Michael Hudson: The Man Who Fired Greenspan

This is the transcript of an interview with Michael Hudson in an Australian film, discussing a 1966 incident:

MH: They increased it largely by having Alan Greenspan create the Greenspan Commission to look at social security and pushing the myth that social security had to be funded out of pre savings, so American labour was essentially taxed 11% between itself and the employers to pay social security and this vast increase in social security taxes was used to lend to the Government(US) to provide it with enough money to slash taxes on the rich and that was Greenspan’s ploy.

He was rewarded by being made head of the Federal Reserve for his actual hatred of labour and his desire that you had to reduce living standards in order to increase the profits of capital.

And so Greenspan was sort of the hack that was hired.

When I was on Wall Street, Greenspan was hired as part of a study I was doing on the balance of payments of the Oil Industry. And one day my boss, John Deaver came into my office and said he really worried about Greenspan being a part of this report because he was known as a hack that always gave …his clients what they wanted instead of something actual.

So he (JD) gave me Greenspan’s figures on depreciation of oil producing refinery assets in Europe and asked me to find out where the faking is? He said he couldn’t believe that Greenspan by himself wouldn’t of just faked the figures and it took me about a week to figure out where the faking of the figures came out (from) and that was Greenspan had simply picked up depreciation rates relative to output for the United States and projected them onto Europe.

So I went over and talked to his assistant Lucille Woo and she said “it’s all implicit, all implicit” and I confronted her with it and she said “Yes that’s what we did”!

And so, Greenspan was indeed ‘talked off the study’ and we met… John Deaver, David Rockefeller and myself and I was told…Greenspan was such a little bastard that if they fired him, he’d hold a grudge against Chase Manhattan for years and they told me to be the guy to give him the news that we couldn’t use his (laughs) statistics on it and I was a 25 year old economist at the time and he hardly new me at all, so I was the guy that…subsequently became known as ‘the man who fired Alan Greenspan’.

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  1. F. Beard

    I have loathed Greenspan since he testified to Congress: If you understood what I just said then I mispoke..

    Good for you Dr. Hudson, that you fired that creep.

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  2. LeonovaBalletRusse

    Prof. Hudson: “I was told …” Precisely what was Hudson the 25-yr.-old TOLD, and by whom? Was he told by an Agent of the Chase Manhattan Bank: “Say what you will, but we must leave him in place so that he doesn’t take revenge on our bank” — something like that?

  3. Jim

    Always BS check your assumptions. In a case like this, I would have calculated historical depreciation / output and compared that ratio to projections. Or historical depreciation / capx compared to projections.

    With respect to Greenspan, he went from being feted worldwide to an infamous symbol of economic collapse. Sure, he’s still sought after at Davos, but few places elsewhere.

    Lula left the presidency and is considered a hero throughout Brazil. Greenspan would probably get vilified if he sought to make a speech at a summer festival.

    He went from being considered the most effective Fed chief in the last 60 years to a person forced to read well-regarded Volcker has become.

  4. Sam

    Third paragraph from the end: “he wouln’t of just faked the figures”

    OF is not a verb; i saw this all the time in freshman composition. “wouldn’t HAVE just faked the figures” LOL

    1. Yves Smith Post author

      This was a transcription, “of” and “‘ve” probably sound similar.

      I can’t change it since this was what I was given and I don’t have the actual recording.

    2. rafael bolero

      Off-base criticism: ‘faked” is a verb, and it is the main verb in this subjunctive phrase; as already pointed out, ‘of” is the common mistaken way of writing the auxiliary verb, ‘have,’ contracted, (‘ve) ; ‘ just’ is an adverb, splitting an the verb phrase at the speaker’s stylistic peril. The whole sentence is colloquial usage. The Y. Smith is reporting/pasting/publishing second-hand speech, an excerpt, an anecdote, written by someone else, so she’s not going to change it. Hey, even professors can talk like normal people sometimes, and this is an appropriate style for anecdote. Hey, leave linguistic analysis to the experts. I like M. Hudson very much, and find his analysis clear and helpful, and nicely angry at times, as is B. Black’s, his colleague.

  5. psychohistorian

    If only Greenspan had been really fired then we might not be in the trouble we are in…..though they would have just found another deluded acolyte.

  6. LD

    “Greenspan being a part of this report because he was known as a hack that always gave …his clients what they wanted instead of something actual.”

