Greenspan Chair: So They Can Stop Blaming Him On Libertarians and Start Blaming Him on NYU

Barry Ritholtz drops the stunning news that former Federal Reserve Chairman and exuberant irrationalist Alan Greenspan will have a chair named after him at New York University. (I hope it's a nice chair.)

Curiouser and curiouser is that the endowment is coming from John A. Paulson, Goldman Sachs's partner in the creation of the sucker-baiting "Abacus" mortgage-backed securities.

Nut section discovered by a Ritholtz reader:

"The Stern School will apply $5 million of John Paulson's gift to support two endowed faculty chairs.  The first chair is named for alumnus Alan Greenspan (BS '48, MA '50, PhD '77), leading economist and former Chairman of the Federal Reserve Board.  Dr. Greenspan was Chairman from 1987-2006, and was the first person to be appointed to five consecutive terms through a period covering four presidential administrations.

Salon's Andrew Leonard points a finger at Paulson: "He is notorious for convincing Goldman Sachs to create such securities, backed by the riskiest mortgages Paulson could identify, simply so he could bet against them -- an astonishing act of irresponsibility that succintly captures, all by itself, the moral bankruptcy of Wall Street during the last decade."

Daily Markets' Cam Hui says, "The news of the Alan Greenspan chair at NYU is just another sign of denial."

My view:

1. Fer fook's sake, there should be something named for Greenspan at NYU -- where, as noted above, Greenspan received his three most important degrees. (News to me: Before that he was a clarinet student at Julliard, but dropped out to tour with Stan Getz! How many millions would be alive today if a time traveler could just go back and convince young Greenspan to live out his jazz/woodwind dreams?)

2. Calling somebody "notorious" is a crafty way of saying "He didn't really do anything wrong, but I disapprove of him anyhow." Paulson may have been mixed up in the story, but he had no moral, legal or even charitable obligation to Goldman Sachs's customers. Goldman may have misled its customers about Abacus, but John Paulson, as I have noted before, is guilty only of gauging the economy accurately -- something the government and its various monopoly franchises should have been doing anyway.

3. Never again will I back down when somebody tries to hang this lapsed-Objectivist albatross around the neck of classical economics. Greenwich Village, not Chicago, must answer for Alan Greenspan.

4. It looks like John Paulson's magic touch has gotten soft lately. Ridin' high in April, shot down in May… How can it be? I thought these rich bastards always had everything figured out…

Comments

[Hazel Meade]

Salon's Andrew Leonard points a finger at Paulson: "He is notorious for convincing Goldman Sachs to create such securities, backed by the riskiest mortgages Paulson could identify, simply so he could bet against them -- an astonishing act of irresponsibility that succintly captures, all by itself, the moral bankruptcy of Wall Street during the last decade."

Someone put a gun to investors heads and forced them to buy those securities?

[prolefeed]

I agree. He offered investors a raw deal. The appropriate response should have been due diligence, followed by nobody buying those securities.

Unless he made fraudulent misrepresentations about those securities, caveat emptor.

[Brandybuck]

No, but someone did put a gun to the taxpayers heads to make them bail out those investors.

[I, Kahn O'Clast]

It's more akin to hiring a construction firm to build a bridge you know is defective, have them sell the bridge but with you still being able to take out insurance against it. The cars at the bottom of the river with the dead bodies still strapped in? Oh, idiots who did not hire their own engineers (or be engineers themselves and perform their own analysis).... And by the way, as a bonus, the construction company paid a "ratings agency" who said the bridge was "good to go".

[prolefeed]

3. Never again will I back down when somebody tries to hang this lapsed-Objectivist albatross around the neck of classical economics. Greenwich Village, not Chicago, must answer for Alan Greenspan.

I think you need to explain in more detail what the fuck that means. Went over my head.

[Tulpa]

albatross = Greenspan

Greenwich Village = NYU

Chicago = The Chicago School

Never again = tomorrow

[tarran]

Since when is Chicago a proponent of classical liberalism?

