A United States Treasury security is a government debt issued by the United States Department of the Treasury through the Bureau of the Public Debt.

Treasury securities are the debt financing instruments of the United States federal government, and they are often referred to simply as Treasurys.

There are four types of marketable treasury securities: Treasury bills, Treasury notes, Treasury bonds, and Treasury Inflation Protected Securities (TIPS).

There are several types of non-marketable treasury securities including State and Local Government Series (SLGS), Government Account Series debt issued to government-managed trust funds, and savings bonds.

All of the marketable Treasury securities are very liquid and are heavily traded on the secondary market.

The non-marketable securities (such as savings bonds) are issued to subscribers and cannot be transferred through market sales.

History[link]

The U.S. government knew that the costs of World War I would be great, and the question of how to pay for the war was a matter of intense debate. The resulting decision was to pay for the war with a balance between higher taxes (see the War Tax Act) and government debt. Traditionally, the government borrowed from other countries, but there were no other countries from which to borrow in 1917: U.S. citizens would have to fully finance the war through both higher taxes and purchases of war bonds.^[1]

The Treasury raised funding throughout the war by selling $21.5 billion in 'Liberty bonds.' These bonds were sold at subscription where officials created coupon price and then sold it at Par value. At this price, subscriptions could be filled in as little as one day, but usually remained open for several weeks, depending on demand for the bond.^[1]

After the war, the Liberty Bonds were reaching maturity, but the Treasury was unable to pay each down fully with only limited budget surpluses. The resolution to this problem was to refinance the debt with variable short and medium-term maturities. Again the Treasury issued debt through fixed-price subscription, where both the coupon and the price of the debt were dictated by the treasury.^[1]

The problems with debt issuance became apparent in the late-1920s. The system suffered from chronic oversubscription, where interest rates were so attractive that there were more purchasers of debt than supplied by the government. This indicated that the government was paying too much for debt. As government debt was undervalued, debt purchasers could buy from the government and immediately sell to another market participant at a higher price.^[1]

In 1929, the U.S. Treasury shifted from the fixed-pice subscription system to a system of auctioning where 'Treasury Bills' would be sold to the highest bidder. Securities were then issued on a pro rata system where securities would be allocated to the highest bidder until their demand was full. If more treasurys were supplied by the government, they would then be allocated to the next highest bidder. This system allowed the market to set the price rather than the government. On December 10, 1929, the Treasury issued its first auction. The result was the issuing of $224 million three-month bills. The highest bid was at 99.310 with the lowest bid accepted at 99.152.^[1]

Foreign countries later started to buy U.S. debt as an investment of their surplus U.S. Dollars. There is fear that foreign countries hold so many bonds that if they stopped buying them, the U.S. economy would collapse; however, the reality is that more bonds are transferred in a single day by the Treasury than are held by any single sovereign state.^[2] The perception of this dependence furthers belief that the U.S. and China economies are so tightly linked that both fear the consequences of a potential slow down in China's purchase of those bonds. In her 2010 visit to China, the U.S. Secretary of State Hillary Clinton called on authorities in Beijing to continue buying U.S. Treasurys, saying it would help jumpstart the flagging U.S. economy and stimulate imports of Chinese goods.^[3]

As the economic recession continues, more doubts arise over the real value of U.S. treasury securities. Though carefully worded, Chinese premier Wen Jia Bao's warning about possible devaluation of Chinese held U.S. bonds was taken very seriously by Washington:

"Of course we are concerned about the safety of our assets. To be honest, I'm a little bit worried" ... "I would like to call on the United States to honor its words, stay a credible nation and ensure the safety of Chinese assets."^[4] - Chinese premier, Wen Jiabao, said at a news conference after the closing of China's 2009 legislative session.

As of April 2009, the U.S. dollar had rallied YTD against all other major world currencies. On March 18, 2009, the Federal Reserve used quantitative easing "to help improve conditions in private credit markets, the Committee decided to purchase up to $300 billion of longer-term Treasury securities over the next six months."^[5]

Marketable securities[link]

This section needs additional citations for verification. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. (February 2009)

Directly issued by the United States Government[link]

Treasury bill[link]

"Treasury bill" redirects here. Note that the Bank of England issues these in the United Kingdom.

Treasury bills (or T-Bills) mature in one year or less. Like zero-coupon bonds, they do not pay interest prior to maturity; instead they are sold at a discount of the par value to create a positive yield to maturity.^[6] Many regard Treasury bills as the least risky investment available to U.S. investors.^{[citation needed]}

Regular weekly T-Bills are commonly issued with maturity dates of 28 days (or 4 weeks, about a month), 91 days (or 13 weeks, about 3 months), 182 days (or 26 weeks, about 6 months), and 364 days (or 52 weeks, about 1 year). Treasury bills are sold by single-price auctions held weekly. Offering amounts for 13-week and 26-week bills are announced each Thursday for auction, usually at 11:30 a.m., on the following Monday and settlement, or issuance, on Thursday. Offering amounts for 4-week bills are announced on Monday for auction the next day, Tuesday, usually at 11:30 a.m., and issuance on Thursday. Offering amounts for 52-week bills are announced every fourth Thursday for auction the next Tuesday, usually at 11:30 am, and issuance on Thursday. Purchase orders at TreasuryDirect must be entered before 11:00 on the Monday of the auction. The minimum purchase, effective April 7, 2008, is $100. (This amount formerly had been $1,000.) Mature T-bills are also redeemed on each Thursday. Banks and financial institutions, especially primary dealers, are the largest purchasers of T-bills.

Like other securities, individual issues of T-bills are identified with a unique CUSIP number. The 13-week bill issued three months after a 26-week bill is considered a re-opening of the 26-week bill and is given the same CUSIP number. The 4-week bill issued two months after that and maturing on the same day is also considered a re-opening of the 26-week bill and shares the same CUSIP number. For example, the 26-week bill issued on March 22, 2007, and maturing on September 20, 2007, has the same CUSIP number (912795A27) as the 13-week bill issued on June 21, 2007, and maturing on September 20, 2007, and as the 4-week bill issued on August 23, 2007 that matures on September 20, 2007.

During periods when Treasury cash balances are particularly low, the Treasury may sell cash management bills (or CMBs). These are sold at a discount and by auction just like weekly Treasury bills. They differ in that they are irregular in amount, term (often less than 21 days), and day of the week for auction, issuance, and maturity. When CMBs mature on the same day as a regular weekly bill, usually Thursday, they are said to be on-cycle. The CMB is considered another reopening of the bill and has the same CUSIP. When CMBs mature on any other day, they are off-cycle and have a different CUSIP number.

Pricing & Quotation[link]

Treasury bills are quoted for purchase and sale in the secondary market on an annualized discount percentage, or basis.

With the advent of TreasuryDirect, individuals can now purchase T-Bills online and have funds withdrawn from and deposited directly to their personal bank account and earn higher interest rates on their savings.

General calculation for the discount yield for Treasury bills is

Failed to parse (Missing texvc executable; please see math/README to configure.): \text{Discount Yield} (%) = \frac{\text{Face Value} - \text{Purchase Price}}{\text{Face Value}} \times \frac{\text{360}}{\text{Days Till Maturity}} \times 100[%]

Treasury note[link]

This is the modern usage of "Treasury Note" in the U.S., for the earlier meanings see Treasury Note (disambiguation).

Treasury notes (or T-Notes) mature in two to ten years, have a coupon payment every six months, and have denominations of $1,000. In the basic transaction, one buys a "$1,000" T-Note for say, $950, collects interest over 10 years of say, 3% per year, which comes to $30 yearly, and at the end of the 10 years cashes it in for $1000. So, $950 over the course of 10 years becomes $1300.

