Andrew Balls of the FT has a superb overview of Alan Greenspan's tenure at the Federal Reserve. It's so good that it would take me more time to cut summary quotes from it than I have this afternoon. So subscribe to the FT and read it:
FT.com / Comment & analysis / Analysis - The activist unafraid to depart from the rules: By Andrew Balls: The Fed chief is due to step down at the end of January, when his term on the central bank’s board of governors expires. At the end of this week, central bankers and economists from around the world will gather for the Fed’s summer retreat in Jackson Hole, Wyoming, to give their verdict.... Mr Greenspan took over at the Fed on August 11 1987 – less than two weeks before “Black Monday”, when the Dow Jones industrial average dropped 22.6 per cent; the largest daily fall in the history of the US stock market. Mr Greenspan’s immediate response, saying the Fed would pump money into the financial system to maintain liquidity, helped to put an end to worries about how the central bank would fare after the departure of Paul Volcker, his predecessor.
Since then US economic growth has averaged about 3 per cent a year and the annual rise in the consumer price index has also averaged about 3 per cent. Unemployment has averaged slightly more than 5½ per cent. Mr Greenspan has cemented the Fed’s anti-inflation credibility but his reputation has been built on the flexibility he has shown. The challenge for his successor will be to match Mr Greenspan’s record of getting the big calls right.
Mervyn King, governor of the Bank of England, points in an interview to his counterpart’s deep thinking, flexibility, communication skills and judgment. He refers to a piece of writing by John Maynard Keynes, the founder of macroeconomics, on another British economist, Alfred Marshall: “Keynes, in his obituary of Marshall, said that a great economist must possess a rare combination of gifts: mathematician, historian, statesman, philosopher. Alan Greenspan embodies that.”...