Maestro: Greenspan's Fed and the American Boom

Maestro: Greenspan's Fed and the American Boom

3.8 13
by Bob Woodward

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On eight Tuesdays each year, Federal Reserve chairman Alan Greenspan convenes a small committee to set the short-term interest rate that can move through the American and world economies like an electric jolt. As much as any, the committee's actions determine the well-being of every American. The availability of money for business or consumer loans, mortgages, job…  See more details below


On eight Tuesdays each year, Federal Reserve chairman Alan Greenspan convenes a small committee to set the short-term interest rate that can move through the American and world economies like an electric jolt. As much as any, the committee's actions determine the well-being of every American. The availability of money for business or consumer loans, mortgages, job creation, and overall national economic growth all flows from those decisions.

Perhaps the last Washington secret is how the Federal Reserve and its enigmatic chairman, Alan Greenspan, operate. In Maestro, Bob Woodward uses his proven interviewing and research techniques to take you inside the Fed and Greenspan's thinking. We listen to the Fed's internal debates as the American economy is pushed into a historic ten-year expansion while the world economy lurches from financial crisis to financial crisis. Greenspan plays a sometimes subtle, sometimes blunt behind-the-scenes role. He appears in Maestro up close as never before -- alternatively nervous and calm, plunging into mathematics one moment and politics the next, sceptical, dispassionate, always struggling, often alone. As Greenspan tells himself, "If you're not nervous, you shouldn't be here."

Maestro traces a fascinating intellectual journey as Greenspan, an old-school anti-inflation hawk of the traditional economy, is among the first to realize the potential in the modern, high-productivity "new" economy -- the foundation of the current economic boom. Woodward presents the Greenspan years, 1987-2000, as a gripping narrative, a remarkable portrait of a man who has become the symbol of American preeminence.

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Editorial Reviews
The 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.

--Laura Beers

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The Maneuver
(Oct. 27, '00)

Get some Democrats on the Fed, President Clinton instructed his economic advisers in early 1994. The entire Federal Reserve Board of Governors was made up of Reagan and Bush appointees, but now Clinton had a chance to name two governors to the seven-member board, his first Fed appointments. With interest rates rising, he wanted Treasury and the White House staff to move fast. The instructions weren't quite "Sink Greenspan," but the president wanted some counterweight to the Fed's Republican chairman, Alan Greenspan.

The search began for two academic economists who were Democrats and who would be at least sympathetic to Clinton's overall economic policies.

Robert Rubin, the director of the National Economic Council, sought out Alan Blinder, the deputy on the president's Council of Economic Advisers, one of his allies in the White House.

How about being the Fed vice chairman? Rubin asked.

Blinder, 48, was a tall, thin, balding Princeton economics professor on leave. He wore thick glasses and had the uneasy erudition of many professors, but he also had a sense of humor that demonstrated he knew how dry and pedantic economics could be.

Blinder kept one foot in the traditional mainstream liberalism that looked out for those on the bottom of the economic ladder, but he was a Democrat who didn't use the class-warfare rhetoric Rubin detested. In Rubin's view, Blinder was just about the right mix.

Blinder had earlier declined appointment as one of the Fed's seven governors, but now he thought hard about Rubin's offer. The job at the Fed meant a step up in the Washington pecking order. A Fed governor was C list, anonymous politically and socially, which was about where Blinder was with his current White House position. Vice chairman of the Fed would put him on the B list. As he thought about whether to take the job, Blinder admitted to himself that he had a human foible, shared by many in Washington -- status.

Blinder figured that the vice chairmanship would offer him a seat at the table and a hand in the great interest rate game. Part of his job at the Council of Economic Advisers had been to phone Greenspan a day in advance of the release of the various Commerce and Labor Department economic statistics. He marveled at how Greenspan wallowed in the numbers, frequently asking questions that sent him deep into the charts. Greenspan and he would be number one and two at one of the most important arms of the most important government in the world. After about a day, Blinder told Rubin yes.

