Greenspan on the Economy
By David Henderson
Yesterday, CNBC’s Squawkbox had Alan Greenspan on for an extensive interview. The difference between the communication skills of Alan Greenspan as economic commentator and the communication skills of Alan Greenspan as Fed Chairman is like the difference between day and night. His book, The Age of Turbulence, is excellent. If I recall correctly (my marked-up copy is at the office), he explained in his book that as Fed Chairman he was purposely unclear.
As my friend Jeff Hummel put it in an e-mail:
I don’t always agree with Greenspan, but here as elsewhere, I’m continually impressed with his intellectual honesty. his epistemic caution. and his command of the data. His analysis is always careful and well thought-out. He stands head and tails above most other financial analysts and economists.
Times below are approximate:
14:00 point: Greenspan has a masterful discussion of cautionary build-up of oil buffers by speculators in the developed world. Crude oil has moved from storage in the ground to storage above ground.
15:00: The importance of the Saudis. They produce 7 mbd and have 3.5 mbd of excess capacity. “Saudi is the whole game.”
16:30: Question: “Has too-big-to-fail been solved?” Greenspan: “No.”
Around 17:00, they joke about not having been able to get Greenspan to do a Squawk Box bit, saying, roughly, “Hey, they got Nixon to say ‘Sock it to me.'” Greenspan’s reply: “Look what happened to Nixon.”
One negative about numeracy. At about 4:10, commentator Steve Liesman showed Greenspan a graph purporting to be after-tax profits as a percent of Gross Domestic Purchases. It shows them at 0.08%, close to an all-time high. But 0.08% is trivial, right? Right, and I’m sure Liesman didn’t mean it. I’m sure he meant 8%. But what are a couple of decimal places among people seriously trying to understand the economy.
HT to Justin Rietz.