The Magical Alan Greenspan


January 13, 2001



BROOKE GLADSTONE: Let's see what happened in the market this week. After a huge early January selloff on dismal economic signs, bad corporate news again came fast and furious. Yet the Nasdaq Index actually recovered because Wall Street is expecting another interest rate cut from Federal Reserve Chairman Alan Greenspan, or at least that's what we've been hearing. As Bob discovered this week, it seems there's hardly a question about the economy for which - in the media at least - Alan Greenspan isn't the answer!

BOB GARFIELD: The lengths people go to, to divine to divine the intentions of Alan Greenspan!

MAN: Let's check the brief case-- [MUSIC] indicator-- [MISSION IMPOSSIBLE MUSIC]

BOB GARFIELD:No matter how impossible that mission, the financial markets and the media that cover them keep on trying. The daily CNBC program Squawk Box actually examines the thickness of Greenspan's satchel to conclude whether an interest rate change is in the offing.

WOMAN It does look kind of chubby.

MAN: I don't think so.

MAN: Yeah! [BOTH SPEAK AT ONCE]

WOMAN Let's - come on - let's get another shot of it - let me see from the side-- [BOTH SPEAK AT ONCE]

MAN: I, I thi-- that looks pretty good! Look at the way the line of the leather breaks--

BOB GARFIELD: Squawk Box is by no means alone in the effort to interpret every move, every utterance, every non-utterance of the inscrutable Fed Chairman for signs of his intentions. Greenspan, he of the owlish expression and opaque public persona, is stalked by the press as if he were the Princess Diana, the JFK, Jr., the Marilyn Monroe of Monetary Policy! Except-- he isn't dead -- no matter what you may have concluded by listening to his congressional testimony.

FED CHAIRMAN ALAN GREENSPAN: When confronted with a period of structural change, our policy actions must be based in large part on identifying emerging trends from surprises and anomalies in the data--

BILL GRIFFITHS:When he sits down to discuss monetary policy or the course of interest rates -- when he's sitting down in Congress there -- nobody knows what he's talking about, and that's on purpose!

BOB GARFIELD: Bill Griffiths is host of CNBC's midday Power Lunch program.

BILL GRIFFITHS:He doesn't say left or right, up or down, north or south; when all is said and done you still don't know how hot it's going to be tomorrow!

BOB GARFIELD:Doesn't matter though. The Great Man has spoken. Consider Lisa Sing Honya. She's an Associated Press reporter in New York who has the unenviable duty in each day's market wrap-up story to synthesize from the billion or two billion shares traded what particular news or economic forces moved the market. This exercise is approximately like finding a key phrase to describe the Collected Works of Aristotle.

BILL GRIFFITHS: It's a lot of educated guesswork. And one of the things you realize very quickly is that nobody knows quite what's going on in the market, but on a day where Alan Greenspan is going to do something -- when the Federal Reserve is going to meet -- I think it's safe to say that you won't have to worry about your lead for the day.

BOB GARFIELD:It's strange to recall that this man was on Gerald Ford's Council of Economic Advisors during the days of 20 percent inflation and was viewed skeptically by Wall Street 13 and a half years ago as a supposed political animal subject to presidential manipulation. Now he is virtually synonymous with independence, perspicacity and something approaching papal infallibility. In a story about OPEC oil ministers this week, the New York Times used the phrase, without feeling any need for further explanation, "Greenspan-like precision." Furthermore, he's a bone fide celebrity!

BOB GARFIELD: What do you think of Alan Greenspan?

WOMAN I heard that if - whatever he says, the market follows.

BOB GARFIELD: What do you think of Dennis Hastert?

WOMAN I don't know who that is.

BOB GARFIELD: What do you think of Alan Greenspan?

MAN: I think he's doing a good job!

BOB GARFIELD: How about Vladimir Putin? Any thoughts?

MAN: Don't know him.

BOB GARFIELD: What do you think of Alan Greenspan?

WOMAN I think he's doing a good job.

BOB GARFIELD: With the--

WOMAN With the market and the situation, yeah.

BOB GARFIELD: And what about Justin Timberlake. How do you feel about him?

WOMAN Who is this?

BOB GARFIELD: Lead singer for 'N Sync.

WOMAN Don't know him.

BOB GARFIELD:It's hard to believe that any Federal Reserve Board Member could be a household name, but thanks in no small part to the media's obsession with him, Greenspan has transcended his carefully cultivated dullness to become a short, balding, somewhat aged matinee idol.

LLOYD GROVE: He's-- at the top of the Ziggurat.

BOB GARFIELD: Lloyd Grove writes the Reliable Source Gossip Column for the Washington Post and is himself poised, ever-vigilant, on the Greenspan watch because -- well - duh!

LLOYD GROVE: He's-- the most powerful man in the world! At least that's what I'm saying.

BOB GARFIELD: And that means tracking his every after 5:00 p.m. move -- not that Greenspan swoops through Washington with Henry Kissinger-like flamboyance. He swoops through Washington on the arm of his wife, NBC's Andrea Mitchell, with studied diffidence. He put the "reserve" in Federal Reserve. He is the center of a worldwide cult of non-personality.

LLOYD GROVE: He's not really an ebullient sort of guy. The most fascinating thing I ever heard about him is that when he takes a, a bath at 5:30 in the morning and-- thinks the great thoughts about the economy, he adjusts the water temperature by manipulating the taps with his toes.

BOB GARFIELD:Yeah, yeah, yeah - finding just the right balance - neither too cool nor overheated. The point is the man is of such mythic stature that the Washington Post is trading in his metatarsal bathwater adjustment behaviors! How weird is that?! Well, actually, upon further reflection, it's not weird at all, because Greenspan is no longer merely the steward of economic expansion nor even the master of economic expansion. Under the ever-more-bearish circumstances wherein all hope is invested in one historic figure, he has become the messiah of economic expansion for the investment community and especially for those who cover it. CNBC's Bill Griffiths.

BILL GRIFFITHS: Now he's God! The media need a symbol. We need a catch phrase. We need, you know, something that will personalize a story - that we when all is said and done don't fully understand. I mean who understands economics? If you can give it a face - if you give it a personality [LAUGHS] -- you can better explain what this is all about.

BOB GARFIELD:So: load up on Greenspan futures, no matter how bad the corporate news, no matter how rapidly we veer toward recession, no matter how thin the man's briefcase is, you don't have to worry about a bear market for Alan Greenspan. Because the media's obsessive fixation on the chairman of the Federal Reserve is not based on what he actually does nor even on irrational exuberance. It is based at least as much on naked self interest, and media self interest, unlike economic expansion, is immutable and forever.