When Greenspan got word that Blinder would be coming as the new vice chairman, he asked outgoing Vice Chairman David Mullins to conduct a due diligence review, to check out Blinder's previous publications and statements. Just so we have no surprises, the chairman said.

Mullins dug into columns that Blinder had written for Business Week, old articles and books. Blinder had criticized Paul Volcker, Fed chairman from 1979-87, for clamping down too hard on inflation, declaring at one point that the American economy was not like a Vietnamese hamlet that must be destroyed in order to be saved. In his 1987 book, Hard Heads, Soft Hearts, Blinder wrote that there was too much hysteria about the evils of inflation. Inflation was more like a head cold than a serious disease, and you don't prescribe a lobotomy for a head cold.

Several days later, Mullins, looking worried, came to see Greenspan.

"It's not perfect," he said.

Greenspan grimaced.

"Don't worry," Mullins said, "it's not like he's a Communist or anything. It's just in his early publications he's noticeably soft on inflation." The Fed's job was to fight inflation.

Greenspan quipped, "I would have preferred he were a Communist."

* * *

Before he joined the Fed, Blinder had several encouraging conversations with the chairman. Greenspan indicated that the board was shorthanded, needed help, and would welcome Blinder.

In the period after his nomination, Blinder followed his own press clippings carefully. The initial press coverage was flattering. Though a piece in The New York Times characterized Blinder as an inflation dove who "does not see inflation as a problem," most of the stories, like the Associated Press piece on the day of his Senate confirmation, noted that the appointment "could put him in line" to succeed Greenspan as chairman. Other stories dubbed Blinder Greenspan's "likely successor," and one story in Investor's Business Daily included a brash prediction from the chief economist at a large Wall Street firm: "A new coalition will form around Blinder. I think this is the beginning of the end for Greenspan." Because Blinder was the first Democratic appointee to the Fed in more than 12 years, the press simply assumed that Blinder would vie for the chairmanship with the Republican Greenspan, whose term was set to expire in March of 1996.

Blinder knew that no vice chairman had ever ascended to the chairmanship. When the press began to talk about him as Greenspan's heir, Blinder said little to fan the flames, but he also made little effort to extinguish them. He said nothing about the press coverage to Greenspan, and the chairman, who had been following the news reports, did not raise the subject.

On the morning of June 27, 1994, the day after his official confirmation in the Senate, Blinder and his wife, Madeline, arrived at the Fed building on Constitution Avenue. Greenspan swore Blinder in as vice chairman, and photographers snapped pictures of the new Fed leadership team. After the ceremony ended, the chairman said he had arranged for two governors and some staff to take Blinder to lunch -- and then walked out the door. Good-bye.

Blinder wasn't sure what to make of it all, but his wife told him that the reception seemed ominously cold. On day one, minute one, the chairman was out the door as soon as he could be. What could it mean?

* * *

On August 16, several days before Blinder attended his second meeting of the Fed's key interest rate-setting committee, the Federal Open Market Committee (FOMC), Greenspan's secretary called him to say that the chairman was coming over to see him.

Greenspan appeared promptly. "This thing," the chairman said, referring to the overall economy, "is heating up." He made it clear that he wanted to raise the rate that the FOMC controlled, the so-called fed funds rate, by 1/2 percent at the next meeting.

Blinder said that he thought 1/4 percent would be sufficient. That was the standard Fed increase, and Blinder saw no need for more, given that the Fed had already raised rates four times since the beginning of the year. Greenspan disagreed. The economy was hot. The chairman indicated, in no uncertain terms, that more than the normal increase was required.

Blinder was less concerned about individual rate increases than he was about where the Fed would wind up in this series of increases. Where was this going? How much was enough? What would tell them when to stop? Blinder was in favor of keeping inflation low, but he was worried that the Fed might be headed toward overkill, a crash instead of a soft landing.

