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Friday, 27 September, 2002, 15:38 GMT 16:38 UK
Alan Greenspan: Market maestro
Alan Greenspan Newsmaker
Caroline Frost

The chairman of the US Federal Reserve, Alan Greenspan, has been awarded an honorary knighthood. But, in his own country, he's finding his reputation a little tarnished.
At 5.30 every morning a lugubrious, 76-year-old American sits in the bath for an hour and a half, reading, thinking, and writing, while the hot water flows. His tub-time toilings send ripples around the globe.

Americans are in awe of the man described by columnist Christopher Hitchens as a "mousy, bespectacled accountant". After all, it's Alan Greenspan's task to set the interest rates for the country, and thus affect every penny spent or saved in the western world.

Nixon and Kissinger
Nixon and Kissinger were both contemporaries
Greenspan has wielded his financial influence from Wall Street to Washington since 1968, when he worked on Richard Nixon's presidential campaign.

Since then, he has served, in some capacity, every president except Jimmy Carter, and his long tenure at "the bankers' bank" has seen him become one of the world's most powerful men.

His job requires him to go before Congress twice a year to give an economic assessment. Greenspan represents the public face of American capitalism; he carries totemic status when things are going well.

At the last session, he told the Senate not to worry about stock market volatility. Now, as US bankers watch their balance sheets suffer, so their almost superstitious belief in him is being tested accordingly.

The Queen with Alan Greenspan and wife Andrea Mitchell
The Queen has made Alan Greenspan an honorary knight
Greenspan's federal duties follow a lucrative business career as an economic consultant, dating from 1953.

Providing advice for such impressive clients as US Steel and JP Morgan, the young financier became an expert across the fields of industry, with an intimate understanding of the national balance sheet.

Half a century later, his job hasn't really changed, except now his role is the balancing of the books.

His knowledge of the economy is staggering, but he rationalises that, "after a lifetime of study, you should know how the system works".

Counting the bars

If all this number-crunching seems a little dry, away from the abacus, Greenspan cuts a more unconventional figure.

Alan Greenspan
Financial markets hang on Greenspan's every word
As a Jewish teenager from New York with a passion for music, he initially dropped out of college to play clarinet and saxophone.

Greenspan only became interested in book keeping as a way of filling time between sessions with his swing combo, Henry Jerome and his Orchestra.

One of the group later remarked that he always knew Greenspan would leave them, as "he was just too good at doing their taxes".

Biographer Bob Woodward calls Greenspan "Maestro", both for his musicianship, and his method of financial guidance, his "awareness of every instrument in the political and economic orchestra".

Ayn's apostle

Although an alumnus of Columbia University, Greenspan's intellectual ideas were honed in the salon of Russian novelist, libertarian and right-wing ideologue Ayn Rand.

If I seem clear to you, you must have misunderstood

The ever discreet Alan Greenspan
Her novel, Atlas Shrugged, is currently impressing members of the UK's Conservative Party. Of his time in her ironically-titled Collective, Greenspan recalled: "She made me think why capitalism is not only efficient and practical, but also moral."

A lifelong Republican who went to the same school as Henry Kissinger, Greenspan has nevertheless proved deft at crossing party divides, and spreading his influence much further than the GOP.

Working in harmony with Bill Clinton throughout the former president's two terms ensured a period of prosperity and economic expansion for their nation. But it is this halcyon era that has now come back to haunt the financial guru.

Stock market stoic

The BBC's economics editor, Evan Davies, says Greenspan's double-edged achievement has been to "preside over a boom and bust".

Stock broker
Greenspan's reputation has taken a battering
"Although he has been accused of prolonging America's period of growth and therefore causing their current national low, Greenspan remains optimistic about the country's long term prosperity," says Davies.

"He doesn't give in to short-term fears, and he doesn't let stock market gloom get him down."

A regular on the Washington party circuit, Greenspan is an introvert who goes out to gather intelligence. As a man whose every utterance and smile can change spreadsheets across the world, he is inevitably careful with his words.

Revered in high places

His reticence is justified. In 1996, he delivered a speech, questioning the effect of "irrational exuberance on asset values". The Dow Jones index fell 145 points the next day.

Greenspan muses that he worries he "might end up being too clear". In fact, his speaking style has become so guarded and ambiguous that he reportedly had to propose twice before his wife understood the question.

Alan Greenspan
Greenspan's reputation is going downhill
Nevertheless, Congress at home and financial markets everywhere continue to hang on his every word. During the televised debates of the 2000 presidential election, candidates Bush and Gore were asked what they would do first in an economic emergency.

The winning man, George W, replied without hesitation, "Get in touch with Alan Greenspan."

Whether the bespectacled accountant with the hang-dog expression will enjoy the same status of market master by the time of the next race for the White House in 2004, will remain to be seen.

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25 Sep 02 | Business
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