Greenspan to Walk Tightrope

Haste still pays haste, and leisure answers leisure; Like doth quit like, and measure still for measure. --
Shakespeare's Measure for Measure

Time is running out on Alan Greenspan, the long-serving chairman of the Federal Reserve. Expected to retire in just under a year when his term to the Fed's Board of Governors runs out, the maestro's legacy, if he departed today, would be one of responsible stewardship of monetary policy and of a chairman who helped the economy weather a series of crises without a major crash.

But there's still one challenge left for Greenspan -- orchestrating the unwinding of the massive stimulus put in place after the Internet bubble popped and terrorists attacked on 9/11. Having kept inflation-adjusted, or real, short-term interest rates in negative territory for more than three years, the chairman and his colleagues are now moving to bring rates back to normalcy as soon as possible.

Whether they can do so without igniting a crisis in any of the pockets of speculation and "excessive risk taking" they have created, brings to mind William Shakespeare's line that haste still pays haste. Or in this case, perhaps, leverage still pays leverage and the carry trade answers the carry trade. ...