There I was in John Lennon Airport on 15 September 2008. W H Smith's to be exact. My daughter was taking me on a brief holiday to the Costa Del Sol Southern Spain for my 60th birthday.
I was looking for a book to read because the books I brought were tucked away in my luggage. I have a very narrow range of interests in books. They revolve around biographies of powerful people and the history of scientific progress. W.H Smiths is not my usual source of reading material but there is not much choice at 5.a.m. in a departure lounge. Nevertheless there were some books which caught my eye and they boiled down to two, Alan Greenspan and some lightweight popular science work on various theories on the origin of human development. The latter was in line with my current reading but I could not take my eyes off Greenspan. I was completely and utterly oblivious to the current state of the financial troubles in America and Europe but I was drawn to "The Age of Turbulence" and that was the book I set about reading on my way to the sun. My daughter Hannah, questioned my logic and I could not explain my choice other than thinking it was time I got to know about this enigmatic figure who was a legend in the western financial world. In my humble way I will give my thoughts on the book and describe the uncanny way in which it was in my hand just when the collapse of AIG collapsed 19 September ...........
The book clearly demonstrated just how unassuming and modest Greenspan is. He described his upbringing as a New york kid who had a passion for understanding economics by drilling down to the fundamentals of the industrial and commercial systems in so called free western countries.
He learned how to forecast the progress of economies simply by tracking the components of the system and predicting their likely progress. As he tracked his own life and professional career he confined himself to the one area which dictated his career, interest rates and inflation. His relationship with U.S political personalities was described in detail but world events were mentioned only in the context of their impacts on those financial indices, for example 9/11, changes in Presidents in the U.S, Thatcherism, Japan, and the tiger economies.
Even though he wrote the book in 2007 and 2008, he actually understood exactly what the credit crunch was, it's cause, it's beginning, but there he stopped. his final chapter attempted to forecast the progress of the U.
S economy as it might unfold by 2030. This long range forecast is easier than a more short term vision because, has he emphasised, economic and financial trends have been remarkably stable over the last 200 years. By the time I got to the final chapters the news broke of the collapse of some large financial institutions in America. Strangely the name Greenspan was printed and mentioned in almost every newspaper and TV commentary, mostly disparaging because he after all was the man in charge for 18 years until recently. Clever columnists and writers blamed him but they did not have a clue. They clearly did not understand him, and surely had not read his book. Had they done so they would have concluded a very simple fact. The Credit Crunch started in August 2007 ( A French bank PNB suspended trading in assets for which their market had evaporated, subprimehome American mortgage contracts) and was only now manifesting itself in businesses collapsing all over the western world. His epilogue illuminates this in a simple paragraph. I admit to being puzzled as to why Greenspan never seemed to see the crisis coming even though his epilogue was written in May 2008. Then I saw it, " Finally of course, there is the credit crunch, which at the time of writing (May 2008) is nine months old, [yes 9 months,] ........ And I suspect that what awaits on the other side is an economic world that we will find very different from the one we've grown accustomed".
Greenspan knew exactly the cause, crazy bankers,using the debt generated from China entering Western capitalism (globalization is the buzzword) to lend money to it's domestic homeowners.Realising they had cocked up they created "virtual" assets by packaging up what transpired to be dud loans and mortgages and then selling them worldwide to create cash. Gradually the chickens came home to roost. So, the book I chose to keep me occupied in the sunny Costa Del Sol was not a bad choice, well that's me!.