Fischer's kooky macro-economic ideas are far closer to those of Keynes than anything from the free-market side.

[Tulpa]

Milton Friedman was in the Chicago school.

[andy]

...and invented Tax withholding before that...

Thanks unca Milton!

[tarran]

In Milton Firedman's defense, he was trying to avoid having the U.S. govt pay for the war via inflation - the inflation caused by the WW I debt caused much of the political turmoil of the 1920's.

[tarran]

The Chicago School's ideas on money are those of one of ites founding members, the good Dr Fisher, whom Milton Friedman once described as "the greatest economist the United States has ever produced".

In essence they think a central bank can establish price controls on the present price of future money (expressed as interest rates) & thereby bring about permanent prosperity.

The fact that price controls fail in every other case seem to not faze them.

Like the Keynesians, their solution to recessions is to inflate the money supply & have the government engage in public works projects.

[CrackertyAssCracker]

I agree. "Optimal Quantity of Money" and all that shit is a half assed and accommodative rebuttal. It's just a complicated variation of the "if only the right people were in charge" defense of the government fucking up the economy.

[Tulpa]

When anarcho-capitalists call you "kooky", you may be doing something right.

[tarran]

Tulpa, sweetie, your ignorance is showing. 😉

[roy]

Monetarist methodology is 95% Keynesian, even if conclusions differ somewhat... so no surprise that monetarist bernanke and Keynesian Krugman are on the same page every time push comes to shove...

[Citizen Nothing]

My school has the Woody Hayes Chair in National Security Studies.
Suck it, NYU.

[robc]

If attacked, punch the nearest Clemson student?

[?]

Went over my head.

Don't worry about it. He was playing to the band with that one.

[Maverick]

Can this guy get a chair? I like his bold position on peeing rights.

(NSFW-ish: sorta blurred but really a half-assed effort by the dudes at i-am-bored.com)

[John]

The holder of the chair will be paid in monopoly money.

[Slumpbuster]

To be fair, John, aren't we all more or less paid in monopoly money?

[John]

True.

[P Brooks]

A "Greenspan Chair"? How about this one?

[Almanian]

heh heh!

[Kolohe]

How many millions would be alive today if a time traveler could just go back and convince young Greenspan to live out his jazz/woodwind dreams?)

Nah, it's probably a subsection under the rule that you can't kill Hitler.

[.]

News to me: Before that he was a clarinet student at Julliard,

It's good practice for the skin flute, which many of the banker and financial elite are so good at playing. Miserable cocksuckers.

[The Gobbler]

"Before that he was a clarinet student at Julliard"

He was learning to be a clarinet?

[Gene Berkman]

Ludwig von Mises was a visiting professor at NYU from 1945 to 1969. I guess things have declined quite a bit in 40 years.

[.]

Mises is the one they should name a chair after, if they haven't already.

[Hobie Hanson]

Not just a chair, they named a throne after him.

In the handicapped stall of the basement bathroom.

[Stephen Smith]

Actually, they haven't declined much - NYU is still a pretty friendly place towards Austrians and free-market types. In fact, other than George Mason, I'd say it's the best place in the US to be a free market economist. So I'm not sure the whole "suck it, NYU!" thing really works so well.

[robc]

BS '48, MA '50, PhD '77

Didnt anyone tell him not to get all his degrees in same place?

Not that I ever understood the logic.

[Sean W. Malone]

I wrote an article for the Mises Institute approaching 2 years ago now which pointed out that Greenspan had little to nothing to do with free-market ideas or Ayn Rand in terms of philosophy as he'd rejected whatever free-market ideas he'd had long before he decided it was ok to become the "maestro" of all central economic planners.

Also having attended and graduated from NYU, I'm thinking Greenspan the manipulator is a good fit at Stern.

[han]

You can supply the answers yourself