The FOMC didn't like to accompany its rate decisions with any clear wording, Blinder knew. Zero wording -- implying that the rate decision could speak entirely for itself -- was beautiful in the world of the Fed. But Blinder thought that the Fed needed to explain itself if it were going to raise rates by 1/2 percent. He asked Greenspan, If the 1/2 percent raise were inevitable, would it be possible to issue a statement declaring that the Fed would go to the sidelines after the rate hike, indicating that no immediate additional rate increases would be forthcoming?

Greenspan said a statement would be possible.

Blinder said he thought a statement would be essential if the entire committee were going to vote for a 1/2 percent hike.

After about fifteen minutes of discussion, Greenspan agreed and left. He had promised Blinder a statement of some kind, and Blinder in turn gave the chairman his vote.

Greenspan knew that Blinder had essentially issued an ultimatum. Ultimatums were not useful around the Fed.

* * *

At the August 16 FOMC meeting, Greenspan, Blinder and the others gathered in the second-floor meeting room at the Fed. For more than an hour, Greenspan led a discussion on the state of the economy. Committee members talked about the economic performance they saw, ranging from hot to middling to even somewhat cold -- reflecting the sometimes wide variation of economic activity in different geographical areas.

"Let me get started," Greenspan said, after everybody had spoken. "A statistic we don't talk about very often," Greenspan said, "is the extraordinary rise in net business formation." New business formation had taken a "fairly sharp upswing," an event that is not consistent with an economy that is in its final and declining stages. A sharp upswing in business formation showed that the momentums in the economy were hardly slowing, as some had argued.

The situation as a whole made Greenspan nervous. "This stuff is really beginning to move," he said.

"I think one has to conclude, as far as policy is concerned, that another upward notch in rates is clearly called for at some point," he went on. If they moved 1/2 percent now, the chairman said, the chances were better than 50-50 that they would not have to increase rates any further before the end of the year.

"I'm a little concerned that 1/4 a point would merely raise the issue of when the other shoe is going to drop," Greenspan continued. He offered his personal assessment of the market reaction to a 1/2 point raise: "My own view -- I'm being a little more detailed than I usually am, so I hope people will excuse me in this respect -- is that it's very important if we were to do 1/2 a point, that we not give the impression that somehow we anticipate major accelerations and this is just the beginning of a long series of 1/2 percent increases. I think we have to be very careful to avoid giving that impression. The only realistic way we can avoid that is to issue some type of statement." The statement could declare the Fed's "intention to hold for a while without tying our hands, which we cannot do."

Pleased that Greenspan was living up to his agreement, Blinder thought there was now a fighting chance that this might be the last needed rate increase.

"The more I think about that as a potential sort of policy package, the less I like all the other alternatives," the chairman concluded.

"I just want to take two minutes to emphasize that it really is a package," Blinder said shortly after the chairman had finished. "So with such a strong statement, I not only support but support enthusiastically the suggestion of the chairman." Just in case his point was missed, he added, "Without it, I would not."

Greenspan read a draft of a proposed statement, which stated vaguely that the Fed expected the rate hike to be sufficient "at least for a time." That could mean months, or to the end of the year, but the chairman knew that it could also mean precisely 4 minutes and 37 seconds -- or less. In other words, the statement meant almost nothing.

Greenspan called for the votes on the 1/2 percent increase, to be accompanied by the statement.

The vote in favor was unanimous. After the meeting, Greenspan complimented Blinder, and told him that he had earned his pay.

The interest rate hike caused rallies in the stock and bond markets, where traders saw the Fed's half point hike as a strong offensive against inflation. It angered some Congressional Democrats and others who believed that the rate hike risked sending the economy into a severe downturn.

Nearly all of the coverage in the media focused on the 1/2 percent hike, with very little mention of the Fed's statement regarding its intention "at least for a time" to avoid any further moves.

A confrontation had been avoided. Blinder felt it was a good outcome, but he also realized that Greenspan was in total control.

