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There's a very good article on Greenspan's legacy - and some of the few who argued against him:

George Soros, the prominent financier, avoids using the financial contracts known as derivatives "because we don't really understand how they work." Felix Rohatyn, the investment banker who saved New York from financial catastrophe in the 1970s, described derivatives as potential "hydrogen bombs."

And Warren Buffett presciently observed five years ago that derivatives were "financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal."

One prominent financial figure, however, has long thought otherwise. And his views held the greatest sway in debates about the regulation and use of derivatives -- exotic contracts that promised to protect investors from losses, thereby stimulating riskier practices that led to the financial crisis. For more than a decade, Alan Greenspan has fiercely objected whenever derivatives have come under scrutiny in Congress or on Wall Street.

http://www.iht.com/articles/2008/10/09/business/09greenspan.php

Sadly too many were (like Paris above), a bit afraid of looking silly, especially when confronted by "the Oracle":

Time and again, Greenspan -- a revered figure affectionately nicknamed the Oracle -- proclaimed that risks could be handled by the markets themselves.

"Proposals to bring even minimalist regulation were basically rebuffed by Greenspan and various people in the Treasury," recalled Alan Blinder, a former Federal Reserve board member and an economist at Princeton University. "I think of him as consistently cheerleading on derivatives."

Arthur Levitt Jr., a former chairman of the Securities and Exchange Commission, says Greenspan opposes regulating derivatives because of a fundamental disdain for government.

Levitt said that Greenspan's authority and grasp of global finance consistently persuaded less financially sophisticated lawmakers to follow his lead.

"I always felt that the titans of our legislature didn't want to reveal their own inability to understand some of the concepts that Greenspan was setting forth," Levitt said. "I don't recall anyone ever saying, 'What do you mean by that, Alan?' "

...
"He had a way of speaking that made you think he knew exactly what he was talking about at all times," said Senator Tom Harkin, a Democrat from Iowa. "He was able to say things in a way that made people not want to question him on anything, like he knew it all. He was the Oracle, and who were you to question him?"

ibid



Maybe it's because I'm a Londoner - that I moved to Nice.
by Ted Welch (tedwelch-at-mac-dot-com) on Sun Oct 12th, 2008 at 04:48:12 PM EST
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"(Greenspan) had a way of speaking that made you think he knew exactly what he was talking about at all times," said Senator Tom Harkin, a Democrat from Iowa. "He was able to say things in a way that made people not want to question him on anything, like he knew it all. He was the Oracle, and who were you to question him?"
A classic example of rhetoric trumping reality.  There was a reason rhetoric was one of the seven liberal arts.  Barron's ran an article earlier this year which questioned Greenspan's academic credentials.  What cannot be questioned are his rhetorical credentials. Rhetoric is what enabled him to surf the crest of the Chicago School neo-classical economics wave set in motion by Friedman.

While I do not recommend that all college undergraduates be required to take a course on rhetroic, I do think that they should be required to take a course that alerts them to the power of that art to win on style arguments that should loose on substance.  The dominance of Friedman and Greenspan and the techniques used by Greenspan should be combed and used as exhibit A.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Oct 13th, 2008 at 01:44:33 AM EST
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