T-Notes and T-Bonds are quoted on the secondary market at percentage of par in thirty-seconds of a point (n/32 of a point, where n = 1,2,3,...). Thus, for example, a quote of 95:07 on a note indicates that it is trading at a discount: $952.19 (i.e., 95 + 7/32%) for a $1,000 bond. (Several different notations may be used for bond price quotes. The example of 95 and 7/32 points may be written as 95:07, or 95-07, or 95'07, or decimalized as 95.21875.) Other notation includes a +, which indicates 1/64 points and a third digit may be specified to represent 1/256 points. Examples include 95:07+ which equates to (95 + 7/32 + 1/64) and 95:073 which equates to (95 + 7/32 + 3/256). Notation such as 95:073+ is not typically used.

The 10-year Treasury note has become the security most frequently quoted when discussing the performance of the U.S. government bond market and is used to convey the market's take on longer-term macroeconomic expectations.

Treasury bond[link]

Treasury bonds (T-Bonds, or the long bond) have the longest maturity, from twenty years to thirty years. They have a coupon payment every six months like T-Notes, and are commonly issued with maturity of thirty years. The secondary market is highly liquid, so the yield on the most recent T-Bond offering was commonly used as a proxy for long-term interest rates in general.^{[citation needed]} This role has largely been taken over by the 10-year note, as the size and frequency of long-term bond issues declined significantly in the 1990s and early 2000s.^{[citation needed]}

The U.S. Federal government suspended issuing the well-known 30-year Treasury bonds (often called long-bonds) for a four and a half year period starting October 31, 2001 and concluding February 2006.^[7] As the U.S. government used its budget surpluses to pay down the Federal debt in the late 1990s,^[8] the 10-year Treasury note began to replace the 30-year Treasury bond as the general, most-followed metric of the U.S. bond market. However, because of demand from pension funds and large, long-term institutional investors, along with a need to diversify the Treasury's liabilities - and also because the flatter yield curve meant that the opportunity cost of selling long-dated debt had dropped - the 30-year Treasury bond was re-introduced in February 2006 and is now issued quarterly.^[9] This brought the U.S. in line with Japan and European governments issuing longer-dated maturities amid growing global demand from pension funds.^{[citation needed]} Since the 1970s the 10 Year Treasury Note and the 30 year fixed mortgage have had a very tight correlation.^[10]

TIPS[link]

Treasury Inflation-Protected Securities (or TIPS) are the inflation-indexed bonds issued by the U.S. Treasury. The principal is adjusted to the Consumer Price Index (CPI), the commonly used measure of inflation. When the CPI rises, the principal adjusts upward. If the index falls, the principal adjusts downwards.^[11] The coupon rate is constant, but generates a different amount of interest when multiplied by the inflation-adjusted principal, thus protecting the holder against inflation. TIPS are currently offered in 5-year, 10-year and 30-year maturities.^[12]

Created by the Financial Industry[link]

STRIPS[link]

Separate Trading of Registered Interest and Principal Securities (or STRIPS) are T-Notes, T-Bonds and TIPS whose interest and principal portions of the security have been separated, or "stripped"; these may then be sold separately (in units of $100 face value) in the secondary market. The name derives from the days before computerization, when paper bonds were physically traded; traders would literally tear the interest coupons off of paper securities for separate resale.

The government does not directly issue STRIPS; they are formed by investment banks or brokerage firms, but the government does register STRIPS in its book-entry system. They cannot be bought through TreasuryDirect, but only through a broker.

STRIPS are used by the Treasury and split into individual principal and interest payments, which get resold in the form of zero-coupon bonds. Because they then pay no interest, there is not any interest to re-invest, and so there is no reinvestment risk with STRIPS.

Nonmarketable securities[link]

Zero-Percent Certificate of Indebtedness[link]

The "Certificate of Indebtedness" is a Treasury security that does not earn any interest and has no fixed maturity. It can only be held in a TreasuryDirect account and bought or sold directly through the Treasury. It is intended to be used as a source of funds for traditional Treasury security purchases. Purchases and redemptions can be made at any time.^[13]

Government Account Series[link]

Government Account Series Treasurys (GAS) are the principal form of intragovernmental debt holdings.^[14] Surpluses from the Social Security Trust Fund are invested in this type of security.^{[citation needed]}

U.S. Savings Bonds[link]

Savings bonds were created to finance World War I, and were originally called Liberty Bonds. Unlike Treasury Bonds, they are not marketable. In 2002, the Treasury Department started changing the savings bond program by lowering interest rates and closing its marketing offices.^[15] As of January 1, 2012, financial institutions no longer sell paper savings bonds.^[16] The annual (calendar year) purchase limit for electronic Series EE and Series I savings bonds is $10,000 for each series. The limit is applied per Social Security Number (SSN) or Taxpayer Identification Number (TIN). For paper Series I Savings Bonds purchased through IRS tax refunds (see below), the purchase limit is $5,000 per SSN, which is in addition to the online purchase limit.^[17]

Series EE[link]

$1,000 Series EE Savings Bond featuring Benjamin Franklin

Series EE bonds reach maturity (double in value) 20 years from issuance though they continue to earn interest for a total of 30 years. Interest accrues monthly and is paid when the holder cashes the bond. For bonds issued before May 2005 the rate of interest is recomputed every six months at 90% of the average five-year Treasury yield for the preceding six months. Bonds issued in May 2005 or later pay a fixed interest rate for the life of the bond (0.6% in November 2011). At 0.6%, a $100 bond would be worth less than $113 just before 20 years, but will be adjusted to the maturity value of $200 at 20 years (giving it an effective rate of 3.5%) then continue to earn the fixed rate for 10 more years. In the space of a decade, interest dropped from well over 5% to 0.7% for new bonds in 2009.^[18] Paper EE bonds were issued with a face value of twice their purchase price, so a $100 bond could be bought for $50, but would not be worth $100 until maturity.

Series I[link]

Series I bonds have a variable yield based on inflation. The interest rate consists of two components: the first is a fixed rate which will remain constant over the life of the bond. The second component is a variable rate reset every six months from the time the bond is purchased based on the current inflation rate. New rates are published on May 1 and November 1 of every year.^[19] The fixed rate is determined by the Treasury Department (0% in November 2011); the variable component is based on the Consumer Price Index (CPI-U) from a six month period ending one month prior to the reset time (1.53% in November 2011, reflecting the CPI-U from March to September, published in mid-October, for an effective annual inflation rate of 3.08%). As an example, if someone purchases a bond in February, they will lock in the current fixed rate forever, but the inflation component will be based on the rate published the previous November. In August, six months after the purchase month, the inflation component will now change to the rate that was published in May while the fixed rate remains locked. Interest accrues monthly, in full, on the first day of the month (i.e., a Savings Bond will have the same value on July 1 as on July 31, but on August 1 its value will increase for the August interest accrual). The fixed portion of the rate has varied from as much as 3.6% to 0% (0% in February 2011 while the inflation portion was 0.74% per year). During times of deflation (during part of 2009), the negative inflation portion can wipe out the return of the fixed portion, but the combined rate cannot go below 0% and the bond will not lose value.^[19]

Besides being available for purchase online, tax payers may purchase I-bonds using a portion of their tax refund via IRS Form 8888 Allocation of Refund. Bonds purchased using Form 8888 are issued as paper bonds and mailed to the address listed on the tax return. Tax payers may purchase bonds for themselves or other persons such as children or grandchildren. The remainder of the tax payer's refund may be received by direct deposit or check.^[20]

