WE'RE IN GOOD HANDS
WITH GREENSPAN
Recently, in a somewhat surprising White House ceremony, one of the least personally respected people in this country re-nominated one of the most personally respected people in this country for yet another term.
I am talking about the current occupant of the White House – under polite circumstances, still referred to as "The President" – re-nominating Alan Greenspan to a fourth term as Federal Reserve Board Chairman. There had been some discussion concerning what the White House might do. Mr. Greenspan's term technically doesn't come up for renewal until June. People generally doubted that the White House would have the guts not to re-nominate Mr. Greenspan if he indicated he still wanted the job. But they could have just left the re-nomination pending, with the excuse that they wanted the next president to nominate his own Fed Chairman.
Somewhere in the caverns of the White House (as we've found out, the White House has plenty of dark places and caverns), consumate politicians decided that if Greenspan wanted another term – he was just too good to pass up – and so they made the announcement rather early.
At an Oval Office ceremony, the President said Mr. Greenspan's leadership has "inspired confidence," both in our country and around the world. He said Greenspan has brought to his job a "rare combination of technical expertise, sophisticated analysis, and old-fashioned common sense."
Alan Greenspan is 73 years old and has been Fed Chairman since 1987, having first been nominated by the President who should rightly be credited with most of the prosperity that we enjoyed during the '80s and '90s. Of course, I am talking about Ronald Reagan.
Before becoming Fed Chairman, Mr. Greenspan had headed the President's Council of Economic Advisors during the Ford administration. Most analysts had predicted that the White House would eventually turn to Greenspan for a fourth term, the fact notwithstanding that the Chairman will be 78 by the end of that term.
The President thanked Mr. Greenspan for his willingness to serve another term, saying quite correctly that the Fed Chairman could have walked away into another, more leisurely and doubtless financially more lucrative, life. Greenspan's nomination is still subject to Senate confirmation, but aside from some minor problems from Senator Tom Harken, Democrat from Iowa (and one of the fine economic minds of the 19th century), the Greenspan nomination is expected to sail through the Senate easily, therefore providing a great deal of continuity in the nation's monetary policy.
That Greenspan could go into private life and earn many times what he is making as the Fed Chairman is indisputable. His predecessor, Paul Voelker, earned about ten times his Fed Chairman's salary immediately upon resigning and going into private life.
Mr. Greenspan's contributions to our economic prosperity rank right up there with Ronald Reagan's. The Fed Chairman has steered us through a number of financial crises over the last 13 years, and enjoys worldwide respect, which is very important in our increasingly shrinking world.
At the bottom line, the current occupant of the White House, while disgracing his office, has been pretty good in the area of economic decisions. Mostly he has stayed out of the way, has listened to the advice of former Treasury Secretary Robert Ruben and Mr. Greenspan, and has fairly let them run the economic show. The fact that he now chooses to re-nominate Mr. Greenspan shows that nobody is all bad all the time.
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Obviously, talking about Mr. Greenspan also involves interest rates. Rising rates, or the fear of rising rates, ruined last year's bond market. In our "Taking Care of Business" seminars, we warned people about investing in bonds; historically they don't compete with stocks, even on a risk-adjusted basis. Last year, as example, despite the "equity party," Lehman Brother's Long Term Bond Index fell 8.79%, and the Bond Buyers Municipal Index fell 13.2%. What good does tax-free interest do when your principle declines by 13.2%?
Let's never forget that as long as we keep inflation under control, the stock market LIVES! Let's trust that Mr. Greenspan has not lost his touch and will continue the balancing act that he has performed over the last decade.
(Tom Butenhoff is a First Vice President with J. E. Liss & Company in Milwaukee. The views are his and not necessarily those of Liss Financial Services or the Job Connection/Hiring Network.)