Architecture

Most architects must have a fulfilling life. You design, you build, and you and others admire for years to come. With respect to the financial system, loud calls are being made for a new architecture. How did we get here and where do we go?

Alan Greenspan has been referred to as the "intellectual architect" of current policy and financial structure. That makes him "similar in profession" to his mentor Ayn Rand's most famous character, Howard Roark. Maybe not in the completely uncompromising, unconventional way, but no doubt Rand/Roark's influence made its way into Greenspan's laissez-faire, free market philosophy.

The other name to invoke here is Adam Smith. Greenspan is again a long-time admirer of the 18th century economist/philosopher. Trust the invisible hand, and society will maximize its potential.

A key distinction must be made, however, between free market commerce and free market finance. When Greenspan was mastering his craft, pouring over thousands and thousands of pieces of data, figuring out mathematical relationships and dissecting economic indicators, he was engrossed in the real economy. When he became Fed Chairman though, he inherited power and persuasion over financial markets. Quotes from the late 90's show that he was clearly in favor of extending the invisible hand throughout the financial system and limiting the reach of regulation.

By now it is clear that the financial architecture is going to undergo change. Speculation and leverage have different systemic implications in the financial markets than they do in commerce, and steps are being taken to prevent the current crisis from reoccurring once we have all conveniently forgotten the missteps of the recent past. I sincerely hope though that the current architects keep the spirit of Greenspan's philosophy alive, albeit with a humble acknowledgment that trust and transparency are key characteristics of a sustainable financial system.

Washington Heights' Finest

The George Washington High School in the Washington Heights section of Manhattan has a number of notable alumni. Henry Kissinger's diplomacy, Harry Belafonte's creative juices, and Rod Carew's hitting stroke all trace their origins to the school. The two alums, however, who are still grabbing the most headlines in today's world, Alan Greenspan and Manny Ramirez, are seemingly very different, yet share a common opacity to the general public. To wit:

Ramirez: "Forget about the trade man. This is the place I want to be man. It's great man. They love me here man. This is the place to be. 'Manny being Manny', it's great man."

July 31, 2005; just after having delivered a game-winning hit on the trade deadline after fully expecting to leave the Red Sox

Greenspan: "I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I've said."

1988; shortly after becoming Fed Chairman

You could make the argument that lack of clarity gives a Fed Chairman the freedom and flexibility to react appropriately as the economic conditions and markets ebb and flow. And that eccentricity also gives a baseball player the freedom and flexibility to "be himself" in a high-pressure media market.

But what happens after "the game is over"? Greenspan's The Age of Turbulence offers valuable insight into how he formed his worldview and applied it to his job. I, for one, can't wait until Manny's career is over and he writes his book.