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| Greenspan's Bubbles: The Age of Ignorance at the Federal Reserve | 
 enlarge | Authors: William Fleckenstein, Fred Sheehan
Publisher: McGraw-Hill
Category: Book
List Price: $21.95
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Avg. Customer Rating:  (39 reviews)
Sales Rank: 8958
Languages: English (Original Language), English (Unknown), English (Published)
Media: Hardcover
Edition: 1
Number Of Items: 1
Pages: 208
Shipping Weight (lbs): 0.9
Dimensions (in): 8 x 5.3 x 0.9
ISBN: 0071591583
Dewey Decimal Number: 332.11092
EAN: 9780071591584
ASIN: 0071591583
Publication Date: January 16, 2008
Availability: Usually ships in 1-2 business days
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| Customer Reviews:
 Awesome April 13, 2008
1 out of 1 found this review helpful
Simple and entertaining, a quick read. This book explains how Greenspan has been the architect of disaster over the last 20 or so years. The facts presented in this book highlight how badly served this county is by the news media. This book doesn't even discuss how Greenspan defrauded 99% of the nation when he "solved" the social security crisis in the the 1980's. That one didn't work either.
 Don't waste your time April 4, 2008
32 out of 57 found this review helpful
I fall on the side of tighter monetary policy and read this book hoping to find arguments and information to support that perspective. But this book is a waste of time for serious students of economics.
Fleckenstein would have you believe that 5% short-term rates were foundational for the 1999 runaway speculation on internet stocks. He offers no logical arguments whatsoever to support his assertion; and historical periods with similar rates didn't lead to similar speculation, so his conclusion that the Fed's policies largely drove this speculation is hardly obvious.
He also argues that the Fed should have done everything in it's power to squelch this speculation but offers no cost-benefit analysis whatsoever to justify the cost of what probably would have required substantially higher interest rates and margin requirements. Would the likely resulting slower economic growth, higher unemployment and lower home ownership have been worth the alleged, although unsubstantiated, benefit of less internet related financial speculation and attendant entrepreneurial risk taking? It seems hard to believe. But rest assured, this book provides no insights on this matter whatsoever.
The author takes a similar tact with the housing bubble, blaming it all on the Fed (even though it has clearly been a worldwide phenomena), without connecting any of the dots with economic logic. The case should be easier to make with the credit bubble than the internet bubble but easier still, I guess, to merely assert it.
If short-term rates alone govern the value of assets (Fleckenstein brings no other factors to bear) why didn't rate cuts from 6.5% to 1.75% between 2000 and 9/10/01 revive the stock market then (or the debt markets now)? Perhaps for the very conclusion Fleckenstein's partner reaches on page 123, "...it has become increasingly clear that he (Greenspan/the Fed) does not control the economy." Had Fleckenstein asserted that in the first sentence he could have sparred us all what amounts to little more than unsubstantiated ranting.
Yes, the author does present evidence of the obvious - there was speculation. But even if his thesis is true, he provides no evidence it was caused or largely caused by the Fed. And, he offers no evidence whether the Fed can or should squelch speculation with the brute force of monetary policy. Don't waste your time.
devastating March 20, 2008
12 out of 13 found this review helpful
Here are some impressions I had:
1). My experience in reading the book exactly matched that of the reviewer who said it was slow going in the early chapters and then excellent and engaging in the middle and late chapters. The early part came across to me as muddling through the early part of Greenspan's reign in what I found to be a somewhat disjointed manner. Also, it seemed to me the author did not make a compelling case showing gross ineptitude on the part of Greenspan during that period. Probably there is not too strong a case for that.
2). As the story entered the mid to latter stage of the tech bubble and subsequent housing bubble, it became thoroughly engaging and I was unable to put the book down. And in this material the author built an unassailable case that Greenspan's performed his job with virtually total incompetence. And, as the author amply substantiates, Greenspan adds insult to injury by promiscuously redefining himself and his past in order to immunize himself from responsibilty for the wreckage he has caused to the economy.
3). Judging from the other reviews, there is unanimous agreement as to Greenspan's incompetence. The one main controversy is to what extent the Fed Chairman is responsible for the bubbles and to what extent are other players (e.g. other regulatory agencies, investors, analysts, speculators, whatever) responsible. I would say on this matter that the author to some degree took it as self-evident that the Fed Chairman's actions were the primary causes of the bubbles. That is not unreasonable since it is widely accepted that the powers wielded by the Federal Reserve have a dominant influence on the macroeconomy. (certainly, that is the INTENT of those who created the Fed) However, it does seem that it is a legitimate matter for debate as to whether, for example, certain interest rate shifts during the tech bubble were as significant as Fleckenstein appears to believe.
4). A couple of interesting issues that were raised in the book are:
a). The adjustments made to Consumer Price Index formulas that are highly suspect. Fleckenstein indicates that three changes were made. One was to go from arithmetic to geometric compounding, which seems to me to be a correct change to have been made. The other two are questionable:
- Substitution
- Hedonics
I don't fully understand how those two are implemented but both do appear highly suspect.
b). Much of the basis for Greenspan's nonchalant attitude toward the tech bubble was his notion that it was justified by massive productivity growth created through the use of new technology. Fleckenstein provided persuasive evidence that that productivity growth was in fact bogus, based on faulty analysis.
I knew essentially nothing about the Fed back then, and so most of the events discussed in the book are ones I was not particularly tuned into at the time, but I do remember all the brouhaha about the massive productivity gains we were experiencing, and I guess it was Greenspan who was the one most vocally peddling that (apparently erroneous- as just about everything else he has ever said) message.
great job taking the rose colored glasses of the view of greenspan and his tenure March 10, 2008
9 out of 10 found this review helpful
Jim from NYC, Mr. Fleckenstein is not a reporter doing all this research after the horse has left the barn. Long time readers of his column have been elightened of the risks of Greenspans flawed policies for years. His weekly columns exposing what was going on and what was going to happen are amazingly accurate if you go back and look at his past columns. To say he is merely a reporter stating this after the fact when it is too late to help anyone is silly. I read his columns regularly and could not wait to read the next one to get some refreshing and original insight on a phenomemon when the rest of the media just regurgitated Greenspans comments and made him look like an infallible god. I sold my house near the peak of the bubble several years ago due to a relocation and have been renting ever since while waiting for the housing market to complete its fall. Fleckensteins articles about the Housing ATM were so dead on, I advise you to go back and research his old articles. A lot of this book was based on those articles. I applaud him for fighting against what was then an invincible tide. I just read his latest article and agree wholeheartedly, wait until the banks start enforcing the LTV (loan to value) on mortgages, it will affect all borrowers. I remember him arguing why the Fed did not enforce some of the tools at his disposal like increasing margin lending requirements during the stock bubble and doing something similar for banks or Fanny Mae during the height of the housing bubble. Anyways, good book, good articles, and great insight on this before it all collapsed.
sitting pretty March 3, 2008
3 out of 5 found this review helpful
I have been a reader of Mr. Fleckenstein's MSNBC column and a member of his blog for quite some time. A number of years ago I purchased gold, silver, and oil before it was fashionable at Mr. Fleckenstein's recommendation. (At the time some people questioned my sanity)
Thanks to him I am now sitting pretty. I'm laughing all the way to the brokerage firm.
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