Friends Don't Let Friends Publish Rambling Op-Eds

One of the reasons I'm back to blogging is that it is highly therapeutic; it provides me an outlet to vent when venting is a better alternative to hair-pulling, gnashing of teeth, wailing, or similar types of activities that annoy my co-workers deeply.


For instance, take today's op-ed in the FT by Alan Greenspan. Now, I'm not a compulsive, Krugman-esque Greenspan-basher like some (Paul Krugman, for instance). But I defy anyone to read this and come away with any understanding of what the former Federal Reserve Chairman is trying to say. Here's my effort:

1. Capital buffers have a cost as well as a benefit.
2. The general public are foolish sheep.
3. Private actors make risk decisions; public actors clean up the mess when they get it wrong.
4. Private actors got it wrong; financial calamity ensued.
5. Public actors, regrettably, intervened to clean up the mess; moral hazard ensued.
6. Sufficient capital buffers would, by definition, have prevented financial calamity and, by extension, the spike in moral hazard.
7. Public actors are therefore encouraging bigger capital buffers.
8. Bigger capital buffers are bad.
9. A debate will occur.

End.

-------

To step away from snarkiness for a moment, there are some very valid points in this piece (particularly about the negative side-effects of higher capital buffers on wealth creation). But taken as a whole, it is an incoherent mess. Not to mention his blithe disregard for the increasingly frequency of financial crises and the enormously negative wealth effects associated with those, too. I am left scratching my head at the FT editors who let this one slip through the cracks. 


Actually, on second thought, maybe they've deliberately done the world a service.