Series HH[link]

Series HH bonds have been discontinued. Unlike Series EE and I bonds, they do not increase in value, but pay interest every six months for 20 years. When they are cashed in or mature they are still worth face value. Issuance of Series HH bonds ended August 31, 2004.^[21][22]

Holdings[link]

Domestic[link]

For the quantitative easing policy, the Federal Reserve holdings of U.S. Treasurys increased from $750 billion in 2007 to over $1.5 trillion by June 2011.^[23]

International[link]

As of March 2012,^[24] the top non-US holders of U.S. Treasurys are:

See also[link]

• Chiasso financial smuggling case
• Consol
• Government debt
• Interest
• Risk
• War bond
• War savings stamps
• Strong dollar policy

References[link]

External links[link]

• Bureau of the Public Debt: US Savings Bonds Online
• Major Foreign Holders of U.S. Treasury Bonds
• U.S. Bureau of the Public Debt: Series A, B, C, D, E, F, G, H, J, and K Savings Bonds and Savings Notes.
• Features and Risks of Treasury Inflation Protection Securities

James Beeland Rogers, Jr.
Born	(1942-10-19) October 19, 1942 (age 69) Baltimore, Maryland, USA[1]
Alma mater	Balliol College, Oxford Yale University
Occupation	Chairman of Rogers Holdings and Beeland Interests, Inc. Co-founder of the Quantum Fund
Website
www.jimrogers.com

James Beeland Rogers, Jr. (born October 19, 1942) is an American investor and author. He is currently based in Singapore. Rogers is the Chairman of Rogers Holdings and Beeland Interests, Inc. He was the co-founder of the Quantum Fund with George Soros and creator of the Rogers International Commodities Index (RICI).

Rogers is an outspoken proponent of the free market, but he does not consider himself a member of any school of thought. Rogers acknowledged, however, that his views best fit the label of Austrian School of economics.^[2][3]

Early life and education[link]

Rogers was born in Baltimore, Maryland and raised in Demopolis, Alabama.^[1][4] He started in business at the age of five by selling peanuts and by picking up empty bottles that fans left behind at baseball games. He got his first job on Wall Street, at Dominick & Dominick, after graduating with a bachelor's degree in History from Yale University in 1964. Rogers then acquired a second BA degree in Philosophy, Politics and Economics from Balliol College, Oxford University in 1966.

Business career[link]

1970-2002[link]

In 1970, Rogers joined Arnhold and S. Bleichroder. In 1973, Rogers co-founded the Quantum Fund with George Soros. During the following 10 years, the portfolio gained 4200% while the S&P advanced about 47%.^[5] The Quantum Fund was one of the first truly international funds.

In 1980, Rogers decided to "retire", and spent some of his time traveling on a motorcycle around the world. Since then, he has been a guest professor of finance at the Columbia Business School.^[6]

In 1989 and 1990, Rogers was the moderator of WCBS' The Dreyfus Roundtable and FNN's The Profit Motive with Jim Rogers. From 1990 to 1992, he traveled through China again, as well as around the world, on motorcycle, over 100,000 miles (160,000 km) across six continents, which was picked up in the Guinness Book of World Records. He tells of his adventures and worldwide investments in Investment Biker, a bestselling investment book.

In 1998, Rogers founded the Rogers International Commodity Index. In 2007, the index and its three sub-indices were linked to exchange-traded notes under the banner ELEMENTS. The notes track the total return of the indices as an accessible way to invest in the index. Rogers is an outspoken advocate of agriculture investments.

Between January 1, 1999 and January 5, 2002, Rogers did another Guinness World Record journey through 116 countries, covering 245,000 kilometers with his wife, Paige Parker, in a custom-made Mercedes. The trip began in Iceland, which was about to celebrate the 1000th anniversary of Leif Eriksson's first trip to America. On January 5, 2002, they were back in New York City and their home on Riverside Drive. His route around the world can be viewed on his website, jimrogers.com. He wrote Adventure Capitalist following this around-the-world adventure. It is currently his bestselling book.

2002 to present[link]

On his return in 2002, Rogers became a regular guest on Fox News' Cavuto on Business and other financial TV shows.^[7] In 2002, Rogers said that Fed Chairman Alan Greenspan's "reaction to the stock-market bubble has caused two more bubbles to grow: a real-estate bubble and a consumer-debt bubble."^[8] In 2006, Rogers said he was shorting US financials, home builders and Fannie Mae.^[9][10]

In 2005, Rogers wrote Hot Commodities: How Anyone Can Invest Profitably in the World's Best Market. In this book, Rogers quotes a Financial Analysts Journal academic paper co-authored by Yale School of Management professor, Geert Rouwenhorst, entitled Facts and Fantasies about Commodity Futures. Rogers contends this paper shows that commodities investment is one of the best investments over time, which is a concept somewhat at odds with conventional investment thinking.

In December 2007, Rogers sold his mansion in New York City for about 16 million USD and moved to Singapore. Rogers claimed that he moved because now is a ground-breaking time for investment potential in Asian markets. Rogers's first daughter is now being tutored in Mandarin to prepare her for the future. He is quoted as saying: "If you were smart in 1807 you moved to London, if you were smart in 1907 you moved to New York City, and if you are smart in 2007 you move to Asia." In a CNBC interview with Maria Bartiromo broadcast on May 5, 2008, Rogers said that people in China are extremely motivated and driven, and he wants to be in that type of environment, so his daughters are motivated and driven. He also stated that this is how America and Europe used to be. He chose not to move to Chinese cities like Hong Kong or Shanghai due to the high levels of pollution causing potential health problems for his family; hence, he chose Singapore. He has also advocated investing in certain smaller Asian frontier markets such as Sri Lanka and Cambodia, and currently serves as an Advisor to Leopard Capital’s Leopard Sri Lanka Fund.^[11] However, he is not fully bullish on all Asian nations, as he remains skeptical of India's future - "India as we know it will not survive another 30 or 40 years".^[12] In 2008 Rogers endorsed Ron Paul for President of the United States.^[13]

Rogers has two daughters with Paige Parker. Hilton Augusta (nicknamed Happy) was born in 2003, and their second daughter Beeland Anderson in 2008. His latest book, A Gift To My Children, contains lessons in life for his daughters as well as investment advice and was published in 2009.

On November 4, 2010, at Oxford University’s Balliol College, he urged students to scrap career plans for Wall Street or the City, London’s financial district, and to study agriculture and mining instead. “The power is shifting again from the financial centers to the producers of real goods. The place to be is in commodities, raw materials, natural resources."^[14]

In February 2011 Rogers announced that he has started a new index fund which focuses on "the top companies in agriculture, mining, metals and energy sectors as well as those in the alternative energy space including solar, wind and hydro."^[15] The index is called The Rogers Global Resources Equity Index and according to Rogers, only the best and most liquid companies go into the index.

Bibliography[link]

• 1995: Investment Biker: Around the World with Jim Rogers. - ISBN 1-55850-529-6
• 2003: Adventure Capitalist: The Ultimate Road Trip. - ISBN 0-375-50912-7
• 2004: Hot Commodities: How Anyone Can Invest Profitably in the World's Best Market. - ISBN 1-4000-6337-X
• 2007: A Bull in China: Investing Profitably in the World's Greatest Market. - ISBN 1-4000-6616-6
• 2009: A Gift to My Children: A Father's Lessons For Life And Investing. - ISBN 1-4000-6754-5

Further reading[link]

• Schwager, Jack D. (1993). Market Wizards: Interviews with Top Traders. Collins; Reissue edition. ISBN 0-88730-610-1. 
• Train, John (2003). Money Masters of Our Time. Collins; Reprint edition. ISBN 978-0-88730-970-0. 

