Straight answers of the direct variety were a bit hard to come by during the two-decade-long and much-storied tenure of Alan Greenspan as chairman of the Federal Reserve Board. But now we have a long-awaited presumably straight answer to at least one big lingering question: It was his brown-bagged lunch.
The Age of Turbulence: Adventures in a New World
(The Penguin Press), was released recently, and for anyone who cares about finance or politics, it is a must-read -- despite its flaws. It gets a coveted Business Press Maven "Help" award and will, unless Greenspan writes many more books before the end of the year, be included on my "best of" yearly wrap-up list. The writing style is a whole lot easier on the ears than Greenspan's sometimes obfuscating speaking style, so don't worry that it'll take a Profile in Courage to read.
But while many other reviewers have given the book standard reviews, The Business Press Maven is going to come at this book sideways. During Greenspan's chairmanship, he had a relationship with the business media as convoluted as anyone's in the history of American finance. Make that world finance. He was worshiped blindly, criticized incessantly and never entirely understood for the great, flawed, self-promoting, self-justifying figure he was.
Part of the strength of this book is that it gives you that proper sense of who he was. It could have been a better book if he could have admitted and made a study of some of his larger mistakes -- such as a purported lack of awareness about housing troubles -- but if he did that, you wouldn't finally get an overall sense of what we were actually dealing with, from the wonderful economic intellect to the warts. Despite his rumpled, professorial appearance, Greenspan could, like most survivors in Washington, cobble together an explanation for pretty much anything. Or stay dead quiet when it served him.
To this end, I want to walk you through the several parts of the book that are designed to solve some of the mysteries of Greenspan's involvement with the business media, my area of interest. While we heard a lot over those two decades from the media about Greenspan, we did not hear much from Greenspan about the media.
Mystery Number One
's "briefcase indicator." This omen held in somewhat playful terms (that were often taken seriously) that when Greenspan walked to Federal Open Market Committee meetings with a thin briefcase, his mind was clear and the economy was moving along swimmingly. A thick briefcase meant the opposite: He had been hunched over economic figures right up until the time of the meeting, the economy was troubled, and a rate hike loomed.
Despite the obvious lack of lasting correlation between the thickness of Greenspan's briefcase and rate cuts, the "briefcase indicator" became business media and Wall Street lore. And because of the obvious lack of correlation, I believe Greenspan's simple but hilarious explanation: "The fatness of my briefcase was solely a function of whether I had packed my lunch."
Mystery Number Two
: Greenspan's own take on his famed "irrational exuberance" speech, when he uttered the words that would come to define an economic era. Here, I don't trust Greenspan's falsely modest "What, me?" explanation. The speech in which he mentioned "irrational exuberance" was -- like all his public talk -- perfectly calibrated. He would never have used such explosive words, even buried so as not to immediately bury the economy, deep in the text.
But Greenspan claims that he was a bit blindsided by the business media's extraction of this phrase, innocently puzzled that they ran with this as their takeaway.
Wrote Greenspan, in aw-shucks mode:
Admittedly, this the speech was not Shakespeare. It was pretty hard to process, especially if you'd had a drink or two during the cocktail hour and were hungry for dinner to be served. When I came back to the table, I whispered to Andrea Mitchell, his television reporter wife -- we'll get there and the others seated there, "What part of that do you think will make news?"
What an ingenue, huh? He didn't even know that, though it was needed, pulling the rug out of the entire economy by saying its strength was in large part the function of the overactive imagination of investors would cause a stir.
Mystery Number Three
: As an adviser to President Ford, Greenspan was thought to have hurt his election chances with a quote, eventually traced back to him, that the economy was "pausing." I never understood why, strategically, he would say such a thing. It wasn't really true in a larger sense. Was he trying to court favor with Carter, assuming he would win? But Greenspan seemed otherwise to be loyal to Ford.
Sure enough, those words were taken out of context. Hear a fuller portion of what Greenspan said and you understand that he saw otherwise strong growth in one of several brief, periodic lulls. Interestingly, too, Greenspan is obviously fond of Ford as a person more than any other president. In a statement both acerbic and telling, he says that Ford would probably perform better on psychological tests than any other president. He attributes the rise of a more normal man to the presidency to the fact that he didn't need to be elected to office.
Mystery Number Four
: Last, I always wondered how a man with such a love-hate, understood-misunderstood relationship with the media ended up marrying a member of the Fourth Estate. What was his rap? Hilariously, Greenspan lays it all out there. At his first dinner date with Mitchell, Greenspan asked her back to his place. To read an essay he wrote on monopolies.
At the time of publication, Fuchs had no positions in any of the stocks mentioned in this column.
A journalist with a background on Wall Street, Marek Fuchs has written the County Lines column for The New York Times for the past five years. He also contributes regular breaking news and feature stories to many of the paper's other sections, including Metro, National and Sports. Fuchs was the editor-in-chief of Fertilemind.net, a financial Web site twice named "Best of the Web" by Forbes Magazine. He was also a stockbroker with Shearson Lehman Brothers in Manhattan and a money manager. He is currently writing a chapter for a book coming out in early 2007 on a really embarrassing subject. He lives in a loud house with three children. Fuchs appreciates your feedback;
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