The Greenspan years.

• Author: Smick, David M.
• Position: FROM THE FOUNDER

There are at least three reasons the year 1987 was big for the international financial system. That year, global stock markets crashed by a magnitude that today would be equivalent to a 2,500-point plummet of the Dow Jones Industrial Average. Alan Greenspan became Chairman of the Federal Reserve and, of course most importantly, The International Economy magazine came into existence.

Looking back on that period, the more things have changed the more they have stayed the same. Our inaugural magazine issue featured articles by then-New York Federal Reserve President E. Gerald Corrigan, trade expert Susan Schwab, and economist Larry Summers--all of whom appear again in the current issue. And one other thing remains the same: Alan Greenspan continues to dominate the news.

In his new book, The Age of Turbulence (Penguin, 2007), the former Fed chief, often referred to as "the Maestro," offers his take on his more than three decades of public service. The result is a curious mixture of economic analysis and political gamesmanship, producing many positive reviews but comments from other analysts on both the right and the left that have been spectacularly critical. For some, the book creates more questions than it answers. Was the Chairman a closet liberal Democrat all along? Yet did he cravenly betray Democrats by garnering favor with the George W. Bush White House in support of tax cuts? Is the book's preoccupation with crisis management ironically an effort to obscure a weakness in that regard, despite a wealth of intuitive talent in other areas? Does the book lavish praise on subordinates who were patsies and ignore those who stood up to him, particularly on monetary policy issues? Is Greenspan ultimately responsible for the pain and heartache produced by the bursting of today's U.S. housing bubble? And should he have seen the coming subprime disaster? These are the uncomfortable questions being thrown at the author.

My take is that Chairman Greenspan enjoyed more than impressive success guiding the U.S. economy and financial system through a new, turbulent period of financial market globalization. He should not back down in defending a remarkable record. As for his book's political analysis, however, a lot of it seems strangely out of touch with the facts and too much blinded by sympathetic feelings for old Ford Administration friends. Reading the Greenspan book, it is almost as if the Reagan Administration never existed. Here was a president, a...