External links[link]

This article's use of external links may not follow Wikipedia's policies or guidelines. Please improve this article by removing excessive or inappropriate external links, and converting useful links where appropriate into footnote references. (September 2010)

Wikiquote has a collection of quotations related to: Jim Rogers

• The Millennium Adventure, Official Jim Rogers website
• The Rogers International Commodity Index A site for information on the RICI

Articles

• "An Early Christmas for Jim Rogers". - BusinessWeek - December 8, 2004.
• "Invest In Commodities – and Keep Your Shirt". - November 23, 2006.
• "We Want Our Kids To Learn Chinese". - MySinchew. - July 19, 2008. - (article about Rogers' life in Singapore)
• "Adventure Capitalist". - PODER Magazine. - April 2010.

Interviews

• Curated Interview With Jim Rogers From Market Wizards
• Jim Rogers on the British Pound, US Dollar, And China
• Jim Rogers, The Adventure Capitalist
• Jim Rogers and George Soros Started the Quantum Fund
• rediff.com: The Money Interview/Jim Rogers, investor, globetrotter
• Financial Sense Newshour's Ask The Expert: Jim Rogers:
  • 2003.
  • May 6, 2004.
• Riverside Conversations: a 3 Part TV Series with Marc Faber
• SCMP video interview, September 8, 2008.
• Investors Chronicle interview. - (on the decline of the US/Europe, emerging markets, commodities). - November 2008.
• Bloomberg Night Talk interview. - November 24, 2008.
• Jim Rogers on The Lew Rockwell Show:
  • "The Crash of '08". - December 12, 2008. - (*.MP3 audio)
  • "Economic Advice to My Children (and You)". - May 17, 2009. - (*.MP3 audio)
• Bloomberg TV Jim Rogers Special. - December 24, 2008.
• TIME Q&A: Jim Rogers:
  • April 28, 2009.
  • October 31, 2008.
• Interview from March 2009 on Channel 4
• Jim Rogers Sat 3 Interview German TV Sat 3
• Euro is not to blame for crisis, BBC News, 26 December 2011.

References[link]

This article may require copy editing for grammar, style, cohesion, tone, or spelling. You can assist by editing it. (February 2012)

Max Keiser
Max Keiser in a London taxi
Born	Timothy Maxwell Keiser (1960-01-23) January 23, 1960 (age 52) New Rochelle, New York
Education	NYU
Occupation	Journalist
Notable credit(s)	Hollywood Stock Exchange, People & Power, The Oracle with Max Keiser, Karmabanque
Relatives	German and Scottish Ancestry, Hugh Maxwell, V 1777-1860
Website
http://maxkeiser.com

Timothy Maxwell "Max" Keiser (born January 23, 1960) is an American broadcaster and film-maker. He hosts Keiser Report, a financial program broadcast on RT (formerly Russia Today).^[1] Keiser also anchors On the Edge, a program of news and analysis hosted by Iran's Press TV.^[2] He hosted the New Year's Eve special, The Keiser's Business Guide to 2010 for BBC Radio 5 Live.^[3] Keiser presented a season of The Oracle with Max Keiser on BBC World News. Previously he produced and appeared regularly in the TV series People & Power on the Al-Jazeera English network. He also presents a weekly show about finance and markets on London's Resonance FM, as well as writing for The Huffington Post.^[4]

In addition to his broadcasting work Keiser is known for his invention of "Virtual Specialist Technology", a software system used by the Hollywood Stock Exchange.

Early career[link]

Keiser has been involved with markets and finance for 25 years. He started his career as a stock broker on Wall Street after graduating from New York University.

Hollywood Stock Exchange[link]

Keiser is the creator, co-founder and former CEO of HSX Holdings/Hollywood Stock Exchange, later sold to Cantor Fitzgerald.^[5] Alongside Michael R. Burns, he co-created the Hollywood Stock Exchange, ^[6] which allows traders to exchange virtual securities, such as "MovieStocks" and "StarBonds", with convertible virtual currency, the Hollywood Dollar.

Keiser is also the co-founder of HSX films, which went on to make almost a dozen films including Mixed Signals, Six-String Samurai, Dancer, Texas Pop. 81 and Girl. The company was bought by Ignite Entertainment/Lionsgate.

Broadcasting career[link]

Keiser presented Rumble at the Box Office^[7] for NBC's Access Hollywood. He also produced and hosted the weekly talk show Buy, Sell, Hold for CBS radio's KLSX in Los Angeles. Currently, he presents The Truth About Markets on Resonance 104.4 FM in London and on RDU 98.5 in Christchurch, New Zealand.

[edit] People & Power

Keiser produced ten short documentary films covering aspects of financial markets for Al Jazeera's series People & Power.^[8] The films include Rigged Markets,^[9] Money Geyser,^[10] Death of the Dollar,^[11] Peaked,^[12] Extraordinary Antics,^[13] Savers vs Speculators,^[14] Banking On It,^[15] Private Finance or Public Swindle?^[16] and Focus on Locusts.^[17]

[edit] The Oracle with Max Keiser

A pilot episode was produced for Al-Jazeera English titled The Oracle. This was developed into a series for BBC World News.^[18] The series first aired on 9 January 2009 and ran for ten episodes. It explored financial current affairs from the perspective of prediction markets. It was intended to be a humorous take on financial news before it happens.

[edit] On The Edge

A weekly financial commentary show which started in 2009 and is broadcast on Press TV, featuring interviews with well known alternative economists.^[19]

[edit] The Keiser Report

Since September 2009, Keiser has hosted The Keiser Report with financial news and analysis, on the RT network. The 30-minute program is produced three times a week. Stacy Herbert is the co-host and banters with Max on headlines and commentary.^[20]

An episode broadcast in September 2011 featured an interview with comedienne Rosanne Barr who stated that her solution to the financial crisis was to "bring back the guillotine".^[21]

Financial punditry[link]

Keiser has appeared as a financial pundit on a number of news networks. Keiser called for a "fatwā" against Hank Paulson^[22] on Al Jazeera in response to the Troubled Asset Relief Program (TARP). In a later broadcast Keiser said "Paulson stinks".^[23] Keiser has advised investors to buy silver bullion and physical silver, promoting the metal as a store of value.

Activism[link]

Karmabanque[link]

Keiser founded the hedge fund Karmabanque, which sought to profit from any decline in equity-value of companies that are susceptible to boycott from environmental groups.^[24] The hedge fund's progress was followed monthly in The Ecologist magazine.^[25] Its targets included Coca-Cola^[26] and McDonald's.

The Karmabanque hedge fund project was designed to simultaneously short-sell companies while funnelling profits into environmental and ethical-business pressure groups which further act to drive down the price. Describing the project Keiser stated, "The Internet allows people, activists, from all over the world to gather, or swarm, and hit a company where it hurts most - in their stock price".^[27]

Extraordinary Antics[link]

In the Al-Jazeera short film Extraordinary Antics,^[28] Keiser travelled to Milan and Venice to find out how CIA station chief Robert Seldon Lady and his fellow CIA agents spent $500,000 on a procedure known as extraordinary rendition - a practice which is illegal and caused an Egyptian citizen, who had been granted asylum in Italy, to be abducted in order to face torture in Cairo.

