Deconstructing Alan Greenspan

For many years, Alan Greenspan mesmerized markets, investors and politicians around the world. He has been credited as a sage, a sphinx – and, on occasion, a magician. But now, less than a year before his planned retirement after 18 years as Chairman of the U.S. Federal Reserve, the chorus of his critics is becoming ever louder.

What has set Alan Greenspan apart from the other politicians and officials in Washington?

“The Fed Chairman is the closest thing in Washington to a deity.”

(Marshall Wittman of the Democratic Leadership Council, March 2005)

Does everyone share that view?

“I think he’s one of the biggest political hacks we have in Washington.”

(U.S. Senate Minority Leader Harry Reid (D-NV), March 2005)

Why the change in sentiment?

“Does anyone still take Greenspan’s pose as a non-partisan font of wisdom seriously?”

(New York Times columnist Paul Krugman, March 2005)

Are there any other reasons?

“As an economic prognosticator, Greenspan has been about as effective as a Cardinal trying to hit Red Sox pitching.”

(Steven Pearlstein, Washington Post columnist, October 2004)

Which other charges are being raised against the Fed Chairman?

“Not only should central bankers avoid asset bubbles — but they shouldn’t be cheerleaders.”

(Andrew Smithers of investment advisers Smithers & Co., March 2004)

How did the Greenspan mystique work?

“Greenspan, who speaks authoritatively if not clearly, sometimes leaves to other Fed officials the role of speaking clearly — but not authoritatively.”

(Barron’s columnist Thomas G. Donlan, May 2004)

What about his recent penchant to take political positions?

“If Fed Chairman Alan Greenspan keeps making news at his current pace, we’ll have to give him his own cable channel — G-SPAN.”

(Allan Sloan, Newsweek’s Wall Street editor, March 2004)

What about his views on Social Security reform?

“Greenspan is not an elected official. But he has reminded us of what elections are supposed to decide.”

(E.J. Dionne Jr., senior fellow at the Brookings Institution, February 2004)

Just how worried is Wall Street about Mr. Greenspan's lax monetary policies?

“With Mr. G at the reins, the Fed has become a one-trick pony – and that trick is awfully, even dangerously, stale.”

(Barron’s columnist Alan Abelson, January 2004)

Mr. Greenspan, how would you defend yourself?

“So long as markets are free and human beings exhibit swings of euphoria and distress, the business cycle will continue to plague us.”

(Alan Greenspan, January 2004)

Finally, why would the world be well-advised to look way beyond Alan Greenspan – and, in fact, America?

“Remember these names: Toshihiko Fukui, Zhou Xiaochuan, Perng Fai-Nan, Park Seung, Joseph Yam and Yaga Venugopal Reddy. They are the central bank governors of Japan, China, Taiwan, South Korea, Hong Kong and India, respectively. They are also arguably more important for U.S. monetary policy than Alan Greenspan, the Federal Reserve chairman, or his successor who will take on the role next year.”

(Chris Giles, Financial Times economic editor, February 2005)