Not content with merely criticizing Ben Bernanke, and the Federal Reserve in general, Alan Greenspan has found a new punching bag in Citigroup, Bank of America, JP Morgan, and Wachovia’s $75 billion Master Liquidity Enhancement Conduit (MLEC), saying that it could have terrible consequences and risks doing more harm than good (and that “it’s name is just plain stupid, and, dare I say it, worse than the Bear Stearns High-Grade Structured Credit Strategies Enhanced Leverage Fund”). Though the plan is an attempt to prevent SIVs from being forced to dump assets in a weak market because scared investors won’t buy their new commercial paper, Greenspan, who since retiring has been spotted taking classes on Freud at the Learning Annex, argues that the move “could conceivably make [conditions affecting investor psychology] somewhat adverse because if you believe some form of artificial non-market force is propping up the market you don’t believe the market price has exhausted itself. Events where we go from euphoria to fear virtually overnight are built into human nature and you cannot really defuse them until the speculative fever breaks. When it breaks, it’s very abrupt and you just have to wait it out.”

Greenspan also criticized the intervention because it will make “the vultures stay away,” and, in his (not saying early stages of dementia but something like that) estimation, “the vultures sometimes are very useful.” As an aside, AG noted: “There will be a crash in China, I just don’t know when.” I shit you not.

Greenspan delivers sharp warning on superfund [Emerging Markets]