The CIA was prosecuted for the case and Mr. Lady was found guilty in a Milan court. He was sentenced on 9 November 2009 to nine years in prison according to the Guardian.^{[citation needed]} This verdict was upheld on appeal. The US refuses to extradite Mr. Lady to Italy.^[29]

Crash JP Morgan - buy silver[link]

Max Keiser has labeled JPMorgan "the biggest financial terrorist on Wall St" in relation to their alleged manipulation of the price of silver.^[30] Keiser started a campaign called "Crash JP Morgan - buy silver",^[31][32][33] whereby people buy silver, thus raising its price and leaving JPMorgan with a huge short position to cover, the margin of which are collateralized by JPMorgan's own stock price, bankrupting itself. Based on the collateralization of silver by the price of its shares and his allegation that JPMorgan's position is an overwhelmingly large naked short position, Keiser predicted that the a per-ounce silver price exceeding JPMorgan's stock price will not only crash JPMorgan but unsettle the underpinnings of the dollar, which he claims are essentially confetti.

Adweek magazine described Keiser as "the most visible character in an underground movement that has spurred hundreds of blog posts and videos, and played some small part in driving up the price of precious metals".^[34] However, Keiser's prediction that JPMorgan would go bust if silver hit 47 dollars has failed to materialise, drawing criticism from the financial community.

Criticism[link]

• The Guardian newspaper, in an item titled "Mad Max", described Keiser's Karmabanque hedge fund as a "fantastical scheme" and accused him of trying to exist "beyond the normal forces and controls of society".^[35]

• Keiser drew criticism at the 2000 ShowBiz Expo in Las Vegas when he said of media content that "Everything is inescapably going to a price point called free". In response Kevin Tsujihara, executive V.P. of New Media at Warner Bros., commented that "Piracy.com" will be the victor if superior content is available on sites supported by advertisements.^[36]

• In 2005 Steven Milloy, the "Junk Science" commentator, demanded that Keiser be removed from the panel of the Triple Bottom Line Investing conference, where he was scheduled to appear. Milloy accused Keiser of making threats against his organization^[37] and petitioned sponsors Calvert Investments and KLD Research & Analytics to withdraw from the project.^[38] Robert Rubenstein, founder of conference organiser Brooklyn Bridge, stated that Keiser's comments "do not constitute a threat to person or property and are not related to the conference or the content that will be presented there".

• Referring to Keiser's Karmabanque project, a spokeswoman for Ryanair said, "Since they put Ryanair on their list our share price has gone up by 10%. We are always delighted to be part of a list which includes Coca-Cola, Starbucks and Wal-Mart".^[39] However, on the same day The Hindu published an article in which Howard Millar, Ryanair deputy chief executive, admitted that his company may be vulnerable to environmental pressure groups, stating, "I am concerned that there is a continuing media campaign and the concern is that people might say 'maybe I will not fly on holiday and maybe I will make a different choice'".^[40]

See also[link]

Biography portal

• Error account - a term often mentioned by Max Keiser
• Central bank or Reserve bank
• Gold standard - where paper currency is backed up by the value of gold
• Hollywood Accounting

References[link]

External links[link]

• MaxKeiser.com Max Keiser's website
• chaostheorien.de Interview with Max Keiser at chaostheorien.de

Alan Greenspan
13th Chairman of the Federal Reserve
In office August 11, 1987 – January 31, 2006
President	Ronald Reagan George H. W. Bush Bill Clinton George W. Bush
Deputy	Manuel H. Johnson David W. Mullins, Jr. David W. Mullins, Jr. Alice Rivlin Roger W. Ferguson, Jr.
Preceded by	Paul Volcker
Succeeded by	Ben Bernanke
10th Chairman of the Council of Economic Advisors
In office 1974–1977
President	Gerald Ford
Preceded by	Herbert Stein
Succeeded by	Charles Schultze
Personal details
Born	(1926-03-06) March 6, 1926 (age 86) New York City, U.S.
Nationality	American
Political party	Republican
Spouse(s)	Andrea Mitchell (1997–present) Joan Mitchell (1952–1953, annulled)
Alma mater	New York University (B.S., M.A., Ph.D.)
Profession	Economist

Alan Greenspan (/ˈælɨn ˈɡriːnspæn/; born March 6, 1926) is an American economist who served as Chairman of the Federal Reserve of the United States from 1987 to 2006. He currently works as a private adviser and provides consulting for firms through his company, Greenspan Associates LLC. First appointed Federal Reserve chairman by President Ronald Reagan in August 1987, he was reappointed at successive four-year intervals until retiring on January 31, 2006 after the second-longest tenure in the position.

Greenspan came to the Federal Reserve Board from a successful consulting career, holding political views influenced by Ayn Rand. Although he was subdued in his public appearances, favorable media coverage raised his profile to a point that several observers likened him to a "rock star".^[1][2][3] Democratic leaders of Congress criticized him for politicizing his office because of his support for Social Security privatization^[4] and tax cuts that they felt would increase the deficit.^[5] The easy-money policies of the Fed during Greenspan's tenure has been suggested to be a leading cause of the subprime mortgage crisis, which occurred within months of his departure from the Fed, and has, said the Wall Street Journal, "tarnished his image".^[6]

Early life and education[link]

Greenspan was born in the Washington Heights area of New York City. His father Herbert Greenspan was of Romanian-Jewish descent and his mother Rose Goldsmith of Hungarian-Jewish descent.^[7]

Greenspan attended George Washington High School from 1940 until he graduated in June 1943, where one of his classmates was John Kemeny.^[8] He played clarinet and saxophone along with classmate Stan Getz. He further studied clarinet at the Juilliard School from 1943 to 1944.^[9] Among his bandmates in the Woody Herman band was Leonard Garment, Richard Nixon's Special Counsel. In 1945 Greenspan attended New York University where he earned a B.S. degree in economics summa cum laude in 1948^[10] and an M.A. degree in economics in 1950.^[11] At Columbia University, under the tutelage of Arthur Burns, he pursued advanced economic studies but dropped out.^[12]

U.S. economist Michael Hudson once fired Alan Greenspan, in 1966, 21 years before he became chairman of the U.S. Federal Reserve; “he was known as a hack that always gave ...his clients what they wanted instead of something actual.”^[13] In 1977, Greenspan obtained a Ph.D. degree in economics from New York University. His dissertation is not available from the university^[14] since it was removed at Greenspan's request in 1987, when he became Chairman of the Federal Reserve Board. However, a single copy has been found, and the 'introduction includes a discussion of soaring housing prices and their effect on consumer spending; it even anticipates a bursting housing bubble'.^[15]

Career[link]

Before the Federal Reserve[link]

During his economic studies at New York University, Greenspan worked under Eugene Banks, a managing director at the Wall Street investment bank Brown Brothers Harriman, working in the firm's equity research department.^[16] From 1948 to 1953, Greenspan worked as an economic analyst at The National Industrial Conference Board, a business and industry oriented think-tank in New York City.^[17] From 1955 to 1987, when he was appointed as chairman of the Federal Reserve, Greenspan was chairman and president of Townsend-Greenspan & Co., Inc., an economic consulting firm in New York City, a 33-year stint interrupted only from 1974 to 1977 by his service as Chairman of the Council of Economic Advisers under President Gerald Ford.^{[citation needed]}

In mid-1968, Greenspan agreed to serve Richard Nixon as his coordinator on domestic policy in the nomination campaign.^[18] Greenspan has also served as a corporate director for Aluminum Company of America (Alcoa); Automatic Data Processing; Capital Cities/ABC, Inc.; General Foods; J.P. Morgan & Co.; Morgan Guaranty Trust Company; Mobil Corporation; and the Pittston Company.^[19][20] He was a director of the Council on Foreign Relations foreign policy organization between 1982 and 1988.^[21] He also served as a member of the influential Washington-based financial advisory body, the Group of Thirty in 1984.

