Morgan Housel: Alan Greenspan, Hypocrite Extraordinaire

If there was ever a great example of hiring the fox to guard the hen house, it was having Alan Greenspan on the Fed Reserve. And, now he is using his powers of hypocrisy to grace our welcoming ears:

Alan Greenspan recently characterized the slow recovery out of the recession as the result of too much government intervention, or what he likes to call "artificial restraints."

Take a deep breath...

Let the anger subside....

OK.

Screw you, Greenspan!

Sorry...slipped there for a second.

This comment is like the fox yelling at the farmer for putting doors on the hen-house. A recent article by Morgan Housel at the publication fool.com, debunked Greenspan's point by pointing out that the hesitancy to hire has been due to flagging sales, not government intervention. The National federation of Independent Businesses even wrote up a nice table, which puts government requirements at 13% of what is "holding back business," behind poor sales (33%) and taxes (19%). This number has been stagnant, according to Housel, for the last 15 years. Pricewaterhouse Cooper's annual Global CEO survey put government intervention at 8%, behind uncertainty (22%) and economic growth (23%).

What is most damning about Greenspan's comment is that he was once the head of one of the most powerful government entities, responsible for overseeing banks and finances. In the 1990s, Greenspan supported the repeal of the Glass Steagall Act, which allowed for investment and commercial banks to combine, creating the monsters of "too-big-to-fail."

Another point brought up by Housel is that Greenspan also injected liquidity into the market and dropped interest rates after 9/11, which fueled an speculative investment bubble in the housing market. While we can speculate that Greenspan was reacting to the economic scare after 9/11, its unbelievable to think that 10 years later he would be essentially criticizing that same type of intervention. Greenspan used government intervention to create what Housel calls "an artificial boost" to a purported never-ending bubble. But, when two administrations use intervention to deal with the consequences of the popping of this bubble, its going too far.

My advice to Greenspan: take your Ayn Rand and relegate yourself to obscurity.