CERAWeek: More from Greenspan

Naturally, we couldn’t fit everything former Fed Chairman Alan Greenspan said into today’s story, so here are a few things that didn’t make it:
CERA Chairman Daniel Yergin asked Greenspan to clarify a widely cited comment from his book where he said, “it is politically inconvenient to acknowledge what everyone knows: The Iraq war is largely about oil.”
The comment wasn’t “a conspiratorial view” but rather meant that it was oil money that made it possible for former Iraqi President Saddam Hussein to invade Kuwait and threaten the rest of the region, Greenspan said.
“There will be a footnote in the paperback,” Greenspan joked.
As one who has spent most of his life as an analyst, Greenspan said he tended to view the world objectively, “that you’re not part of the action.” But when writing his book he had to use the word “I” all the time.
“When you write in the first person you have a greater capacity to make assertions where the evidence is somewhat less than you’d require …” otherwise, he said.
On being a numbers geek:
“When I see numbers I visualize what it means in the real world,” he said, such as changes in the percentage of scrap that is produced per metal ingot by steel plants. “When you look at numbers you’re looking at the real world.”
On what characteristic all the presidents he’s worked for had (except Gerald Ford, whom he called the closest to “normal” of any person he knew):
“There’s a fierceness in all of them which if they didn’t have they couldn’t function in that office. What lands on their desk”… are problems “no one else can solve.”
The current financial turmoil will probably lead to a new way of looking at risk management, he said. Most risk management models have been using numbers based on a “normal distribution” of results over time. Since economies spend a relatively short time in crisis, most of that data reflects times of gradual shifts.
“But you need the risk management models to work their best during the fear stage,” Greenspan said.

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