Wednesday, May 30, 2012

Color Commentary

Frederick J. Sheehan is the author of Panderer to Power: The Untold Story of How Alan Greenspan Enriched Wall Street and Left a Legacy of Recession (McGraw-Hill, 2009) and "The Coming Collapse of the Municipal Bond Market" (, 2009)

            Encounters with a young Alan Greenspan have floated around the Internet lately. Why do they matter? Most importantly, because what is being said is how Greenspan was known in the 1960s. Before quoting Michael Hudson and Pierre Rinfret, a comment on why this matters today:

The following is rechoreographed from a talk by Frederick J. Sheehan to the Committee for Monetary Research and Education dinner at the Union League Club in New York on May 17, 2012:

"It is timely to talk about the consequences of Alan Greenspan tonight. Not so much the man as the degradation in our halls of leadership. At the top, he was, first - welcomed, then - venerated. He personifies many characteristics that befoul the United States today: cutting corners, shirking responsibility, deflecting blame, outwitting the legal system - in general, our lack of discipline, our lack of will.

"The unwillingness of leaders to address our perilous conditions - today - runs part-and-parcel with sanctifying an errand boy who deflected attention from America's social and economic corrosion. Greenspan wormed his way to the top - but then, so did our current political, academic, and celebrity leaders who have done so well for themselves specifically because first - Greenspan, and now - Ben S. Bernanke, have furloughed leaders from responsibility."

Back to the past: Michael Hudson, Distinguished Research Professor of Economics at the University of Missouri, Kansas City, quoted on

"When I was on Wall Street, Greenspan was hired as part of a study I was doing on the balance of payments of the Oil Industry. And one day my boss, John Deaver came into my office and said he really worried about Greenspan being a part of this report because he was known as a hack that always gave ...his clients what they wanted instead of something actual. [From Panderer to Power, p.4: "[Martin] Mayer would later discuss Greenspan's technique at greater length: 'the book on [Greenspan] in that capacity was you could order the opinion you needed'." -FJS]

"So he [John Deaver] gave me Greenspan's figures on depreciation of oil producing refinery assets in Europe and asked me to find out where the faking is. He said he couldn't believe that Greenspan by himself wouldn't have just faked the figures and it took me about a week to figure out where the faking of the figures came out (from) and that was Greenspan had simply picked up depreciation rates relative to output for the United States and projected them onto Europe.

So I went over and talked to his assistant Lucille Woo and she said 'it's all implicit, all implicit' and I confronted her with it and she said 'Yes that's what we did'!

And so, Greenspan was indeed 'talked off the study' and we met... John Deaver, David Rockefeller and myself and I was told...Greenspan was such a little bastard that if they fired him, he'd hold a grudge against Chase Manhattan for years and they told me to be the guy to give him the news that we couldn't use his (laughs) statistics on it and I was a 25-year-old economist at the time and he hardly new me at all, so I was the guy that...subsequently became known as 'the man who fired Alan Greenspan'."

Recollection #2: Pierre Rinfret (1924-2006) was a New York economist and unelectable politician. He was outspoken and was quoted on page 102 of
Panderer to Power. Following is a longer version of the same. Longer still can be read on Jesse's Café Américain, May 10, 2012 "Pierre Rinfret and Michael Hudson: The Myth of Alan Greenspan.":


"I first met Alan Greenspan in 1948 when we both attended the New York University School of Commerce, Accounts and Finance. At that time I was the senior fellow in the Economics Department. The run in was a forerunner of his behavior throughout his entire life. But I am not going to bore you with the gruesome details. I have, therefore, known Dr. Greenspan for more than 50 years and I must say that he has always underwhelmed me! I was in the class of NYU before him and our paths crossed innumerable times in our professional careers.

"I debated him on many an occasion, we shared many speaking platforms together, we both worked for Richard Nixon in the 1968 and 1972 campaigns as well as in between, we both graduated from NYU undergraduate school and Graduate School and we both ran our own economic and financial consulting businesses. In addition we played golf together more than once with mutual friends.

"One of the absolute lies about him is that he retired from his consulting business a wealthy man. Absolutely and totally untrue. When he closed down his economic consulting business to go on the Board of the Federal Reserve [1987 - FJS] he did so because he had no clients left and the business was going under. We even went so far as to try and hire some of his former employees only to find out he had none for the 6 months prior to his closing. When he closed down he did not have a single client left on a retainer basis....I once called him a political hack in a speech before the Chamber of Commerce in Chicago and I did not retract that statement then or now."

            Rinfret was not the only interested party. When Greenspan headed to the Fed, a friend was asked by one of his clients to value Townsend-Greenspan. He found the same: the only assets to value were the desks and the chairs. Nothing else was left. It was as hollow as the new Federal Reserve chairman.