One of the perks of being a divinity is that your teachings go unquestioned. By that standard,

Alan Greenspan enjoyed at least a solid couple of years among those ranks. However, his once-sacrosanct reputation is looking a lot more earthbound these days.

In the good times, the media, Wall Street and some investors regarded the

Fed chief with a blind devotion approaching idolatry. "He had been revered, but he was anointed in '98," says David Orr, chief economist at

First Union Capital Markets

. "It was a coronation." The level of adulation for Greenspan was off the scale compared with earlier Fed chairmen -- as was the tremendous expansion of the economy, which began exactly 10 years ago next month.

But lately that invincible image has started to fray around the edges as companies have retrenched, laying off employees and slashing spending, and the

Nasdaq

and

S&P

have stumbled into bear market territory. One analogy compares Greenspan to the Wizard of Oz: Right now investors are a lot like Dorothy, just discovering that the Wizard is only a human being.

The question, says finance professor Meir Statman of Santa Clara University, is "whether what is happening now is something that was bound to happen, a wave much too powerful even for Greenspan

to withstand, or whether he was sluggish in his response."

Now, the debate rages. Critics on Wall Street say the Fed chief deserves blame for the slumping stock markets, complaining that the Fed contributed to the current economic slowdown by hiking rates too aggressively last year. Between June 1999 and the following May, the Fed raised interest rates by 1.75 percentage points, to 6.5%. But others contend the Fed chief cannot be expected to solve all the problems of the economy through adjustments in monetary policy. Greenspan defenders also say keeping the market afloat isn't one of his job requirements, and that his aggressiveness last year was aimed in part at taming the "irrational exuberance" he first warned of in December 1996. They say Greenspan deserves credit for taking time to carefully read the direction of conflicting economic signals, rather than giving in to investors' demands for a very aggressive rate cut schedule.

Either way, what's noteworthy is that the argument is taking place at all.

Criticisms Mount

Since January the Fed has changed its course, cutting rates by almost as much, slashing 150 basis points in less than three months.

But even that's not enough to appease some critics. In a

Wall Street Journal

editorial last month, Wayne Angell, chief economist at

Bear Stearns

and a former governor of the Fed, argued that the times call for more aggressive cuts, given the dramatic drop in annual economic growth from 5% to 1% last year.

Even in Washington, the Fed chief has lost points. Only a year ago, during a hearing for Greenspan's renomination at the Fed,

Senate Banking Committee

head

Phil Gramm

practically gushed compliments. "Millions of people ... owe you a deep debt of gratitude for your leadership," he said, "and for doing more than probably anyone else on the planet to produce the strong economy we have today." But during testimony before lawmakers in February, Greenspan faced reprimands from those who complained that the Fed's rate increases in 2000 worsened current economic problems and suggested rate cuts should have begun sooner.

To be sure, average Americans still seem pretty satisfied with Mr. Greenspan's performance. In a March poll for the

Wall Street Journal

/

NBC News

conducted by

Hart-Teeter Research

, Greenspan earned a positive rating from 55% of respondents, with only 8% giving him a negative rating. While 17% of those polled gave him credit for economic gains, only 4% blamed him for problems in the economy.

Unrealistic Expectations

Still, there's no denying the tide of opinion is changing, with sentiment in some quarters of Wall Street taking a sharp turn toward the critical. But is such a swing in opinion fair? Or are investors punishing Greenspan for the simple fact that the market is reverting back to normal after a long, gleeful joy ride away from economic reality?

Some economists say the latter is true, suggesting investors have come to embrace impractical ideas about what the Federal Reserve is actually capable of doing. Even as powerful an institution as the Fed shouldn't be expected to shoulder sole responsibility for the economy and the market, they say. "It's really an unrealistic expectation that the Fed all on its own, with only monetary policy and jawboning, could effect all the fine-tuning needed to maintain the economy's momentum," says Samuel Hayes, who teaches investment banking at

Harvard's

business school.

Tax policy and government spending form two other legs in the three-legged stool, he says.

In any case, a government institution can't really be held accountable for the behavior of millions of Americans who wildly bid up the Nasdaq past 5000, and went on a spending spree that has created staggering levels of consumer debt. In the wake of that crazy run-up, a cooling-off period may be warranted to return the economy to some semblance of normalcy.

"I think that we've had a market that's had a lot of froth in it and that froth was inevitably going to have to be squeezed out," says Hayes, "so this market correction is no more than the engagement of economic gravity that is pulling things back toward a rational price base. The sour grapes will probably continue as long as the market continues to trend downward. People are always looking for a scapegoat, and it makes good copy to dump on Greenspan."

Current economic troubles notwithstanding, economists credit Greenspan with steering the economy through rough spots several times in his 14-year tenure. The Fed helped stave off recession with rate cuts that bolstered sentiment after the market crash in 1987 and the emerging markets crisis in 1998.

Other times, Greenspan went above and beyond the call of duty, lending his prestige to outside efforts to keep the economy on an even keel. In October 1987, Hayes recalls, Greenspan mobilized banks and other lenders to provide liquidity for several troubled Wall Street houses that appeared likely to default. In 1995, he helped muster support in

Congress

for a massive loan to help Mexico through its devastating peso crisis. And three years later, he threw his weight behind a plan to garner support from Wall Street firms for a bailout of massive hedge fund

Long-Term Capital Management

, preventing another crisis.

Proceed With Caution

Even now, some economists acknowledge the Fed has its reasons for moving slowly. First Union's Orr says he thinks interest rates should be at least 50 basis points lower -- and maybe the Fed thinks so too. But the nature of the institution is to be cautious. "I think a principle Greenspan has operated under is that the future is unknowable, and therefore human beings are going to make mistakes in projecting the future," says Orr. "So if you know you're going to possibly make a mistake, you should take an action that will have the least harm if it is a mistake." The worst thing to do would be to act in panic mode -- especially given the number of conflicting economic signals to be deciphered.

Still, Orr has faith the Fed will deliver. Right now the eurodollar futures contract -- which he considers the best proxy for the market's expectations -- is forecasting a Fed funds rate of about 4.25% for September. "I have no doubt they'll get to it if they need to. What they don't want is to do too much too quickly," he says.

But no less than Greenspan himself acknowledged the hurdles facing any policymaker in a speech Tuesday before the

National Association for Business Economics

. Trying to forecast the economy "is a bedeviling job because the future, at root, cannot be foretold," he told attendees.