When Alan Greenspan retired in 2005, the reviews of his tenure by the mainstream media were practically unanimous. Bravo, Mr. Maestro! No commemoration of his 18-year reign was complete without some variation of the phrase, "he presided over the longest period of peacetime economic growth in United States history."
Before the echo of those words fade, take a quick look at the front page of the Wall Street Journal on Wednesday, which morosely declares that for stock investors, the past 10 years may go down in history as a "lost decade" equivalent to the 1930s and 1970s.
The stock market is trading right where it was nine years ago. Stocks, long touted as the best investment for the long term, have been one of the worst investments over the nine-year period, trounced even by lowly Treasury bonds.
The Standard & Poor's 500-stock index, the basis for about half of the $1 trillion invested in U.S. index funds, finished at 1352.99 on Tuesday, below the 1362.80 it hit in April 1999.
Granted, the stock market is not the same thing as the overall economy, but if you accept the argument that at least a portion of the housing boom and bust and the U.S.'s current economic travails are the result of monetary policy moves orchestrated by Greenspan to keep the stock market humming, then you must at least consider reevaluating the former Federal Reserve chairman's legacy. To bequeath unto the nation one of the great sustained periods of lackluster stock performance in living memory, along with possibly the worst economic downturn since the Great Depression, is, well, historic.
But it could be worse. As economist Dean Baker impishly wonders, "suppose we had invested Social Security in the stock market?"
In other news, new home sales dropped again, to the lowest pace in 13 years, orders for durable goods took an "unexpected dip," and, in my absolute favorite sound bite of the day, Financial Times chief economics commentator Martin Wolf declares that March 14, 2008 (the day the Federal Reserve forced Bear-Stearns to accept JPMorgan's buyout offer), "was the day the dream of global free-market capitalism died."
You heard it here first: Alan Greenspan is a stone-cold killer. He murdered global free-market capitalism!