Woodward on the Magic of Greenspan

“Ladies and gentlemen, the real President of the United States,” blared the headline over a full-page ad in a recent New York Times. The ad is for Bob Woodward’s “instant bestseller,” Maestro, and the implication is that the book’s subject, Alan Greenspan, has far more power than whoever it is that finally emerges from the Florida chadmire with the decisive electoral votes. Is this true? Is the Fed chairman a man who has shaped his time as opposed to a man shaped by his time? And if so, what is the secret of Greenspan’s success? Can Woodward tell us?

To the extent that stock market obsession is a new American pastime, Greenspan’s role is that of a benevolent authority, almost a father figure to the great boom of the last decade or so. Earlier this year a series of interest rate increases took its toll  on Greenspan’s heroic reputation, but lately he seems quite popular again. What we “know” about our Fed chairman is the following: He presides over the Federal Open Market Committee meetings, where a key short-term interest rate is set. He gives speeches, and he answers questions before Congress, but he is famous for long-winded, elaborately qualified public statements that have the effect of masking what he really thinks. And he is very powerful.

That’s about it: a combination of importance and mystery. Here I should mention Greenspan: The Man Behind The Money by Justin Martin, another new book. It’s loaded with Greenspan data, including his period playing jazz clarinet and tenor sax (includes hanging out with Stan Getz), his time in Ayn Rand’s inner circle (includes his letter to the Times rebutting a nasty review of Atlas Shrugged), the fact that his handwriting is “small and rococo,” and his dating of Barbara Walters. There’s even a baby picture. The book’s premise is simply that Greenspan is “an American first–a celebrity Fed chairman,” and it’s hard dispute this. He has been a punch line on The Simpsons, the subject of a fan Web site or two, even the object of a sexual fantasy in (That’s not a joke, so don’t follow this link  unless you’re prepared for the worst.)

But Martin offers up no shocking theory or dramatic Rosebud moment to make it clear why (or if) Greenspan deserves adulation. Which brings us to Maestro. Now, nobody reads Bob Woodward for the prose, and I doubt many people turn to his books looking for insights, per se. The attraction is the access, the behind-the-scenes reporting. The Agenda, for instance, was memorable less for its analysis of Bill Clinton than for dishing on Clinton’s temper, with tidbits like the president’s epiphany that the future of his economic programs and his administration depended on “the Federal Reserve and a bunch of fucking bond traders.”

Accordingly, the sales pitch with Maestro is that it takes us “inside” the Fed, telling us how things really work there–“the last Washington secret.” Unfortunately, there is precious little action, hardly any raised voices or real arguments, and no quotes with the same pungency as Clinton’s bond trader remark. (Well, except for Clinton’s bond trader remark, which pops up again here in one of several incidents that Woodward recycles from The Agenda in the process of pushing Maestro’s main text past 200 pages.) Mostly the book is about interest rates, Greenspan’s reasons for wanting them higher or lower or as is, others’ objections, etc. The most interesting aspect of this concerns Greenspan’s evolving thinking about productivity–not exactly a bombshell.

The weirdest moment in the book–and perhaps the closest Woodward comes to telling us what it is that makes Greenspan truly different and special–is a scene set in 1994. The details aren’t important, but Greenspan must overcome a consensus among his colleagues to raise rates by half a point when the chairman thinks a quarter-point is enough. Most of the back and forth is, according to Woodward’s source notes, drawn from FOMC meeting transcripts. Greenspan, who ultimately carries the day, at a crucial point goes all out making his case and says, “I am telling you I have a pain in the pit of my stomach.” Woodward writes:

The pain in the stomach was a physical awareness Greenspan had experienced many times. He felt he had a deeper understanding of the issue–a whole body of knowledge in his head and a whole value system–than he was capable of stating at that moment. If he was about to say something that wasn’t right, he would feel it before he was intellectually aware of the problem. It was this physical feeling, this sense in the stomach, that he believed kept him from making dangerous or absurd statements that might appear on the front page of the newspapers. At times, he found his body sensed danger before his head. As he walked down the street there would be an approaching car, and his body knew to stay out of its way before his head.

Am I the only person who finds that passage startling? I’ve been conditioned all these years to think of Greenspan as the cautious and unfailingly logical man whose superior command and understanding of economic data is the key to his brilliant decision-making. And now it turns out that, what, he has a trick knee? He’s magic? His friend Harvey peeks around corners for him? And since Greenspan himself is the only conceivable source for this passage, are we to conclude that the chairman simply believes his own hunches trump all comers? Maestro’s finale spends a little time on the question of how much Greenspan enjoys the limelight and perhaps encourages the myth-making that surrounds him, but Woodward seems ultimately unconcerned with this and tells us that the chairman deserves his wizardlike status: When we peer behind the curtain, “we find comfort.” We end Maestro, as we began, accepting Greenspan’s heroic power mostly on faith.

Maybe it doesn’t matter. After all, Greenspan seems to have mostly made the right decisions so far. Recently I got a note from someone who knows a thing or two about the Fed who said: “For someone to be a populist hero, the general public has to understand why the hero is heroic. I would wager that 99 out of 100 people on the street would not be able to explain what the Fed is or does and why Alan Greenspan should be worshipped.” I’ll agree with the second sentence and with the spirit of the first one: People ought to understand what Greenspan does before they conclude that he’s a hero. But do they really have to? I don’t think so. In fact, I’m sure that they don’t. I can feel it, right here, in the pit of my stomach.