* * *

Less than two weeks later, most of the FOMC members attended the Kansas City Federal Reserve's annual retreat in Jackson Hole, Wyoming. The overall theme of the gathering was "Reducing Unemployment," and Blinder was asked to give some concluding remarks at the end of the conference on Saturday, August 27.

He had spoken at the Jackson Hole conference before, as an academic unbound by the customs and responsibilities of working at the Fed. He made it clear at the outset of his 20-minute speech that he understood the difference: "It is quite clear that in my new job, my role is to say nothing -- and certainly not to say anything interesting," he joked.

Still, Blinder then argued that the Fed might be too focused on preserving price stability and fighting inflation. Shouldn't the Fed embrace with equal intensity the goal of maximum employment, a goal explicitly written into the most recent law governing the Fed? "The central bank does have a role in reducing unemployment," he said.

The next day, Blinder was dismayed to read the New York Times story on page 26, which stated that in his speech he "publicly broke ranks with most of his colleagues" and that his comments "revealed an intellectual split" within the Fed. On Monday, August 29, the Times pounced again with a business section front page story headlined "A Split Over Fed's Role; Clashes Seen After Vice Chairman Says Job Creation Should Also Be a Policy Goal." The story drew a sharp contrast between Blinder and Greenspan, who had recently reaffirmed his view that inflation fighting was the primary goal of the Fed.

As Blinder saw it, he'd been asked to deliver the summation speech at a seminar called "Reducing Unemployment." What else was he supposed to talk about?

The Full Employment and Balanced Growth Act of 1978, called the Humphrey-Hawkins Act after its legislative sponsors, mandated that the Fed do its best to achieve maximum employment, and Blinder thought he had merely drawn attention to that responsibility. A New York Times story disagreed, noting that emphasizing jobs over inflation was like "sticking needles in the eyes of central bankers."

Greenspan went on vacation without commenting, leaving Blinder to twist in media winds, which eventually dubbed the situation "L'affair Blinder." A three-inch stack of stories about a rift at the Fed followed.

A simple word or sentence to key Fed reporters from the chairman, even off the record, noting that the whole matter was part of a standard policy debate could have ended the furor, Blinder believed. He interpreted Greenspan's silence as intentional. For one reason or another, Greenspan wanted to let him twist.

Yet Blinder did not raise the issue with him directly, realizing that Greenspan had not only plausible but perfect deniability. The chairman hadn't created the controversy, and surely he couldn't be held accountable for the media. Blinder didn't want to go begging. In his mind, the "chairman who wouldn't speak" took on a life of its own. Blinder believed that Greenspan was manipulating the press. His silence was just as damaging as, if not more so than, any negative comments that he might have made. Nobody, Blinder believed, knew how skillfully Greenspan played the Washington political inside game. He was witnessing its subtle but deadly sting first hand.

Blinder was scheduled to give a speech in a downtown Washington hotel on September 8. Afterwards, dozens of reporters and many cameras awaited him. Blinder realized he had a choice either to act like a football player or to stop like a civilized person to answer a few questions. He stopped and answered the questions, downplaying any philosophical rift between himself and the chairman.

The next day, The New York Times reported that Blinder had held an "unscheduled" press conference. Son of a bitch, he said to himself. It looked as if he were putting himself forward, showboating. Fed governors didn't have press conferences. If he hadn't been discussed as a possible contender for Greenspan's job in 1996, Blinder believed the press attention would have subsided. He consistently maintained that he had never spoken to the White House about the possibility, and he seemed hurt that his relationship with Greenspan had been damaged. Nonetheless, Blinder refused to close the door on the possibility he might become the next Fed chairman.

He talked to The Wall Street Journal and was asked if he wanted to succeed Greenspan. "I don't spend a lot of time thinking about it," he said, suggesting that he spent at least some time on the subject. "It's a fantastic opportunity if it comes along. For the time being," he continued suggestively, "we have a very good chairman of the Fed. The job is not open."

