Europe News

Strip Greenspan of His Knighthood: SocGen Strategist


Fred Goodwin, the former chief executive of Royal Bank of Scotland, last week joined Italian Fascist dictator Benito Mussolini, Romania's Communist dictator Nicolae Ceausescu, communist spy Anthony Blunt and Zimbabwe's Robert Mugabe on the list of people who have had their knighthoods rescinded by the UK.

Alan Greenspan

He’s not the only high-profile Sir from the business world who should lose his knighthood, Albert Edwards, strategist at Societe Generale, wrote in a research note Thursday.

Edwards, known for his bearishness, believes that ex-Federal ReserveChairman Alan Greenspan – who was given an honorary knighthood (the only kind non-Commonwealth citizens can hold) in 2002 for his services to the world economy – and Bank of England Governor Mervyn King should also have their titles taken away.

“Long before the credit bubble burst, we had identified the former and current head of the US Federal Reserve as primarily responsible for the inevitable debacle. The UK’s Bank of England was similarly responsible for presiding over a copy-cat catastrophe. If knighthoods are being removed for those held primarily responsible for the debacle, shouldn’t Sir Alan Greenspan and Sir Mervyn King, like the ex-CEO of RBS Fred Goodwin, be stripped of their honors too?” he argued.

“It is the Central Bank’s job to remove the punchbowl and be unpopular. Hence I believe it is the monetary authorities in both the US and the UK who are almost wholly responsible for allowing this lax monetary environment and the boom and bust in their respective economies. I find it simply incredible that they have been so successful at shifting the blame elsewhere.

Terry Smith, CEO of Tullett Prebon, also called recently for Greenspan, who presided over the Fed between 1987 and 2006, to lose his title.

While the title Sir may conjure up images of medieval chivalry, in the modern UK, it is more often used to reward former politicians and business leaders who have done the state some service than it’s used to refer to people who have rescued damsels in distress.

Goodwin has attracted particular opprobrium in the public eye because RBS had to be bailed out by the British taxpayer following its takeover of ABN Amro close to the top of the market – which many view as spurred by his own hubris.

The size of his pension from RBS, valued at more than 700,000 pounds ($1.1 million) annually at one point, was the focal point for attacks, and he eventually accepted a smaller sum after receiving death threats.

King, who has been governor of the BoE since 2003, has been criticized in the past for not spotting the signs that the UK was headed for recession. Since the credit crisis, he has slashed interest rates to all-time lows, and enacted several rounds of quantitative easing. The latest round, announced on Thursday, will bring the total stimulus to 325 billion pounds. He has expressed his admiration for Greenspan publicly several times and the two men have both served on the Group of Thirty, a group of leading economists.