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Last Updated: Thursday, 29 December 2005, 22:05 GMT
In quotes: Robert Rubin on Greenspan
Robert Rubin was Treasury Secretary (1995-1999) during President Clinton's administration. His period coincided with a fraught time for the world economy: the emerging market currency crisis.

Alongside his deputy Larry Summers, he worked with Alan Greenspan to look for ways to stabilize the turbulent markets. Time Magazine dubbed the trio "the Committee to Save the World." He talked to Sir Howard Davies for BBC Radio 4's The Greenspan Years (to be broadcast at 2000 GMT on Monday, 2 January, 2006).

ON WORKING WITH GREENSPAN

The Asian financial crisis was a very good example of how well this worked. If we had all started with what you might refer to as ideologies, or sets of beliefs, and our whole discussion was guided or shaped, or informed, by those ideological belief-based views, I don't think we could ever have functioned together effectively.

What actually happened was: we sat down in the face of what were in many ways unprecedented circumstances, and circumstances of great importance not only to our country but probably to the whole global economy.

And we looked at the facts and then we reacted analytically, and we worked our way through to what was a common view of the appropriate strategy.

ON GREENSPAN'S PRODUCTIVITY INSIGHT

[Productivity] was something we discussed a great deal, and in the early stages of it, when you went to your respective economics departments - Greenspan at the Fed. Larry and me at the Treasury - the economists didn't see it.

But Alan had an instinct from what he did see that there was something going on that the economists weren't explaining. He couldn't point the proof of it but it was his instinct on everything he saw happening. And of course in time the proof emerged, and what you had was a greatly increased productivity rate.

ON "THE CULT OF GREENSPAN"

Each chairman has been the personification of the Fed, and in the case of Volcker [Greenspan's predecessor, Paul Volcker] people said that when he stepped down nobody could ever take his place and Volcker was a great hero of his time. Alan came along and now Alan is a great hero of his time in the eyes of many, and I think he has done an extremely good job.

I think Ben Bernanke was a very good choice, but he will have to face his challenges and prove his mettle. And I think the nature of the institution is such, and the nature of the media is such, with the media trying to present things in simplified ways so that people can easily relate to, that if a chairman does handle the job reasonably well, then I think it does get personified in the person of the chairman.

ON GREENSPAN AND THE STOCK MARKET BUBBLE

An important question facing economic historians is: when you have a bubble of the kind that developed in 99 - and it certainly had begun even earlier than that - should a Federal Reserve chairman, should a Secretary of the Treasury, in effect issue public warnings? And I think the answer is no. Alan did have that elusive comment, or that alluding kind of comment about irrational exuberance.

But I do not think you want to have a Federal Reserve Board chairman or Secretary of the Treasury issuing red, white and yellow warnings about stock markets. I think that is a very dangerous position for any aspect of the Federal government to be in.



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