* * *

In the days before the FOMC meeting on November 15, Blinder thought the economy was looking stronger -- too strong. A roar was coming up from the markets, saying that the Fed had goofed with its sideline statement and was behind the curve. Greenspan asked to see him again. When the chairman arrived, he said he wanted to make a dramatic gesture to show that the Fed was not behind the curve, to show the Fed's teeth in a big way.

Blinder agreed, saying that the economy was running hard and something had to be done. He told Greenspan that he would have no trouble with a 1/2 percent increase at the coming meeting.

Greenspan wanted to move a full 3/4 percent.

Blinder was a little bit surprised. He had concluded that they would eventually have to move a total of 3/4 percent, but he thought that it might be wise to do it incrementally.

Greenspan wanted to get there right away. He didn't cite any specific data, focusing instead on his feeling that the pot was boiling and that 3/4 percent was the only way for the Fed to get out ahead of the markets.

It was a major disagreement. Blinder was worried that 3/4 of a point all at once could shatter confidence in the markets and have a negative effect on the rest of the economy, particularly on the people who were out there trying to buy homes.

Greenspan stood firm.

Hmmmmm-hmmmmm, Blinder finally said noncommittally -- a kind of unspoken "I don't know." He did not indicate to the chairman that he would go along.

At the November meeting, Blinder said they might be heading toward raising rates so much that the Fed might chokes off most economic growth. What they were contemplating was not trivial. "It is very strong medicine," he said. Enough to stop even an economy with considerable momentum. "It is therefore not to be prescribed lightly." "I must say the discussion this morning has been one of the best discussions I have heard around this table in quite a long while," Greenspan said when the others had finished. He said he would not dismiss Blinder's comments.

"I think we are behind the curve," he added, after offering a brief assessment of the economy. "I think that creating a mild surprise would be of significant value.

"So, I think that we have to be very careful at this stage and be certain that we are ahead of general expectations. I think we can do that with 3/4 of a point."

To underscore his strong feelings, the chairman added, "I must tell you that 1/2 percent makes me a little nervous. No, I take that back: It makes me very nervous and I would be disinclined to go in that direction." Anyone voting against him, in other words, was in favor of a very nervous chairman.

"I fear that doing 3/4 of a point today rather than 1/2 of a point may send us down an oversteering path," Blinder said. He reminded the committee that "the Greenspan Fed has never once moved the Fed funds rate by 3/4 of a point in either direction. Not once. When this Fed has erred, it has been on the side of caution....I always thought that was a good idea.

"My personal preference is strongly for 1/2," Blinder concluded. "I thought hard about whether I should dissent on this matter, and I did not decide until last night. I finally decided that I won't....I think it is better to show a united Federal Reserve against the criticism that we are surely going to get for this move." Blinder would go along with the rate hike, but he made it clear that he would stand strongly against raising rates again at the next meeting.

"Okay," Greenspan said, right on the tail of Blinder's long speech about his struggle. "I propose that we move 3/4 percent."

All 12 members voted yes.

Blinder had gone with the chairman because he didn't want to use the power of his dissent on what could be seen as a tactical dispute. The practical difference between 1/2 percent and 3/4 percent, in terms of measurable effects on the economy, was quite small. Blinder's chief concern was where they might be heading in the months to come.

He also knew that there was a tradition at the Fed that members go along with the chairman unless they are really uncomfortable, terribly uncomfortable. This is especially true of the vice chairman. Nobody at the Fed, as far as Blinder knew, could remember the last time a vice chairman had dissented from the will of the chairman.

Blinder also realized that if he shot his cannonball now, it would be wasted -- because he wasn't going to change the decision. He would have fallen on his sword for no reason.

Blinder came from an academic environment, where he was used to following his conscience. It had become clear to him that voting solely on the basis of his convictions and economic conclusions wouldn't work at the Fed.

