest central banker in history”
“The greatest central banker in history, “it said in praise of politicians even when the US Greenspan convened the millennium for another four years at the head of the Federal reserve (Fed). The then reigning for 13 years Fed chief was in the world of money as a measure of all things, enjoyed cult status in the financial markets and had the backing of both Republicans as well as Democrats.
Here, Greenspan was previously in big shoes kicked. He had the job from the legendary Paul Volcker adopted, had managed to rein in galloping inflation with a daring high interest rate policy. But Greenspan, who grew up in New York’s Washington Heights son of a stockbroker and financial analysts,
The gaunt economist was even surprising to superstar among money politicians.
“Black Monday” with great glasses, which had in 1977 a doctorate from New York University, just seemed to do everything right. 1987 directly after taking office, he mastered in a kind of first acid test as the “Black Monday” received in the financial history Exchange quake. The Fed opened the floodgates to counter the panic of investors with massive liquidity. Seemed
The Method. They should be a hallmark of central bankers. Born was the promise that was henceforth referred to in the trading rooms of financial professionals as “Greenspan Put”: When it gets tough, you can rely on the Fed. Of the unpleasant risks and side effects of low interest rates and cheap money was not yet so much to hear
Greenspan magic hand
Greenspan success continued -. Under its monetary policy management put the US- one of the longest economic heydays back in its history. In early 2000 there was the “Economist” eerie: The renowned business magazine described the central bankers as “Almighty” of the financial world. “Investors rely so much on Greenspan’s magic hand that they bid up the shares in the assumption that he will save even if it goes wrong.”
It took another seven years until it right hits. First, Greenspan was more celebrated for its presumed foresight as an oracle. As the terrorist attack on the twin towers of the World Trade Center on 11 September 2001, the stock markets could tumble again, Greenspan attacked once again the proven panacea – and lowered interest rates determined. It worked. But when the money tap open for too long, it can cause damage to crops
pioneer of speculative bubbles
Today it is considered to be largely uncontroversial. The flood of money from the Greenspan-dropper was a pioneer of speculative bubbles, which led to the collapse of the housing market and the economic collapse of 2007. The worst economic crisis of the postwar period but no longer fell into Greenspan’s tenure. He went in 2006 to retire – the cleanup took his successor, Ben Bernanke. Partly also the current Fed chief Janet Yellen is still busy
Error not admits Greenspan, however a -. He finally repeatedly warned against exaggeration of the housing and credit markets. With this assessment, but it is pretty much alone. The refusal to grant the blame for the crisis, Greenspan brought harsh criticism from peers such as the Nobel laureate economist Paul Krugman a “He still has not the integrity, to take responsibility for his own actions.”
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