Commentary: Reflections on Alan Greespan
By Maxine Shapiro, KERA 90.1 Commentator
Dallas, TX –
How do you say goodbye to Alan Greenspan the man who singled-handedly changed our economic landscape? As a financial commentator, he was the juiciest thing to write about (next to Wal-Mart). Long before Alan Greenspan became Chairman of the Board of Governors of the Federal Reserve System, people of the financial world were bowing to him. His words moved mountains and definitely markets. Gosh, I still remember the days on the floor of the Chicago Board of Trade. It was the late seventies, early eighties. I was working in 30-year Treasury Bond futures when all of a sudden, out of nowhere (meaning no economic report had came out) the market went nuts. It would rally or break, sometimes hitting its limit for the day. Commodity and Financial Futures can only move so high or low in one trading day. The floor was frenzied - phones would be ringing and everyone would be asking - what happened. And somebody would scream "Greenspan just came out and said," said something - made a prediction, a statement, who knows but the power was clearly there. This was not uncommon.
Remember this was before he was the Fed Chair. He owned an economic consulting firm, Townsend, Greenspan and Company. His clients were not you and me. They were the Fed.
Though now I hold Mr. Greenspan in the highest esteem, there were times when my feelings towards the man undeniably waned. Take a stroll back with me to December 2001. After 9/11 there was little to be grateful for except for the stock market bouncing back a bit. Greenspan was speaking to a group of European economists regarding the euro. Our recession, that we didn't know we were in, was over. However, unemployment was rising. If you weren't laid-off then someone close to you was. In Europe, it is much more difficult to fire or layoff an employee than it is in the U.S. As Alan put it in a rare understandable statement, "By law and by custom, American employers have faced far fewer impediments in recent years to releasing employees. This difference is important in our new high-tech world because much, if not most, of the rate of return from the newer technologies results from cost reduction, which on a consolidated basis largely means the reduction of labor costs." It sounded so cold to me then - and still does. Forget about families, self-esteem, food on the table - corporations had only one way to reduce costs - layoffs. Then, no one wanted to address, lowering CEO's pay would have definitely fallen under the category of cost reduction! Fact: today, CEO compensation is growing faster than salaries and much fast then inflation. Let's move to April 2002 when Wal-Mart ousted ExxonMobil as the largest company in the world. Alan had begged us for a year to spend for the good of the country. And we did, maxing out our credit cards and going to Wal-Mart.
Then came August 2003 when I proudly applauded Alan Greenspan. Economists didn't have a clue where were and where we were going. The economy just wasn't fitting any of the given formulas. Alan finally said we have to be spontaneous here. Wow. Rules are good when the format fits. But very few elements of the economy had been consistent. It was like trying to fit a square peg into a round hole. And this is when Alan Greenspan truly became my guru. He was an example of why we must, in this global environment, improvise and blend our formulas with spontaneity.
I'm sure we have not heard the last of Mr. Greenspan. I hope not.
Maxine Shapiro is a national keynote speaker and corporate trainer.
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