The Age of Turbulence: Adventures in a New World [Hardcover]

In light of the credit crisis, many blame former US Federal reserve chairman Alan Greenspan for the current malaise in the world economy. However, the man himself chooses to describe it as a once in century type event. Caught in the debate is this memoir of his which went into print barely months after credit bubble burst.

Greenspan unquestionably played a key role in how the US economy as well as the world economy has panned out for over the last five decades. Bearing that in mind this book deserves respect and it does not disappoint. It is engaging and interesting. The author clearly acknowledges that he conveys his understanding of the world in context of his own experiences.

Essentially, the book dwells on Greenspan's illustrious career in the first half and his thoughts on the economy and monetary policy in the second. A trawl through Greenspan's career is highly readable containing bits about how he found his way into central banking and dealt with not just a succession of US presidents from Ford to Bush, but incoming and outgoing administrations as well. It is packed with anecdotes about anything in government circles from Greenspan meeting Margaret Thatcher to conversing with Rush Limbaugh about the Mexican crisis.

From there on to the latter stages of the book, one gradually gets an insight into the former Fed Chairman's thoughts, the influence of Adam Smith on him and his vivid description of the "failure of Keynesian economic models." For those claiming Greenspan had a preference for keeping rates artificially low, there's plenty on ammunition as he admits his liking for "cutting interest rates to make it easier for people to borrow and spend." However, in his defence, Greenspan explains how he kept the recession short via low interest rates following the dotcom bubble and kept them low until he saw an economic recovery.

His problem was that by the time the Fed raised the rates it was already too late and seeds of the current economic malaise had been sown. There is a bit of bravado in his writing which does unravel during current market conditions. For instance, he notes: "Many economists credit central bank monetary policy as the key factor in the last decade's reduction in inflation worldwide." With both economists and central bankers equally foxed and staring at deflation, such statements now seem to be a bit over the top.

Clinton and Greenspan both share some of the blame for the current crisis. This emerges in Chapter 7 of the book which is a fascinating read. Throughout the narrative Greenspan endorses repeal of the Glass-Steagall Act by Clinton in 1999 which ensured complete separation of between commercial banks and investment banks and so began the cycle of high risk taking for high returns.

Furthermore, Clinton's policy of beefing up the Community Reinvestment Act (1977) dwelling on relaxation of rules for mortgage lending fanned the subprime market, which hitherto accounted for less than 5% of all borrowing but rose to 30% by the time Greenspan penned the final thoughts for this book.

In summation, the author perhaps wanted this book to be the celebration of his career. Regrettably, it has rather become an insight into what and where monetary policymakers, bankers and those in financial circles tripped-up.

This should not discount Greenspan's work and his life in public service. He was player in what was to unfold and for the readers he provides a vivid account for them to draw their own inferences. I feel it is a decent book. However, it's prudent to mention that I did find myself frequently disagreeing with the great man's take on the World Economy.

The first part of the book takes you through Greenspan's working life and reminds us that financial crises occur rather frequently and although circumstances change two factors appear to be constant: the greed of the financial community and their sheep like behaviour in following others into, for example, SE Asia prompting the financial crisis there in the 90's or high tech stock driving the dot.com bubble. No surprise then that the current crisis (a level 5 crisis according to the definition provided early in this book) is a consequence of reckless pursuit of high risk investment.

In the second part of the book Greenspan shares his thoughts on economic theory across a range of subjects (and in doing so loses some of the writing fluency from the first part as too much technical jargon is employed - losing a star in the process!). In this section he reveals, unwittingly, a fundamental flaw in his economic thinking. Greenspan's view is regulation needs to be minimised to allow markets to grow most effectively and that control in the market will come from self interest. The fundamental flaw is the self interest of the CEO, who sets the strategy for a company, is not necessarily the same as the self interest of the company i.e. the CEO gets rich while the company goes bust (RBS...!).

Overall a great read - full of stacks of relevant and valuable information.

Alan Greenspan as chairman of the Federal Reserve for almost two decades was at 'the commanding heights' of policy making in the world's most powerful economy. During his tenure the American Economy enjoyed remarkably good health which contributed to the almost iconic status of the author.

Interestingly for a banker, the book is excellent in that it is both intelligently written and pleasantly read. On occasions it is lively and candid. In this regard the author criticises President Bush for not exercising restraint in public spending while asserting that the Iraq war was largely about oil.

The first half of the book comprise reminiscences of the author while in the balance he reflects on the main economic issues which will confront governments in the decades to come.

The author relates America's economic history since the 1950s through his experience in business and in government and at the Federal Reserve Board. He comments on America's Presidents from Nixon to Bush and British Prime Ministers from Margaret Thatcher to Tony Blair.

Compared to only twenty years ago, the new financial world is turbulent - hence the title of the book - more flexible, resilient, open and fast changing.

Reflecting on the future the author speculates on China's prospects, Russia's prospects, Latin America's prospects, demographics, corporate governance, inequality, energy and the like.

Mr Greenspan has been criticised for not acting pre-emptively by keeping interest rates low for too long and thus precipitating bubbles in the stockmarket and real estate. He acknowledges the criticism but maintains his stance.

This popular book should appeal to a wide readership interested in World Economics