* * *

The year 1995 was no better for Blinder, and he and his wife Madeline flew to Acapulco, Mexico after Christmas to vacation on the beach, so he could stare at the water and decide whether he should seek reappointment as vice chairman when his term expired in early 1996. It was a hard decision. After less than two years at the Fed, he was profoundly frustrated.

Blinder believed he had figured out what was so disconcerting. Greenspan didn't allow any risk. If there was a 2 percent or a 4 percent probability that something might happen -- such as Blinder succeeding him or Blinder's star rising -- Greenspan worked to bring the probability down to zero. Most people would tolerate low chances. Greenspan wanted to stomp out the slightest probability. That's why Greenspan had stuck the knife in him, Blinder believed, in so many ways and so skillfully. And there were no fingerprints.

Blinder decided he should leave. He wanted to be a lame duck for as short a time as possible, so he cut it tight and told the White House only two weeks before the expiration of his term. As a little piece of revenge, he decided not to tell Greenspan. Blinder figured the chairman could read about his departure in the newspapers. After all, Greenspan had never really told him anything, never really let him in the way Blinder had hoped. He realized it was childish on his part. The news of his departure hit the papers on January 17, 1996.

Greenspan said nothing to Blinder, but he presided at a little going away party for him.

You know, Greenspan said graciously at the ceremony, it seems like you just got here, it's been wonderful to have you.

Ha, ha, Blinder thought as he stood nearby in deep discomfort.

How much, Greenspan continued, he had enjoyed having Blinder as a colleague, how valuable he had been to the FOMC and the board, what a shame he was leaving so soon.

Ha, Blinder thought again. He concluded that Greenspan was not a straight person, not open and direct in the way that Blinder expected of colleagues. He had just wanted to be part of the interest rate game, and Greenspan had not permitted it.

Excerpted by permission of Simon & Schuster, Inc. Copyright © 2000 by Bob Woodward, Simon and Schuster. Researcher Jeff Himmelman contributed to this report.

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Maestro: Greenspan's Fed and the American Boom 3.8 out of 5 based on 0 ratings. 13 reviews.
Anonymous More than 1 year ago
Guest More than 1 year ago
This is one book that I would recommend for anyone who is interested in money and how it works. I've been interested in money rates and awed by how much power Mr Greenspan carries. This book gives a wonderful insight to how much thought he gives to his decisions and how powerful his influence is over his colleagues. I loved the book and the audio version.
Guest More than 1 year ago
I thought this was a good book to show the impact one man has on our economy. It shows us that we should choose the wise and experienced to run our country. I thought some parts dragged on, but others really grabbed me.
Guest More than 1 year ago
Author Bob Woodward gives a good description of the behind-the-scenes happenings at the Federal Reserve. He devotes one chapter to each year of the Greenspan era (ending in 2000), and explains Greenspan's thoughts and theories on the economy. Woodward begins to explain how the Fed controls the economy, yet his explanation is only cursory, outlining only a few isolated incidents. Woodward's remarkable insight is apparent at the end of the book, though, as he poses the question of when the boom will end, and what unforseen momentous event will bring this end. Hint: Read the glossary at the back of the book before reading the rest of the book. It will help to explain economic terms and theories in laymen's terms.
Guest More than 1 year ago
An excellent read, and a very fast one as well. It is clear that after reading this book Greenspan and President Clinton coordinated together to help bring about the economic boom in the U.S., which started in earnest back in 1993 and reached a peak between 1997-2000. The Greenspan-Clinton relationship showed true bipartisanship!
Guest More than 1 year ago
In a globalization world, Greenspanisation is a fact. For every single human person who wants to understand how the real hiding forces works in a financial market driven world, this 'is' the book. Very well written, an exquisite piece of good work that will bring the reader into Alan Greenspan's head. Understand the Fed and you will understand it all
Guest More than 1 year ago
I was attracted to the book because I wanted to learn about Greenspan, but the title is brutally honest. This is about Greenspan's fed and not about Greenspan. Moreover, the author's style is sparse and straight to the point. Woodward sticks to the facts and not much else.

