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Published: Tuesday, 4/3/2001

Sorry to say, Greenspan's been had

I used to love Alan Greenspan's spare elfin self. He exemplified true grit, understanding how the economic world bubbles, interpreting it for the rest of us, hewing to principle. No nonsense all the way.

During the Clinton years Mr. Greenspan was a colossus of stability who could keep the would-be free-wheeling Democratic administration in check. It was fun to watch him at it.

I especially liked his warning that the market was overpriced relative to worth. Given the fluff and fury surrounding profitless dot.coms, it made sense to me.

Republicans liked him, too. In a letter to colleagues, Rep. J.C. Watts, Jr., of the House Repub-lican Conference, said Greenspan deserved as much credit as anyone “for the record growth and prosperity the United States has enjoyed in recent years.”

I thought he deserved it.

Then he allowed himself to be hustled by that Texas slickster who now calls the Oval Office home. Perhaps he wanted to make up for Papa Bush's blaming him for his political demise in 1994. Perhaps he experienced a conversion, but that's hard to buy.

As a result, old, reliable Alan Greenspan, who had been sensibly opposed to tax cuts until the national debt was paid off, and persuaded most of us to feel the same way, did a 180-degree turn.

Now it's hard to believe a thing he says.

I don't blame Mr. Greenspan, as some enjoy doing these days, for what Newsweek's Alan Sloan calls the “Mad Dow Disease” afflicting the stock market. It seems to me more the product of opportunists and nervous nellies who respectively like the action or who like to run.

Among the opportunists is President Junior, who has been poor-mouthing the economy, the better to sell his misbegotten $1.6 trillion tax plan destined to kick the nation into deficit spending. It will cost twice what he claimed and it will put Medicare at risk unless someone smart and gutsy in Congress begins to speak out.

Smart and gutsy? Shut my mouth. Courage is never a shining quality of politicians, no matter how big their egos. It's always safer in the crowd. But I'm an optimist. I believe a great and booming voice will ultimately emerge speaking coherently about the national dollars, and sense.

I stay confident in the market for inane reasons. First, how can magic let you down? And if the galloping gains of the past decade aren't magic, I'll eat tripe soup, my quintessential yuk, forever.

To me appreciated profits always seemed like Monopoly money. And if they weren't real going up, they can't hurt too much going down.

Second, fish gotta swim, birds gotta fly, and the market's gotta fluctuate.

It does it primarily at the whim of traders who sit crinkly-nosed like rabbits - scenting danger today, opportunity tomorrow. Declarations of war, tax and interest rate changes, and brouhahas like the California power crisis and OPEC hikes also set it off.

Such folks, too, have egos, and Thor-like tendencies. These, I suspect have been at work as they express pique that Mr. Greenspan didn't lower interest rates as much as they wanted. Guess they showed him!

Guess, in turn, he showed them.

For sure the market isn't the economy. It isn't the safest place to put your money. But it is as safe, given inflation, as a wad wrapped in plastic and canned airtight two feet down in the back yard.

But being in the market, besides the long-term better gains it offers, also puts one in the mainstream of the nation's economic life, even as it forces one to watch one's back, watch one's front, and ferret out the thieves and cutthroats who are out to get one's pocketbook.

A bet on the market, it seems to me, is a bet on the nation and faith that, the incumbent oiligarchs notwithstanding, it will prosper.

These things, I'd bet, are as much behind Treasury Secretary Paul O'Neill's disinterest in chewing the fat with reporters over Mad Dow antics, as what cynics call his realization that he doesn't really understand the market and the fickle, persnickety, anxiety-ridden nature of its buyers and sellers.

He knows enough to remain in the market once he swaps about $100 million in stock and options from Alcoa, the company he used to head, for mutual funds. And if his shares falter some, he'll hardly notice. It's tough to comprehend the enormity of all those zeros, especially with so many left.

Alan Greenspan does under-stand it all, I'm sure. I'll keep listening to what he says. I'll root for him against the market wonks. But I'll take his other pronouncements less to heart. I hate that he is a guy who was had.

Eileen Foley is a Blade associate editor. E-mail her at efoley@theblade.com.



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