Greenspan steps down as Fed chief

Alan Greenspan leaves the US Federal Reserve today after 18-and-a-half years as its leader.

Alan Greenspan leaves the US Federal Reserve today after 18-and-a-half years as its leader.

Mr Greenspan, arguably the most famous chairman in the history of the US central bank, is treated in some circles as a virtual oracle for his seeming mastery of the business cycle.

A Gallup poll released yesterday showed 65 per cent of Americans approved of his performance. Some 21 per cent disapproved and the rest had no opinion.

The public has seen more fat years than lean under Mr Greenspan, whose tenure spanned the 1990s economic boom. During the record 10-year expansion he carried an aura on Wall Street that made many feel he might keep growth running indefinitely.

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That bumper growth period of the 1990s was fuelled in part by a huge stocks rally that Mr Greenspan famously labelled "irrational exuberance" in 1996, though he later said it was not his role to second-guess investors.

The bursting of the high-tech bubble in 2000 and a subsequent mild recession tested investors' faith, but the world has rushed to praise him in his waning months on the job.

"There are some of us who believe he aided and abetted some asset bubbles," said Paul Kasriel, chief economist of Northern Trust Co. in Chicago, alluding to the 1990s stock market boom and the surge in housing prices over the past five years.

Mr Greenspan counters these accusations by saying interest rates are too blunt a tool to safely fix asset bubbles.

The Fed chairman has also faced criticism for stepping into areas that had nothing to do with monetary policy, offering support for Mr Bush administration tax cuts in 2001 and private retirement accounts in the government system.

Mr Greenspan (79), who is being succeeded by Ben Bernanke, now has plans for a book, a consulting service and speaking engagements.