Having said that, I found the book fascinating and devoured it in about three evenings. I did not fully understand the kind of relationship that Rubin and Greenspan had developed and did not understand the machinations that occured during the various banking 'crises.'

On the down side there is a partisan tone throughout the book. For example, the author strongly implies that George Bush Sr. (whose degree is in economics!) did not understand the economy at all and that his staff did not understand how to work with anybody who showed the least bit of independence. These kind of digs pop up throughout the book. While they did not bother me, my guess is that it would grow tiresome to any thin-skinned conservative.

Despite the drawbacks this is a good read if you need a book to occupy a short time. Don't expect flowery prose but do expect a strong dose of politics. Just like the author's other books it gives a strong sense of context, and the last 8 years have been a remarkable time.

Guest More than 1 year ago
Maestro: Greenspan's Fed and the American Boom, Bob Woodward (Simon & Schuster, New York, 2000) Maestro is not a traditional biography. It is, rather, a professional biography, a history of Alan Greenspan's tenure at the Fed. The subtitle, Greenspan's Fed and the American Boom is a more accurate description of this book's goals. Woodward should not be criticized for producing a professional biography rather than taking on the substantial task of examining the mind of the enigmatic Chairman; it is what he set out to produce. Woodward hints at the complexity of Greenspan's mind but concentrates on details and techniques. If there is a limitation to Woodward's work it is that he tells us more about Michaelangelo's techniques for chipping stone than how that great artist arrived at the ultimate vision of his David. The substance of Greenspan's vision is left to another. Still, Woodward peppers his reportage with intriguing personal details, details which, if explored, might lead to some understanding of the curious, complex mind, and man, behind the mechanics of modern Federal Reserve policy. What Woodward tell us about the Chairman's personal life is in the last paragraphs of the book's chapters - afterthoughts. For example, Greenspan went to Julliard, then known as the Institute of Musical Art, dropped out after two years and played tenor sax with the Henry Jerome band, a big band in the 1940s style. Somehow, Greenspan discovered the lure of economics, and studied at Columbia under Arthur Burns, who subsequently became Fed Chairman (1970 - 1978). He sometimes solves complex mathematical equations for the joy that solutions can bring. Greenspan, the mathematician cum musician, was a member of Ayn Rand's inner circle. 'Objectivism,' mathematics, and music are things we normally don't put together. Rand encouraged Greenspan's involvement with Richard Nixon's 1968 campaign, an intriguing start to a political life. Greenspan's roots in Rand's objectivism, the connection between his mathematics and music, and his actions as Fed Chairman would make a powerful intellectual biography. There are homier details as well. Greenspan called his mother every day, and, before his marriage to Andrea Mitchell, a national news correspondent, was reputed to have been a 'ladies' man,' if that phrase is still current. Other sources relate that Greenspan participated in meetings lying on the floor to ease a bad back. Certainly Greenspan's is a life worth examining, however Woodward offers us a different, less interesting view. Woodward assumes readers come to the book with knowledge of how the Fed effects interest rates, at least mechanically. This should not be a bar to they ordinary reader. If the Fed sells government bonds, buyers pay with checks. Payment lowers the amount of money the banking system holds. This creates upward pressure on the interest rates banks charge each other for overnight or extremely short-term loans. If the Fed buys bonds, its checks increase the amount of money the banking system holds, creating downward pressure on the same interest rates. The Fed targets a short-term rate, called the Fed Funds rate, by either buying or selling bonds. The mechanics of the Fed's operation are simple; the policy behind them complex. Woodward's details of Greenspan's rule at the Fed are, quite simply, annoying, as is his use of unending quotes from parties at private meetings in the Fed, the White House, Treasury, and other places the reader will sense Woodward he could not have been. Woodward has been frequently criticized for this; there is no reason to say more. The most important limitation of Maestro is that Woodward confuses details of the Chairman's day-to-day activity and coalition building among members of the Federal Open Market Committee (FOMC) with the actual creation of monetary policy. To give him his due, Woodward has done his homework. It's painfully obviously he's read transcripts of innumerabl
