MAESTRO: Greenspan's Fed and the American Boom.

• Author: Scheiber, Noam
• Position: Review

MAESTRO: Greenspan's Fed and the American Boom by Bob Woodward Simon & Schuster, $25.00

Gettin' Lucky With Greenspan

THE OPENING CHAPTER OF BOB Woodward's Maestro is riveting stuff. It is October of 1987, barely two months into Alan Greenspan's tenure at the Federal Reserve, and the chairman is in Dallas for a routine speaking engagement. Concerned about the market's Monday-morning doldrums, Greenspan checks in with a local Fed official shortly after arriving. The official offers a perfunctory response--"down five oh eight"--in which Greenspan finds a measure of relief. Then the official clarifies: the market is not down 5.08 points. It's down 508 points.

It turns out Woodward has parachuted us right into Black Monday, the biggest one-day slide in stock market history. But not to worry. With panic swirling around him--White House Chief of Staff Howard Baker whimpering like an incontinent lap dog, New York Fed President William Corrigan spewing invectives ("Alan, you're it ... Goddammit, it's up to you!")--Greenspan not only saves the day, he does so with Bond-like panache. This, of course, is the genius of Alan Greenspan.

But it's worth considering exactly what Greenspan does here. As far as I can tell from Woodward's account, it's only two things: one, issue a one-sentence public statement that seems to calm the markets; and two, mastermind a last-ditch plan that would guarantee payments between financial institutions (a lapse in those payments could have unraveled the entire financial system). The first strikes me as a no-brainer--what else do you do if you're the Fed chairman?--even though the insiders Woodward later quotes call it "brilliant." The second turned out to be irrelevant. As it happened, the market reversed course when a handful of Wall Street players bought $60 million in futures contracts the following afternoon. To this day, Greenspan still doesn't know who organized it.

And this, in a nutshell, is the problem with Maestro. Where Woodward's Greenspan cuts an Olympian figure, the real Greenspan was just a bright guy with better-than-average instincts. He has no special insight into the world that was changing around him and, in the end, he simply benefited from favorable forces beyond his control. Woodward is right that the story of the Greenspan era is the story of 1987 writ large. He's just wrong about what happened in 1987.

Needless to say, someone intent on taking a critical view of Greenspan wouldn't suffer for lack of...