Chairman of the Federal Reserve[link]

On June 2, 1987, President Ronald Reagan nominated Greenspan as a successor to Paul Volcker as chairman of the Board of Governors of the Federal Reserve, and the Senate confirmed him on August 11, 1987. Investor, author and commentator Jim Rogers has said that Greenspan lobbied to get this chairmanship.^[23]

Two months after his confirmation Greenspan said immediately following the 1987 stock market crash that the Fed "affirmed today its readiness to serve as a source of liquidity to support the economic and financial system"^[24][25][26] George H. W. Bush blamed Fed policy for not winning a second term. Democratic president Bill Clinton reappointed Greenspan, and consulted him on economic matters. Greenspan lent support to Clinton's 1993 deficit reduction program.^[27] Greenspan, while still fundamentally monetarist in orientation, had eclectic views on the economy, and his monetary policy decisions largely followed standard Taylor rule prescriptions (See Taylor 1993 and 1999).

In 2000, Greenspan raised interest rates several times; these actions were believed by many to have caused the bursting of the dot-com bubble. However, according to Nobel laureate Paul Krugman "he didn't raise interest rates to curb the market's enthusiasm; he didn't even seek to impose margin requirements on stock market investors. Instead, he waited until the bubble burst, as it did in 2000, then tried to clean up the mess afterward."^[28] In autumn 2001, as a decisive reaction to the September 11 attacks and various corporate scandals which undermined the economy, the Greenspan-led Federal Reserve initiated a series of interest cuts that brought down the Federal Funds rate to 1% in 2004. While presenting the Federal Reserve's Monetary Policy Report in July, 2002, he said that "It is not that humans have become any more greedy than in generations past. It is that the avenues to express greed had grown so enormously." and suggested that financial markets need to be regulated.^[29] His critics, notably Steve Forbes, attributed the rapid rise in commodity prices and gold to Greenspan's loose monetary policy, which Forbes believed had caused excessive asset inflation and a weak dollar. By late 2004, the price of gold was higher than its 12 year moving average.

On May 18, 2004, Greenspan was nominated by President George W. Bush to serve for an unprecedented fifth term as chairman of the Federal Reserve. He was previously appointed to the post by Presidents Reagan, George H. W. Bush, and Clinton.

In a May 2005 speech, Greenspan stated: "Two years ago at this conference I argued that the growing array of derivatives and the related application of more-sophisticated methods for measuring and managing risks had been key factors underlying the remarkable resilience of the banking system, which had recently shrugged off severe shocks to the economy and the financial system. At the same time, I indicated some concerns about the risks associated with derivatives, including the risks posed by concentration in certain derivatives markets, notably the over-the-counter (OTC) markets for U.S. dollar interest rate options."^[30]

Greenspan opposed tariffs against People's Republic of China for its refusal to let the yuan rise.^[31] According to Bloomberg LP, "U.S. workers displaced by trade with China should be compensated, he said, through unemployment insurance programs and retraining."^[32]

Greenspan's term as a member of the Board ended on January 31, 2006, and Ben Bernanke was confirmed as his successor.

As chairman of the board, Greenspan did not give any broadcast interviews from 1987 through 2005.^[33]

After the Federal Reserve[link]

Immediately upon leaving the Fed, Greenspan formed an economic consulting firm, Greenspan Associates LLC.^[34] He also accepted an honorary (unpaid) position at HM Treasury in the United Kingdom.

On February 26, 2007, Greenspan forecast a possible recession in the U.S. before or in early 2008.^[35] Stabilizing corporate profits are said to have influenced his comments. The following day, the Dow Jones Industrial Average increased by 416 points and increased 3.3.% of its value.

In May 2007, Greenspan was hired as a special consultant by Pacific Investment Management Company (PIMCO) to participate in their quarterly economic forums and speak privately with the bond managers about Fed interest rate policy.^[36]

In August 2007, Deutsche Bank announced that it would be retaining Greenspan as a senior advisor to its investment banking team and clients.^[37]

In mid-January 2008, hedge fund Paulson & Co. hired Greenspan as an adviser. According to the terms of their agreement he was not to advise any other hedge fund while working for Paulson. (During 2007 Paulson had foreseen the collapse of the sub-prime housing market and hired Goldman Sachs to package their sub-prime holdings into derivatives and sell them. Some economic commentators blamed this collapse on Greenspan's policies while at the Fed.)^[38][39]

On April 30, 2009, Greenspan offered a defense of the controversial H-1B visa program, telling a U.S. Senate subcommittee that the visa quota is "far too small to meet the need" and saying that it protects U.S. workers from global competition, creating a "privileged elite". Testifying on immigration reform before the Subcommittee on Immigration, Border Security and Citizenship, he said more skilled immigration was needed "as the economy copes with the forthcoming retirement wave of skilled baby boomers".^[40] On April 19th 2012 Greenspan received the NYU an Alumni Award at the Plaza Hotel. He gave a speech about the lack of Congressional cooperation. Alan Greenspan (STERN ’48, ’77, GSAS ’50) - received the Eugene J. Keogh Award for Distinguished Public Service

Memoir[link]

Greenspan wrote a memoir titled The Age of Turbulence: Adventures in a New World, published September 17, 2007.^[41][42] Greenspan says that he wrote this book in longhand mostly while soaking in the bathtub, a habit he regularly employs ever since an accident in 1971, when he injured his back.^[43] Greenspan discusses in his book, among other things, his history in government and economics, capitalism and other economic systems, current issues in the global economy, and future issues that face the global economy. In the book Greenspan criticizes President George W. Bush, Vice President Dick Cheney, and the Republican-controlled Congress for abandoning the Republican Party's principles on spending and deficits. Greenspan's criticisms of President Bush include his refusal to veto spending bills, sending the country into increasingly deep deficits, and for "putting political imperatives ahead of sound economic policies".^[44] Greenspan writes, "They swapped principle for power. They ended up with neither. They deserved to lose [the 2006 election]."^[43][45] Of all the presidents with whom he worked, he praises Bill Clinton above all others, saying that Clinton maintained "a consistent, disciplined focus on long-term economic growth."^[46] Although he respected what he saw as Richard Nixon's immense intelligence, Greenspan found him to be "sadly paranoid, misanthropic and cynical". He said of Gerald Ford that he "was as close to normal as you get in a president, but he was never elected".^[45] As for advice regarding future U.S. economic policy, one change Greenspan recommends is for the U.S. to improve its primary and secondary education systems. He asserts this would narrow the unusually large gap between the minority of high income earners and the majority of workers, whose wages have not grown proportionately with globalization and the nation's GDP growth.^[47]

Objectivism[link]

