As IF Times

link Greenspan Should Have Seen Housing Crisis, Burry Says in Times – Bloomberg.com.

For those watching the repercussions and players surrounding the recent bank collapse in the U.S., it’s fascinating to watch the responses of the very key players.  Michael Burry will be recorded as one of the first and few people to actually key into the gross imbalances building in the bond and swap markets for mortgage debt.   He came to this conclusion not because of accident, but by very painstaking and thorough individual research, poring over volumes of dry and numbingly arcane documents.  He was amply rewarded for his work and conviction.

Alan Greenspan, whose genius credentials are eroding rapidly with the passage of time, dismisses Burry’s work as “statistical illusion”, basically saying Burry was lucky.  Alan Greenspan’s own place in history is yet to be written given his being totally blindsided by the debacle in the housing market and the ensuing collapse of Lehman Brothers, Bear Stearns and essentially, Merrill Lynch.  For years, the maestro of incomprehensible economic babble, he assumed the position of oracle of the financial markets deigning to be able to read all the statistical measures of economic activity with authoritative accuracy.  Not to deny his immense intellect, nonetheless, Mr. Greenspan has spent his life in academia having essentially no real life experience, certainly not in putting his money where his mouth is.  Sound like anyone else we know?

The point is not to dump on Mr. Greenspan, because people make mistakes.  But he does ask for some questioning of his credibility if he dismisses the work of others whose views don’t align with his own perceptions.  This smacks of arrogance and lack of intellectual integrity.  It may be that he has a stake in the consequences of an interest rate policy which he was very much responsible for during the balloon like expansion of credit which fueled the run-up in home prices.  Even a person not as endowed with his intellect would know that when a large pile of dry tinder is assembled, all that is needed as some kind of spark to set the whole pile alight.  This is the kind of homespun wisdom acquired in real life experiences.  The artificially low interest rates which prevailed on his watch as Federal Reserve Board Chairman undoubtedly was a main ingredient to the speculative housing bubble that ensued.  To not think that this might end in some kind of calamity is a serious professional mistake.  Apparently the complex and artificial models of the world which Greenspan works in didn’t allow for this.  As I have opined before, I’d much rather listen to a guy with a chest full of experience than a desk full of theories.