Greenspan's Deficits

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Any qualms about Greenspan are dwarfed by fears of what will happen in January when his term as a Fed governor expires. Most Fed watchers agree that Greenspan has done a superb job of shepherding the economy, especially since he has had to contend with two major stock-market corrections, assorted global financial crises, a rash of corporate scandals and 9/11. An economy's success is tied to confidence, and Greenspan has made believers out of marketmakers and policymakers.

Almost by definition, his successor and the economy over which he or she presides will start off at a disadvantage, especially if Greenspan fails to steady the rocky economy in the months ahead. Some Fed watchers are worried that the President might pluck from corporate America a CEO with little formal finance background to run the Fed, as he did with John Snow at Treasury. The most likely candidates, though, are Martin Feldstein, a Harvard professor and former head of President Reagan's Council of Economic Advisers (CEA); Glenn Hubbard, dean of Columbia Business School, who ran the CEA during much of Bush's first term; and Ben Bernanke, just nominated to be the new CEA chief.

Whoever gets the job obviously has a very tough act to follow, in more ways than one. "In the short term, he did wonders for the U.S. economy, but now we are saddled with the bill," says Ravi Batra, an economist at Southern Methodist University and author of a new polemic, Greenspan's Fraud: How Two Decades of His Policies Have Undermined the Global Economy. That's a harsh verdict. But if Alan Greenspan misses the universal acclaim he once enjoyed, he may have only himself to blame. It was Greenspan, after all, who famously warned about the perils of irrational exuberance.