Objectivist movement
Philosophy Objectivism Rational egoism Individualism Capitalism Romantic realism
Organizations Ayn Rand Institute Atlas Society Nathaniel Branden Institute Objectivist Party Libertarianz
Theorists Ayn Rand Andrew Bernstein Harry Binswanger Nathaniel Branden · Yaron Brook Allan Gotthelf · David Kelley Tibor R. Machan Leonard Peikoff · George Reisman John Ridpath · Richard Salsman Tara Smith
Literature Capitalism: The Unknown Ideal For the New Intellectual Introduction to Objectivist Epistemology The New Left Objectivism: The Philosophy of Ayn Rand Philosophy: Who Needs It The Romantic Manifesto The Virtue of Selfishness The Voice of Reason Objectivist periodicals Journal of Ayn Rand Studies
Related topics Libertarianism and Objectivism Objectivism and homosexuality Objectivist movement in India Randian hero Philosophical movement
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In the early 1950s, Greenspan began an association with famed novelist and philosopher Ayn Rand.^[41] Greenspan was introduced to Rand by his first wife, Joan Mitchell. Rand nicknamed Greenspan "the undertaker" because of his penchant for dark clothing and reserved demeanor. Although Greenspan was initially a logical positivist,^[48] he was converted to Rand's philosophy of Objectivism by her associate Nathaniel Branden. He became one of the members of Rand's inner circle, the Ayn Rand Collective, who read Atlas Shrugged while it was being written. During the 1950s and 1960s Greenspan was a proponent of Objectivism, writing articles for Objectivist newsletters and contributing several essays for Rand's 1966 book Capitalism: the Unknown Ideal including an essay supporting the gold standard.^[49][50] Rand stood beside him at his 1974 swearing-in as Chair of the Council of Economic Advisers. Greenspan and Rand remained friends until her death in 1982.^[41]

He has come under criticism from Harry Binswanger,^[51] who believes his actions while at work for the Federal Reserve and his publicly expressed opinions on other issues show abandonment of Objectivist and free market principles. However, when questioned in relation to this, he has said that in a democratic society individuals have to make compromises with each other over conflicting ideas of how money should be handled. He said he himself had to make such compromises, because he believes that "we did extremely well" without a central bank and with a gold standard.^[52] In a Congressional hearing on October 23, 2008, Greenspan admitted that his free-market ideology shunning certain regulations was flawed.^[53] However, when asked about free markets and Rand's ideas in an interview on April 4, 2010, Greenspan clarified his stance on laissez faire capitalism and asserted that in a democratic society there could be no better alternative. He stated that the errors that were made stemmed not from the principle, but from the application of competitive markets in "assuming what the nature of risks would be."^[54]

Criticism[link]

Housing bubble[link]

In the wake of the subprime mortgage and credit crisis in 2007, Greenspan stated that there was a bubble in the US housing market, warning in 2007 of "large double digit declines" in home values "larger than most people expect".^[55] However, Greenspan also noted, "I really didn't get it until very late in 2005 and 2006."^[56] Time magazine placed him third on a list of 25 people to blame for the financial crisis.^[57]

Greenspan stated that the housing bubble was "fundamentally engendered by the decline in real long-term interest rates",^[58] though he also claims that long-term interest rates are beyond the control of central banks because "the market value of global long-term securities is approaching $100 trillion" and thus these and other asset markets are large enough that they "now swamp the resources of central banks".^[59]

Following the September 11, 2001 attacks, the Federal Open Market Committee voted to reduce the federal funds rate from 3.5% to 3.0%.^[60] Then, after the accounting scandals of 2002, the Fed dropped the federal funds rate from then current 1.25% to 1.00%.^[61] Greenspan stated that this drop in rates would have the effect of leading to a surge in home sales and refinancing.

Besides sustaining the demand for new construction, mortgage markets have also been a powerful stabilizing force over the past two years of economic distress by facilitating the extraction of some of the equity that homeowners have built up over the years.^[61]

However, according to some, Greenspan's policies of adjusting interest rates to historic lows contributed to a housing bubble in the US.^[62] The Federal Reserve acknowledges the connection between lower interest rates, higher home values, and the increased liquidity the higher home values bring to the overall economy.

Like other asset prices, house prices are influenced by interest rates, and in some countries, the housing market is a key channel of monetary policy transmission. — Board of Governors of the Federal Reserve System, September 2005.^[63]

In a speech in February 2004,^[64] Greenspan suggested that more homeowners should consider taking out Adjustable Rate Mortgages (ARMs) where the interest rate adjusts itself to the current interest in the market.^[65] The fed own funds rate was at a then all-time-low of 1%. A few months after his recommendation, Greenspan began raising interest rates, in a series of rate hikes that would bring the funds rate to 5.25% about two years later.^[66] A triggering factor in the 2007 subprime mortgage financial crisis is believed to be the many subprime ARMs that reset at much higher interest rates than what the borrower paid during the first few years of the mortgage.

In 2008, Greenspan expressed great frustration that the speech he made on February 23, 2004 was used to criticize him on ARMs and the subprime mortgage crisis, and stated that he had made countervailing comments eight days after it that praised traditional fixed-rate mortgages.^[67]

In that speech, Greenspan had suggested that lenders should offer to home purchasers a greater variety of "mortgage product alternatives" other than traditional fixed-rate mortgages.^[64] Greenspan also praised the rise of the subprime mortgage industry and the tools which it uses to assess credit-worthiness in an April 2005 speech:

Innovation has brought about a multitude of new products, such as subprime loans and niche credit programs for immigrants. Such developments are representative of the market responses that have driven the financial services industry throughout the history of our country ... With these advances in technology, lenders have taken advantage of credit-scoring models and other techniques for efficiently extending credit to a broader spectrum of consumers. ... Where once more-marginal applicants would simply have been denied credit, lenders are now able to quite efficiently judge the risk posed by individual applicants and to price that risk appropriately. These improvements have led to rapid growth in subprime mortgage lending; indeed, today subprime mortgages account for roughly 10 percent of the number of all mortgages outstanding, up from just 1 or 2 percent in the early 1990s.^[68]

The subprime mortgage industry collapsed in March 2007, with many of the largest lenders filing for bankruptcy protection in the face of spiraling foreclosure rates. For these reasons, Greenspan has been criticized for his role in the rise of the housing bubble and the subsequent problems in the mortgage industry,^[69][70] as well as "engineering" the housing bubble itself:

It was the Federal Reserve-engineered decline in rates that inflated the housing bubble ... the most troublesome aspect of the price runup is that many recent buyers are squeezing into houses that they can barely afford by taking advantage of the lower rates available from adjustable-rate mortgages. That leaves them fully exposed to rising rates.^[71]

Stiglitz stated that Greenspan “didn't really believe in regulation; when the excesses of the financial system were noted, (he and others) called for self-regulation — an oxymoron.”^[72] Greenspan, according to The New York Times, says he himself is blameless.^[73] On April 6, 2005 Greenspan called for a substantial increase in the regulation of Fannie Mae and Freddie Mac: “Appearing before the Senate Banking Committee, the Fed chairman, Alan Greenspan, said the enormous portfolios of the companies — nearly a quarter of the home-mortgage market — posed significant risks to the nation's financial system should either company face significant problems.”^[74] Despite this, Greenspan still claims to be a firm believer in free markets, although in the 2007 publication of his biography, he writes, "History has not dealt kindly with the aftermath of protracted periods of low risk premiums" as seen before the credit crisis of 2008.

