The Age of Turbulence

Alan Greenspan published The eld of Turbulence Adventures in a New World on September 17, 2007 and the first half(prenominal) of the work is an autobiographical chronology of his life. It gives readers a chance to view the muckle and circumstances that can help and guide Greenspan as he grew up.The second half of the account control states the major economic events that devour occurred over the past half century. He details his life under different U.S. Presidents as well as economic systems including the Marxist Communism, Populism, as well as Market Capitalism.According to Greenspan, free merchandise capitalism is the economic approach that leave alone trump other approaches. Based on Adam Smiths invisible hand which is the peoples motivational self- pertain which is important in his view of building a flourishing economy.In the book he discusses the fast historical growth of the U.S. economy under the market capitalism as well as its benefit to the other foreigners. Inte rspersed in the material is Greenspans lack of quality public secondary education for the masses especially in the field of sciences and mathematics and it map in the variant of rich and poor in the U.S.Greenspan hits hard as he criticizes President Bush, VP Cheney and Republican-controlled Congress for abandoning the traditional tenets of fiscal discipline. Included in his argument is the Presidents refusal to veto new Fed sequencel legislation which increases the spending easily. According to him, Bush approach has been one of conflict avoidance and attending to political agendas leaving no room for reason.It is President G geological erald Ford whom he praises above all the other presidents including former President Clinton calling his governance as characterized as a accordant disciplined focus on long-term economic growth. Even at the age of 81, Greenspan has strong opinions about several issues and is saddened that it is politically difficult to admit that in truth, the Ir aq war is mainly about oil. His comments about the war can be shocking as he reveals that there could be about 1.2 million people could have died because of this conflict in Iraq.According to a Washington Post columnist, people will most likely agree that Greenspans greatest contribution is that of the constitution shaper who, through the power of his office, the force of his intellect, and the cunning behind-the-scenes maneuvering, engineered the wholesale deregulation of the US banking and pecuniary system.With regard to legacy, his most important legacy is that of fashioning the US economy more prone to asset bubbles, corporate scandals and financial c repeals, but robust enough to absorb such shocks while proceed to riposte long-term economic growth (Pearlstein, 2006, p. D01).He was elected to third consecutive term in 1996. One of the highlights of this term is tell to be the crucial role he played during the financial crisis that hit Asia and Russia.With the world fin ancial system under threat, Greenspan is verbalise to have gone against the conventional wisdom of raising inte relief rates, and instead convinced his Fed colleagues to do the reverse and support him in pushing for three consecutive interest rate cuts. That unexpected move is said to have been instrumental in pumping capital flows into the world economy and averted a recession in the US and many parts of the world.Moreover, Greenspan is said to have collaborated with the and so secretary of the treasury Robert Rubin in inspiring cartel in the national economy, so much so that in 1998, unemployment levels were at 24-year lows, inflation levels were at 11-year lows, and consumer confidence was highest compared to the past 30 years.According to a Washington Post columnist, people will most likely agree that Greenspans greatest contribution is that of the policy letr who, through the power of his office, the force of his intellect, and the cunning behind-the-scenes maneuvering, eng ineered the wholesale deregulation of the US banking and financial system.With regard to legacy, his most important legacy is that of making the US economy more prone to asset bubbles, corporate scandals and financial crises, but robust enough to absorb such shocks while continuing to deliver long-term economic growth (Pearlstein, 2006, p. D01).Some manikins demonstrate the Greenspan standard in action. From 1994 to early 1995, for example, Greenspan was said to have launched a series of preemptive moves to tighten the monetary policy to ward off the threat of a trend towards rising inflation, in the form of increased interest rates. While the move to raise rates were said to have initially shocked the market, such moves were said to be a clear statement of the Feds seriousness to tame inflation.As a will to his flexibility, he then eased rates towards late 1995 when the economy showed signs of abrupt weakening, thus pumping money into the economy and avoiding a slowdown in economi c activities (Yu, n.d., p. 5).Another example of Greenspans prescience was in 1998, when the Fed introduced rate cuts in three consecutive months from September to November, amidst signs of an economic slowdown. Such moves are said to have influenced European central banks to make similar rate cuts to avert a greater slowdown in the economies of Europe.Virtually every intellectual sector in the United States and the rest of the world has heaped praise