Alan Greenspan Knew The Truth…

From page 226 of The Price of Loyalty: George W. Bush, the White House, and the Education of Paul O’Neill by Ron Suskind:

Greenspan listened to the give-and-take with impatience. Yes, yes, we know all that. “I get back to corporate financial policy:dividends, stock options, incentives.”

He wanted the causal logic he and O’Neill embraced to be so compelling it could not be denied. “Before 1980, share buybacks were discouraged,” Greenspan said. “Returns were driven by dividends. Earnings are a very dubious measure…” And he began to pull apart the gold standard — earnings per share — that drove markets, expectations, hope and fear. There are so many tools a CEO can use to “craft” an earnings statement, so many ways to mislead. “All asset values, after all, are just based on a forecast…” The group was following his every word, but the chairman did not see in their gazes an outrage to match his own. He clapped his hand on the table and raised his voice. “There’s been too much gaming of the system until it is broke. Capitalism is not working! There has been a corrupting of the system of capitalism.”

… it’s just too damned bad he never said this in public to the rest of us!

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