According to Robert Reich, "Greenspan's worst move was to contribute to the giant housing bubble and the worst worldwide crash since the Great Depression. In 2004 he lowered interest rates to 1%, enabling banks to borrow money for free, adjusted for inflation. Naturally, the banks wanted to borrow as much as they possibly could, then lend it out, earning nice profits. The situation screamed for government oversight of lending institutions, lest the banks lend to unfit borrowers. He refused, trusting the market to weed out bad credit risks. It did not."^[75]

In Congressional testimony on October 23, 2008, Greenspan finally conceded error on regulation. The New York Times wrote, "a humbled Mr. Greenspan admitted that he had put too much faith in the self-correcting power of free markets and had failed to anticipate the self-destructive power of wanton mortgage lending. ... Mr. Greenspan refused to accept blame for the crisis but acknowledged that his belief in deregulation had been shaken." Although many Republican lawmakers tried to blame the housing bubble on Fannie Mae and Freddie Mac, Greenspan placed far more blame on Wall Street for bundling subprime mortgages into securities.^[76]

Late 2000s recession[link]

In March 2008, Greenspan wrote an article for the Financial Times' Economists' Forum in which he said that the 2008-financial crisis in the United States is likely to be judged as the most wrenching since the end of World War II. In it he argued: "We will never be able to anticipate all discontinuities in financial markets." He concluded: "It is important, indeed crucial, that any reforms in, and adjustments to, the structure of markets and regulation not inhibit our most reliable and effective safeguards against cumulative economic failure: market flexibility and open competition." The article attracted a number of critical responses from forum contributors, who, finding causation between Greenspan's policies and the discontinuities in financial markets that followed, criticized Greenspan mainly for what many believed to be his unbalanced and immovable ideological suppositions about global capitalism and free competitive markets. Notable critics included J. Bradford DeLong, Paul Krugman, Alice Rivlin, Michael Hudson, and Willem Buiter.^[77]

Greenspan responded to his critics in a follow-up article in which he defended his ideology as applied to his conceptual and policy framework, which, among other things, prohibited him from exerting real pressure against the burgeoning housing bubble or, in his words, "leaning against the wind". Greenspan argued, "My view of the range of dispersion of outcomes has been shaken, but not my judgment that free competitive markets are by far the unrivaled way to organize economies." He concluded: "We have tried regulation ranging from heavy to central planning. None meaningfully worked. Do we wish to retest the evidence?"^[78] The Financial Times associate editor and chief economics commentator, Martin Wolf, responded to the discussion with an article defending Greenspan primarily as a scapegoat for the market turmoil. Several notable contributors in defense of Greenspan included Stephen Roach, Allan Meltzer, and Robert Brusca.^[79]

An October 15, 2008, article in the Washington Post analyzing the origins of the economic crisis claims that Greenspan vehemently opposed any regulation of derivatives, and actively sought to undermine the office of the Commodity Futures Trading Commission when the Commission sought to initiate regulation of derivatives. Meanwhile, Greenspan recommended improving mark-to-market regulations to avoid having derivatives or other complex assets marked to a distressed or illiquid market during times of material adverse conditions as seen during the late 2000s credit crisis.^[80]

Greenspan was not alone is his opposition to derivatives regulation. In a 1999 government report that was a key driver in the passage of the Commodity Futures Modernization Act of 2000—legislation that clarified that most over-the-counter derivatives were outside the regulatory authority of any government agency—Greenspan was joined by Treasury Secretary Lawrence Summers, Securities and Exchange Commission Chairman Arthur Levitt, and Commodity Futures Trading Commission Chairman William Ranier in concluding that "under many circumstances, the trading of financial derivatives by eligible swap participants should be excluded from the CEA" (Commodity Exchange Act). Other government agencies also supported that view.^[81]

In Congressional testimony on October 23, 2008, Greenspan acknowledged that he was "partially" wrong in opposing regulation and stated "Those of us who have looked to the self-interest of lending institutions to protect shareholder's equity — myself especially — are in a state of shocked disbelief."^[53] Referring to his free-market ideology, Greenspan said: “I have found a flaw. I don’t know how significant or permanent it is. But I have been very distressed by that fact.” Rep. Henry Waxman (D-CA) then pressed him to clarify his words. "In other words, you found that your view of the world, your ideology, was not right, it was not working," Waxman said. "Absolutely, precisely," Greenspan replied. "You know, that’s precisely the reason I was shocked, because I have been going for 40 years or more with very considerable evidence that it was working exceptionally well."^[82] Greenspan admitted fault^[83] in opposing regulation of derivatives and acknowledged that financial institutions didn't protect shareholders and investments as well as he expected.

Matt Taibbi described the Greenspan put and its bad consequences saying: "every time the banks blew up a speculative bubble, they could go back to the Fed and borrow money at zero or one or two percent, and then start the game all over", thereby making it "almost impossible" for the banks to lose money.^[84] He also called Greenspan a "classic con man" who, through political savvy, "flattered and bullshitted his way up the Matterhorn of American power and ... jacked himself off to the attention of Wall Street for 20 consecutive years."^[85]

In the documentary film Inside Job Greenspan is cited as one of the persons responsible for the Economic Meltdown of 2008 and named in Time Magazine as one of the "25 People to Blame for the Financial Crisis".

Political views and alleged politicization of office[link]

Greenspan describes himself as a "lifelong libertarian Republican".^[45]

In March 2005, in reaction to Greenspan's support of President Bush's plan to partially privatize Social Security, Democratic Senate Minority Leader Harry Reid attacked Greenspan as "one of the biggest political hacks we have in Washington"^[4] and criticized him for supporting Bush's 2001 tax cut plan.^[5] Then-Democratic House Minority Leader Nancy Pelosi added that there were serious questions about the Fed's independence as a result of Greenspan's public statements.^[86] Greenspan also received criticism from Democratic Congressman Barney Frank and others for supporting Bush's Social Security plans favoring private accounts.^[87][88][89] Greenspan had said Bush's model has "the seeds of developing full funding by its very nature. As I've said before, I've always supported moves to full funding in the context of a private account."^[90]

Others, like Republican Senator Mitch McConnell, disagreed that Greenspan was too deferential to Bush, stating that Greenspan "has been an independent player at the Fed for a long time under both parties and made an enormous positive contribution".^[91]

Economist Paul Krugman wrote that Greenspan was a “three-card maestro” with a "lack of sincerity" who, "by repeatedly shilling for whatever the Bush administration wants, has betrayed the trust placed in the Fed chairman".^[92]

Republican Senator Jim Bunning, who opposed Greenspan's fifth reconfirmation, charged that Greenspan should comment only on monetary policy, not fiscal policy.^[93] However, Greenspan had used his position as Fed Chairman to comment upon fiscal policy as early as 1993, when he supported President Clinton's deficit reduction plan, which included tax increases and budget cuts.^[94]

Personal[link]

Greenspan has married twice. His first marriage was to an artist named Joan Mitchell in 1952; the marriage ended in annulment less than a year later.^[95] He dated newswoman Barbara Walters in the late 1970s.^[41] In 1984, Greenspan began dating journalist Andrea Mitchell. Greenspan at the time was 58; Mitchell is 20 years younger. In 1997, they were married by Supreme Court Justice Ruth Bader Ginsburg.^[96][97]

Honors[link]

President George W. Bush presents the Presidential Medal of Freedom to Alan Greenspan, on November 9, 2005 in the East Room of the White House.

Greenspan was awarded the Presidential Medal of Freedom, the highest civilian award in the United States, by President George W. Bush in November 2005.^[98] His honorary titles include Commander of the French Légion d'honneur (Legion of Honor, 2000) and Knight Commander of the British Empire (2002).^[99] In 2006, Greenspan was awarded the Department of Defense Medal for Distinguished Public Service.^[100]

In 2004, Greenspan received the Dwight D. Eisenhower Medal for Leadership and Service, from Eisenhower Fellowships. In 2005, he became the first recipient of the Harry S. Truman Medal for Economic Policy, presented by the Harry S. Truman Library Institute. In 2007, Greenspan was the recipient of the inaugural Thomas Jefferson Foundation Medal in Citizen Leadership, presented by the University of Virginia.

On December 14, 2005, he was awarded an honorary Doctor of Commercial Science degree by NYU, his fourth degree from that institution.^[101]

See also[link]

• List of United States political appointments that crossed party lines

References[link]