    So at the Fed then, who was leading Greenspan around, through both Rep and Dem Admins with the same outcomes?

    1. Damian

      exactly -this is the book that should be written – who was controlling greenspan?

      he said he made a mistake – never saw it all coming he said – looked like a fool in the face of Michael Burry disclosures – but had all the possible data and people to stop the game in its tracks and he didnt do it –

      who is the man pulling his chain – rubin or?

      1. Procopius

        I’m surprised we don’t see more about his involvement with the actual cult Ayn Rand set up. He was one of the original half dozen members, called “the Class of ’43.” I think there’s a very strange back story to how he prospered. He must have developed connections with a very shadowy hidden cabal that supported his career.

  7. Steve

    I personally don’t understand why the likes of such a powerful man like Rockefeller would be concerned about the reactions of a “little bastard” like Greenspan. It makes no sense. Either Greenspan really is just a “little bastard,” in which case how he feels about getting fired is of small consequence, given his incompetence and “littleness”; or else it is of consequence, in which case one has to ask why.

    1. Damian

      my read is that greenspan was one of the “go to” guys for a point of view to be validated by alleged “economic analysis” and with enough numbers thrown in to make it believeable –

      for the report to be discredited so easily – in front of Rockefeller – chairman of chase – was pretty embarassing – for all concerned – but his brand even in the mid 60’s was worth something. so the concern of how he would act in the future – potentially pissing on someone elses parade in the future – Rockefeller was probably knowledgeable where greenspan had already screwed someone else – ie: the “little bastard” – today we would call him a little prick!

      1. Steve

        I don’t know… doesn’t that just push the question back further? Wouldn’t a Greenspan be afraid to anger or betray a powerful man like Rockefeller–in some respects also his boss. It seems to me that Rockefeller could do a lot more to Greenspan than Greenspan to Rockefeller.

        1. Damian

          an economist can use selective facts to promote anything they want – especially in those days with limited computer power – so the discipline was dangerous in the wrong hands- if he is turning in a phony report to chase to support their interests he could do it for anyone against them as well – clearly greenspan has been proven to be a charlatan of world class status

      2. Carla

        “for the report to be discredited so easily – in front of Rockefeller – chairman of chase – was pretty embarassing – for all concerned – but his brand even in the mid 60′s was worth something.”

        It is really embarassing– for all concerned — when rich people are dumb. This is why it is so much better to be poor– no pressure.

        After G.W.B., we are not over being embarassed by the stupidity of the rich and powerful?

        During the reign of B.H.O., we’re having trouble wrapping our minds around the stupidity of the smart, hired, bought-and-paid-for- elites. And apparently, we are not yet sufficiently embarassed by THEM.

        But while they are being bought, it is WE who are paying.

        Those with inherited wealth accept as their birthright the assumption that they are smarter than the rest of us. The fact that almost everybody else buys it too is really, really sickening.

        1. Damian

          Carla – i dont believe “they” believe they are smarter – i think they “know” they have control of the politicians, judges and regulators completely – that standing gives them the air of arrogance and superiority – because they know there is nothing you can do no matter how good your case may be they have the control to knock out the facts, logic and prescedents

          Proof – posted elsewhere some time ago:

          When the rule of law has become completely negotiable – from the elite POV – entity, then why would any thinking person NOT believe that the elite also consider any other such social constructs – e.g., political affiliations, treaties, contracts, etc etc – as nothing more than words, easy to change and manipulate to their liking.

          Right now, in America, who/what institution can/will stop these people?

          With each passing “revelation” about how the this or that social construct no longer matters (see MF Global) to the ruling class, one cannot help but see a pattern made ostensible by a casual scrutiny of the last 30 years.

          In 2002 Bush’s spokesman told us:

          The aide said that guys like me were ”in what we call the reality-based community,” which he defined as people who ”believe that solutions emerge from your judicious study of discernible reality.” I nodded and murmured something about enlightenment principles and empiricism. He cut me off.

          “Thats not the way the world really works anymore,” he continued. ”We’re an empire now, and when we act, we create our own reality.