on the singularly successful steer of monetary policy by Alan Greenspan during his term as chairman of the US Federal mental reservation Board. Blinder and Reis, in a paper out of Princeton notes the followingNo one has yet credited Alan Greenspan with the fall of the Soviet Union or the rise of the Boston Red Sox, although both may come in time as the legend grows. But within the domain of monetary policy, Greenspan has been central to effective about everything that has transpired in the practical world since 1987and to some of th e major developments in the academic world as well (Blinder and Reis, 2005, p. 1).Indeed, the book examines his views on these issues. To wit, Greenspan presided over an era marked by the Black Friday stock market crash in 1987, the wars in Kuwait in 1990 and the Iraq war in 2000, a global financial crisis in 1997 and 1998, the biggest financial bubble in history, a productivity growth turnaound that started in 1995, and the threat of deflation in 2003 (Blinder and Reis, 2005, pp. 1-2), and successfully hurdled them all to the benefit of the US and world economies.On the other end, some quarters have also been critical of the tenure of Alan Greenspan. One quarter argues that Greenspan leaves the Fed with a legacy of debt that will have long-term adverse impacts on the US and world economies. Specifically, a study notes that such a legacy of debt by Greenspan has potential adverse consequences.Basically, the line of ratiocination is that foreign creditors could start to question how America will be able to pay future interest and dividend payments without resorting to printing dollars, and such could result on a run on the dollar. The run on the dollar can then lead to a rise in interest rates, which could hurt the housing market and cause mortgage defaults to rise. Such a rise in defaults could then cripple the banking system, making Federal rate cuts less effective in steering the economy.I think that on balance, those who have been heaping accolades on Mr. Greenspans performance at the helm of the Federal Reserve Board have reason to do so. The Greenspan era was one that was characterized by the singular success of the policies of Mr. Greenspan to steer the US economy to its current state of prosperity.Basically, my take on the Greenspan standard is that Mr. Greenspans policies are found on intelligent, period-by-period assessments of the state of the economy, and making adjustments to monetary as needed, discarding old assumptions that are not in tune to reality and keeping close tabs to what is actually misfortune moment by moment. The Greenspan standard seems just another way of saying that Mr. Greenspan kept a close watch of the economy and did everything at his disposal to make sure that monetary policy is cautiously and prudently managed.The criticism regarding Mr. Greenspans legacy as one of it being a legacy of debt is simplistic. The argument is predicated on the withdrawal of trust by creditors in the ability of the US to pay its debt obligations, and on the collapse of the housing market. It is simplistic because it fails to consider that the macro economy is unfree on factors other than housing.Also, it is simplistic because the argument does not take into consideration the probability of a debt default happening, which is the main event that detractors say will conjure off a series of cascading effects leading to the weakened ability of interest rates tweaking in controlling the economy.He mentions in the book that th e rate of scientific innovation is slowing down. He is pessimistic about the prospects that the United States is facing. He is able to predict that there are advances in the information technology and this will permanently increase the economys growth capacity. Greenspan was able to keep interest rates low so that the economy could reach its potential. Greenspan was vindicated because in the years after that, the productivity figures started rising consistently.By and large, Greenspans memoir is an interesting read that makes readers enlightened about his life in the context of the Sept. 11 bombing. He is a man who also influenced the nation as he traces his early roots, as well as his training as an economist and finally his logical argument as the Fed Chairman.His experience in the dotcom era manifests to him that the best way to control a speculative boom is to prevent it from developing from the very start. What makes the book an engaging material is the fact that he relied on the use of formal mathematical models together with a set of assumptions that can be identified with data. He stated his own predictions about the future and concluded that in the end, it is mans ability to transcend the sufferings and trials that ultimately matters in the end.REFERENCESBlinder, A.S and Reis, R. (2005). Understanding the Greenspan Standard. Princeton University. Retrieved April 6, 2008 at http//www.kc.frb.org/PUBLICAT/SYMPOS/2005/PDF/BlinderReis.paper.0914.pdfGreenspan, Alan. The Age of Turbulence Adventures in a New World. Allen Lane (17 Sep 2007) Pearstein, S. (2006). The Laissez-Fairest of them all. Washington Post. 20 January 2006. Retrieved April 6, 2008 at http//www.washingtonpost.com/wp-dyn/content/article/2006/01/19/AR2006011903180.htmlYu, H. (n.d.). Alan Greenspan. University of Florida. Retrieved April 6, 2008 at http//bear.cba.ufl.edu/demiroglu/fin4504fall2004/Articles/Greenspan.pdf