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From Barnes & NobleThe Barnes & Noble Review
During the 2000 Republican primary campaign, Senator John McCain promised that if elected president, he would not only reappoint Federal Reserve Chairman Alan Greenspan; McCain added, "If he were to happen to die, God forbid, I would do like they did in the movie Weekend at Bernie's. I would prop him up and put a pair of dark glasses on him." McCain's implication was that Greenspan's mere presence at the head of the nation's central bank inspires investor confidence and fuels economic growth. While it's true that Greenspan has become identified with economic growth, he is no mere figurehead. As Bob Woodward reveals in his new book, Maestro: Greenspan's Fed and the American Boom, Greenspan's forceful, sometimes authoritarian, leadership of the Federal Open Market Committee, the ten-member board that sets short-term interest rates, has profoundly influenced the path of economic growth over the past 13 years.
Maestro is not a biography of Greenspan so much as a history of the economy and markets during the period of his stewardship. The book's tentative working title was Boom, and the book focuses on how Greenspan engineered the great U.S. economic resurgence of the 1990s. In researching his book, Woodward interviewed not only Greenspan but nearly every important member of Washington's economic elite. The testimonies of people like Alice Rivlin, Robert Rubin, and Lawrence Summers lend weight to his analyses. And though Woodward is a journalist, not an economist, he has a strong grasp of economic theory and terminology. This proves both a strength and a weakness, as certain passages are often hard to understand, even for someone who has studied economics. However, for the most part, Woodward is very good at translating economic jargon into clear journalistic prose.
The most interesting sections of the book concern the major crises that Greenspan has faced as Fed chairman. His responses to these challenges reveal that he is not as pro-free-market as he is sometimes portrayed. After the 1987 market crash, for example, he authorized the Fed to act as a guarantor on private-sector loans to avert a string of potentially disastrous defaults. He also encouraged Treasury Secretary Rubin to use U.S. funds to bail out the troubled Mexican government in 1995. And when the effects of the Asian collapse hit U.S. markets, he actively supported the bail-out of a major hedge fund, lest its collapse cause a general market crash. Each of these controversial actions had its detractors, but one of the strongest themes of Woodward's book is Greenspan's commitment to his convictions even in the face of opposition. And time has proven that Greenspan's convictions are usually right.