Reply #51: One Good(k)night does not a sweet prince make

[54anickel]

http://www.fallstreet.com/feb106.php

One of the many themes coursing through Shakespeare’s Hamlet is the Prince of Denmark’s transformation from a man of thought into a man of action. For most of the play Hamlet is building a case against Claudius (for the murder of his father) and debating his options in the form of memorable soliloquies. In the end, and after Hamlet ‘catches the conscience of the King’, an unpredictable killing spree ensues, spawned by the hand of the now murderous but once procrastinator Hamlet.

During Alan Greenspan’s charmed tenure as Federal Reserve Board Chairman the audience, which in this case was investors instead of playgoers, queried when the Fed would act. And while 18-years of anticipation wrought some instances of unpredictability, for the most part Greenspan proceeded in a very pedestrian manner: He collected inflationary evidence (which seemed almost non existent during much of his tenure) and occasionally tightened monetary policy. In the later years, he collected deflationary evidence and loosened monetary policy accordingly. In short, Greenspan was largely a man of inaction that followed the Wall Street script.

The major exception to Sir Greenspan’s tale of inaction was his response to crisis type events. For example, following the 1987 crash, the Asian crisis, LTCM, and the 2000 stock market bust the usually unhurried Greenspan reacted with great zeal by loosening monetary policy and/or promising future liquidity (some have also suggested that the Fed used direct intervention to keep stock prices from collapsing and to keep gold from skyrocketing, but that is another story). The bailout/easy money policies in response to would be tragedies (Y2K included) are to some Greenspan’s greatest trait, and for others his tragic flaw.

There are parallels between Hamlet and Greenspan. Both laboriously gathered evidence in the quest for truth. Where Hamlet wanted to identify his father’s killer, Greenspan wanted to identify a sound money policy. However, there is also a key difference. Whereas Hamlet finally acted on the basis of his conscience, Greenspan acted against it. This is why the one engenders a degree of sympathy from the audience despite his delayed action. This is also why the other will likely be vilified should his easy money policies prove a destructive influence in the future.

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