          And while you’re studying that reality — judiciously, as you will — we’ll act again, creating other new realities, which you can study too, and that’s how things will sort out. We’re historys actors . . . and you, all of you, will be left to just study what we do…………”

          creating subjective reality and making it stick – is the real power and where the arrogance comes from

          1. James

            Great quotes. I see from Wiki that they were later attributed to none other than “Bushes Brain,” that “little bastard” of all little bastards, Karl Rove. Which is appropriate – I could easily imagine these same words coming from that pompous ass Rumsfeld as well – as the Shrub himself could have never strung together that much pseudo-intellectual horseshit on his own. Which has me pondering just such a conversation:

            Scene: The Oval Office. Bush is splayed out on the couch with his feet up on the coffee table sipping a tallboy of Busch Light, of which he has a cooler full sitting close by. Rove is in the room as well for damage control. The usually unflappable Rove is visibly alert and ready should poor W step in it and go on record saying something characteristically stupid.

            W: Let me tell ya somethin’ right now Ron. We’re an EMPIRE now. We’re reality creators. And when the evil doers do somethin’ evil, we just go on and create another damn reality, and it’s like the evil never even happened. Cause we’re reality creators now, see? [Big fawning smile and characteristic eyebrow twitches while seeking and waiting for agreement and approval from interviewer Ron Susskind.]

            Susskind: So, Mr President, you’re saying we all live in some kind of alternate reality now…?

            W: Listen Ron… Ron, go ahead and help yourself to the cooler there. Lord knows Karl over there is just gonna shit himself if I even try to drink all of those by myself, especially since I’ve been “on the wagon” now for years. Is that the right words there? I can’t ever remember whether I’m on the wagon or off, never mind where’s the damn wagon. Karl, which one is it? And whether I’m on it, off it, or somewhere in between, just where in THE HELL do they keep the damn thing and what has it got to do with me? Hell, I’ve got my own airplane now. What do I need with a damn wagon in the first place?

            Rove: Slaps head and groans loudly.

            W: Anyway Ron, we’re all history’s actors now too… Karl, is that right? I thought I was Commander and Chief? I ain’t just a damn actor now, am I? I mean, I remember election night… most of it anyway, even after all them jello shots off Condi. Ron, please don’t print that last part. Laura don’t like to be reminded of that night. Anyway, Ron, I’m an actor and the President… Ahh hell, Ron, I don’t know anything about all this stuff. Talk to Karl later and he’ll fill you in. Drink a damn beer already [W tosses a tallboy from the cooler across the room] and lets get f***ed up! Karl, you drinkin’ tonight, or are you being a turd blossom again as usual?

            Rove: [Slides down the wall on which he was leaning, sits on the floor, and begins sobbing uncontrollably.]

          2. Carla

            “…creating subjective reality and making it stick – is the real power and where the arrogance comes from”

            Yeah, I know.

            “Right now, in America, who/what instituion can/will stop these people?”

            Us, Damian. Only us. The 99%.

            All we have on our side is sheer numbers, and basic common sense. Actually, that’s a potent combination.

            Each one, teach one. Every one of us can contribute, whether it’s with money, time, or everything we’ve got. BTW, did you know that Bill Moyers supports the Move to Amend?

            Check it out: http://vimeo.com/35388815

          3. fresno dan

            Unfortunately, I think you have hit the nail on the head with your analysis.
            You know, supposedly this is a “A nation of laws, not men.”

            I remember when I was a child upon first learning that concept, and thinking “Well, you need people to enforce the laws, so aren’t the people as important as the laws?”

  8. Max424

    Hey, is Ayn Rand Greenspan still in Davos?

    Are you thinking what I’m thinking? That’s right. If he’s over there somewhere, we can disappear the treasonous* son-of-a-bitch, and do it legally!

    He was the greatest terrorist of them all; did more damage to “his” country than 10,000 bin Ladens could ever dreamed of doing.

    I say, grab Greeny and throw him in a Guantanamo cell; then blow bubbles at him, 24/7.

    Note: Just kidding! I’m a liberal, and as such, I believe even the devil deserves his day in court (now if we could just apprehend the slippery bastard).

    *Greenspan was the guy who OPENLY STATED his first loyalty was NOT to the United States, but to Capitalism.

  9. michael hudson

    To clarify the personnel, I was balance-of-payments analyst in Chase Manhattan’s research department. John Deaver was Director of Research, and my immediate boss. David Rockefeller hosted a lunch with Socony whee he agreed to fund the balance-of-payments of the oil industry study.

    Deaver didn’t like Socony, and I also thought they were thugs. They were the guys who insisted on bringing in Greenspan. Deaver said that this would hurt the study, and I think it was David Rockefeller who told me that the reason they chose me to do the study instead of the oil department was precisely because the oil department was viewed as simply representing the oil industry’s view.

