Magazine article The American Conservative

Après Alan, le Deluge?

Magazine article The American Conservative

Après Alan, le Deluge?

Article excerpt

He had presided over the greatest prosperity in U.S. history when Calvin Coolidge announced from the Black Hills of South Dakota, "I do not choose to run for president in 1928."

In March 1929, Coolidge turned the presidency over to Herbert Hoover, the commerce secretary he derided as "The Wonder Boy." Six months later came the Wall Street crash and Great Depression with which Hoover's name is forever associated.

Coolidge was enjoying retirement.

Is Alan Greenspan the Calvin Coolidge of our time? Is Ben Bernanke, his successor as chairman of the Federal Reserve, fated to inherit a monetary crisis that Greenspan's policies have assured? So some pessimists believe.

At his retirement after 18 years, Greenspan is being hailed as the greatest central banker of his time. He saw us through the crash of '87, the fears of Y2K, the stock market collapse of 2000-2002. Only two recessions, neither deep, marred a tenure that coincided with two of the most prosperous decades in U.S. history.

Why, then, is the praise for Alan Greenspan not universal?

Dissenters say our prosperity is hollow. While the economy appears healthy, a disease is eating away inside, a disease that Dr. Greenspan has been treating with oxycontin. The chairman, they say, was a friend to presidents and kept them happy and himself in power by the greatest expansion of money and credit in history. And just as the easy-money Fed policies of the Hoover-Coolidge era led to the crash of '29, a day of reckoning is ahead.

"If Greenspan is popular," writes John Cassidy of The New Yorker, "it is because he has made many middle-class home-owners millionaires, at least on paper."

"But the economy is chronically unbalanced. Like an athlete on steroids, it is ailing from the inside. The United States has a negative personal savings rate; an immense budget shortfall, which will expand as the baby boomers retire; a trade deficit greater than Russia's gross domestic product. As a country we are living far beyond our means. Every working day, we borrow more than three billion dollars from foreigners, notably the central banks of China and other Asian nations, in order to pay our import bills and keep our interest rates low."

On its cover, The Economist portrays Greenspan as a desperate relay runner racing to hand the baton to Bernanke. Only the baton is a lighted stick of dynamite. …

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