Guest More than 1 year ago
When I saw this book about Alan Greenspan it immediately sparked my interest. Then I noticed who the author was, and I thought to myself 'could Bob Woodward, a liberal jounalist, actually write a book like this that wasn't slanted toward the left?' Then I noticed that the chapters were not titled, so I couldn't get a feel for the jist of the book without purchasing it. About half way through the book it finally came out--Woodward very subtly implies that the last recession was, of course, created by Ronald Reagan, that Bush tried to protect his predecessor by remaining silent, and along comes Clinton to save the day with a deficit reduction plan conceived of by none other than Alan Greenspan, which of course, makes a tax increase 'right.' It's the lack of complete, historical economic and political facts that for me, destroyed this book's credibility. Between paying higher taxes or higher interest rates, I'm indifferent. I'd rather pay niether.
Guest More than 1 year ago
From busting Nixon and nearly destroying America, Woodward finally emerges as an uplifting writer who allows Americans to see goodness in the American boom. Woodwoard is a legend, a fixture of American culture, a man whose writing will live beyond his years on earth. Our hats go off to you Bob for this revolutionary book!!
Guest More than 1 year ago
Sometimes frightening, sometimes obscure, often entertaining, Maestro takes us into a world of economic power and politics that makes the savings account rate look good. Little did I know that my hard earned retirement savings were at such risk! On the other hand, if my money had been in a bank savings account, I wouldn't be retired today. More than I wanted to know and not enough. I want to read the sequel now!
Guest More than 1 year ago
I was eager to read this book for two reasons. First, I wanted to find out what the most influential man of the last 20 years was all about. Secondly, I need to know why he made it impossible for George Bush Sr. to be reelected. I am disappointed on both counts. This is probably one of the most superficial books that Bob Woodward has written. You can save yourself a whole five hours by reading the excerpts in the Washington Post. All the pertinent information is there. The rest of the book is repetitious. Alan Greenspan railroads the board into raising the interest rates ¼ of a point. Greenspan railroads the board into lowering it ¼. And for variety, he railroads them into an ¿asymmetric directive¿ to change the interest rate. There are 256 pages of that, nothing else. I take that back there is Woodward grieving the end to the sodomy presidency. I know Woodward had a difficult task. To write a book about the most introvert personality of the twentieth century is not easy. But give me a break Bob. Interview his wife, his high school teacher, his gardener, his psychologist!!!! Interview somebody that will give us a hint of what the man is all about. The book was obviously written by interviewing the rock, (Alan ¿constructive ambiguity¿ Greenspeak) and his professional acquaintances. Now that really makes for revealing book. The sources are a total waste of time. There is one thing that is painfully obvious, Alan Greenspan is the benevolent dictator all of us control freaks dream of being. You come out with the feeling that the most ridiculous waste of money of the whole federal government is the salary we pay the board members of the Federal Reserve. Fire the whole bunch of them. Who needs a whole bunch of over paid PhDs to rubberstamp what Alan Greenspan thinks. As to my second reason for reading the book I got three paragraphs. One, Alan did screw George Bush Sr.. Two George Bush acknowledged that Alan screwed him. Three, Alan said something that was constructively ambiguous about screwing George Bush. Please give me a break I spent 5 hours reading this. Give at least a little bit of information. The book tries to be ¿constructively ambiguous¿ as it¿s subject. It fails to be constructive.
Guest More than 1 year ago
This book demonstrates why Alan Greenspan commands such a respect from the Clinton Administration. Greenspan manipulated the U.S. economy to his willing, thereby achieving a boom which has lifted the nation well-ahead of the 80s era... with a view to eliminating the current federal debt. A great insight into the man who incited the zealousness of the present American economy... with interesting facts about his personality.