The end of an era
Today Dr. Alan Greenspan steps down as chairman of the United States Federal Reserve. It is the end of an era. During his more than 18 years as Fed chairman, US growth averaged 3.1 per cent, inflation 3.1 per cent and unemployment 5.5 per cent. America enjoyed the longest expansion in its history, with only five quarters of negative growth in two brief and shallow recessions.Mr Greenspan's great strength as Fed chairman was his open, inquiring mind. As a policymaker he was sceptical about models and forecasts, preferring to glean insight from a wide range of raw data that captures the shifting patterns of a fast-changing economy. This approach led him in the 1990s to spot very early on the "missing variable" of rising US productivity growth. Mr Greenspan steered the economy through a host of crises: the 1987 stock market crash, the savings and loan debacle, a series of emerging market crises in the 1990s, the collapse of Long Term Capital in 1998 and the terrorist attacks of September 11, 2001. His understanding of capital markets and of the benefits of financial innovation were second to none. And his risk management paradigm offered a helpful way of thinking about decision-making in an uncertain world, rightly leading him to take mild risks with inflation to see off the risk of deflation in 2003. During his time in office, the Fed as an institution grew in quality and reputation: he passes on a superb staff and an impressive team of governors. Mr Greenspan also made big strides in making the Fed more open and communicative, with the speedier publication of its policy statement and more detailed minutes. As he steps down from his position as chairman of the US Federal Reserve today.
In summary Dr. Alan Greenspan will be departing his role as one of the great economic figures. Having steered the world's largest economy for 18 years, under four Presidents, through a stock market crash, the September 11 attacks and the dotcom boom, Dr Greenspan hands over the reins. The 79-year-old former professional saxophone player has seen America endure two mild recessions under his stewardship but is generally acknowledged as leading the US economy through a sustained period of growth and prosperity.
