Sunday, March 04, 2007

How can a retired unelected official have this much power?

I think we all noticed the stock market slide last week. We’re told that it had to do with what happened in China. However, a March 2 article in the New York Times, Greenspan Is Still Able to Move Markets, caught my attention.

Whoa, I thought to myself: how is this retired, unelected official, the former chairman of the Federal Reserve, able to have such an impact?

From the article, “First on Monday and then again on Thursday, Mr. Greenspan upset stock markets merely by uttering the word “recession” and saying that one might but probably would not occur by the end of this year….It also raised several questions. Did the old Fed chairman, who has been hailed as the maestro of the economy, disagree with the new Fed chairman? For a man who had worked assiduously to keep markets calm while he ran the Fed, why was Mr. Greenspan now using an incendiary word-bomb? At almost 81, did he secretly miss the limelight? Or was he trying to build up advance interest in his new book?”

I have no idea why Greenspan gave his opinion about a recession or why the stock market took a nose dive as a result; I’m sure we’ll learn more eventually.

However, reading this article jogged my memory about what I know about Alan Greenspan, who, as the chairman of the Federal Reserve, was commonly described as the most powerful man in the U.S.

Here’s what I don’t like:

1. That one person, unelected, whether in office or retired, can have such a huge impact on our and the world's economy.

2. Greenspan himself. I read Bob Woodward’s Maestro – Greenspan’s Fed and the American Boom in 2001, and learned that he is a staunch advocate of a dog-eat-dog world. For instance, on pages 208-209 of Maestro, this exchange took place between Representative Bernie Sanders and Alan Greenspan at a House Banking Committee hearing on October 1, 1998:

Sanders: “According to the United Nations, Mr. Chairman, the world’s richest 225 individuals have a combined net wealth of over $1 trillion, equal to the bottom 47 percent of the world’s population….”

Quoting from p. 209, “Greenspan responded that he did not believe in short-term compassion. Redistributing $1 trillion from the 225 richest to the 3 billion poorest would not achieve much in the long run. In reality, those 3 billion people live on an average of less than $2 a day; the $1 trillion could provide them with $1 day for a year.”

I am so offended by this! Mothers and fathers of the world’s 38,000 children who are dying daily from starvation and diseases would love a 50% increase in income, even if it only added a year to the life of their child. Perhaps during that year, would come to the village and offer help in the form of a coat or cow that would help sustain that family.
Furthermore, if the $1 trillion were devoted to cleaning up the drinking water in developing countries and other life-sustaining projects, the lives of 3 billion people could indeed be improved.

1 comment:

Anonymous said...

Would that Greenspan would give some of his wealth (assuming he has some) to the micro lending people, and advocate that other rich people do so as well.