    I was told to conduct as thorough and honest a study as I could, and not to have any interest in mind except the actual statistics. I was told that it would take a year, and if the study didn’t prove that the oil industry generated a very strong and very quick balance-of-payments inflow, they wouldn’t popularize or publish it, but they simply wanted to know what the balances were.

    Mr. Deaver believed that simply having Greenspan on the study would discredit it, because he was notorious for writing lobbying puffery for his clients. So he was sure that Greenspan was also quite lazy.

    I didn’t think I could figure out where inappropriate numbers came — but I did, somehow.

    The spelling, by the way, should have been Lucille Wu, not Woo. I remember it because the whole office was so ratty. I think that Greenspan got his payment from Socony in any case, because they wanted him for other stuff.

    Added clarification: the words “little bastard” were John Deaver’s, NOT David Rockefeller’s. He always was pretty laconic, in the little contact I had with him. Deaver was trying to protect Chase and David from possible criticism for even employing a hack on the study.

    By the way, I learned almost everything I know about balance-of-payments accounting while at Chase. It was a wonderful job.


    1. Damian

      Michael enjoyed the clarification – i always suspected Greenspan as a hack – eliptical phrases was a big screen – great confirmation

      “simply having Greenspan on the study would discredit it, because he was notorious for writing lobbying puffery for his clients. So he was sure that Greenspan was also quite lazy.”

      i suspect he always sold this “talent” throughout his career to those who wanted control of whatever process he participated in – devastating guy

    2. Richard Kline

      So Michael, this is truly a golden nugget from the historical perspective. What struck me acutely was exactly the substantive demonstration of the sheer intellectual _fraudulence_ of Alan Greenspan as demonstrated here. What we see is that when the money study had to be made . . . he faked it—and was known for that by his peers! In short, He NEVER was a maestro, reading all those facts and figures at the Fed; as an economist, he was pure fraud. The picture painted by this incident is pure and simple: he’s been a ‘bag man’ his whole career, just a high end one.

      One shouldn’t be shocked that a man just the width of his shoe lifts from a full-on shyster held the top of the government in thrall for some fifteen years in the Nineties and Naughts—and what does that say about _them_, then, those government hacks licking up Greenspan’s spittle? Lower than low.

  10. Fiver

    I’ve elsewhere heard/read that Greenspan was really not a very capable analyst of any kind, just some sort of bent piece of human wire they used to pick the DC social lock and to then head straight for the safe at Treasury.

  11. F. Beard

    Greenspan is also a gold standard proponent – a thoroughly hypocritical position for a so-called “libertarian”.

  12. ep3

    with a story like that, how did greenspan climb all the way to the top? in the real world, if you were fired for poor work, generally you are screwed for awhile. Plus, employers like to talk so one will ask the other about why u were fired and that shoots the little guy in the foot.
    So what makes this clown (greenspan) so special? How can he be so pathetic yet be considered a god by bumbling idiots?

    1. frank revelo

      In the real world, you are only screwed if you offend powerful people. In this case, there were two groups of powerful people. Greenspan slightly offended one group, but thoroughly pleased the other. And even the group he offended was no doubt impressed by Greenspan. Here was a man who gave the appearance of honesty, and yet was thoroughly corrupt. A man like that can be very useful, and would no doubt go far in life, so no need to make an enemy of him unnecessarily. And that is why nothing bad resulted and indeed Greenspan was later rewarded by being promoted to positions of great responsibility later on.

      Economics is not like plumbing. If a plumber screws up and the toilet overflows, then yes, the plumber gets fired and the employer gives a bad recommendation and he is screwed for life. But economics is propaganda. To say that Greenspan is a bad economist is to say he is a bad propagandist. Whereas the truth is that Greenspan is very skillful as a propagandist, mainly because he gives the appearance, to the average dullards at least, of being a self-effacing public servant, interested only in the public weal. Just look at his hidious appearance, with that bulbous nose and bald head and coke-bottle eyeglasses. Right out of central casting, stereotypical bean-counter who is incapable of telling a lie, dedicated to the truth, the whole truth, and nothing but the truth as far as his beloved numbers aer concerned. How could you not trust a man like that? Compare with a handsome young man with a full head of hair. A man like that might have a mistress or other big expenses that might tempt him into lying or stealing. But Greenspan? Never. Or so the dullards assumed.

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