Greenspan Dies

Alan Greenspan presided over the Federal Reserve for 19 years under four presidents, from Presidents Reagan to George W.

Bush.

His comment in 1996 about investors' "irrational exuberance" initially shocked the markets, but the bubble didn't burst until 2001. "With a couple of choice words he can momentarily send the stock market to heaven or hell," a Washington Post column said in 1997.

Alan Greenspan, the "Maestro" who presided over the Federal Reserve for 19 years under four presidents and mastered the art of obfuscation known as Fedspeak, has died.

He was 100.

The influential economist died Monday from complications of Parkinson's Disease, said his wife of 29 years, Andrea Mitchell, the chief Washington correspondent and chief foreign affairs correspondent for NBC News .

Greenspan was appointed Fed chairman in 1987 by President Ronald Reagan and held the position — through busts and booms — until retiring in 2006.

His tenure was the second longest, four months short of that of William McChesney Martin, who presided over the central bank from 1951 to 1970.

In an apparent bid to avoid rocking the markets or not showing the Fed's hand until it was time, Greenspan would cloak his utterances in language that left the sharpest minds — including those of contentious members of Congress — scratching their heads. "His long, convoluted sentences seem to take away at the end what they have given at the beginning as they flow to new levels of incomprehensibility," The Washington Post's Bob Woodward said in his 2000 biography "Maestro: Greenspan's Fed and the American Boom." But it was his unusual frankness in one televised speech, on Dec.

5, 1996, that set off a bit of market madness.

Discussing the challenges of setting monetary policy, he said: "How do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade? ...

We should not underestimate or become complacent about the complexity of the interactions of asset markets and the economy." The phrase "irrational exuberance" was interpreted as a signal that Greenspan thought the market was overvalued.

The Tokyo stock market, which was open at the time, sank 3% on the comment, and other markets subsequently tumbled.

However, the markets quickly recovered and continued to climb until the dot-com bust in 2001.

Years earlier, in 1974, when he was chairman of the White House Council of Economic Advisers, Greenspan had to explain on Capitol Hill why the administration wasn't whipping inflation now , as the Ford administration dubbed its war on rising prices.

In a sure-to-befuddle Greenspanism, he said: "It is a tricky problem to find the particular calibration in timing that would be appropriate to stem the acceleration in risk premiums created by falling incomes without prematurely aborting the decline in the inflation-generated risk premiums." "Some folks, especially money managers who shovel vast amounts of cash from one pile to another, think about Greenspan a lot," Linton Weeks and John M.

Berry wrote in The Washington Post in March 1997. "They watch his every word, mark his every move, graph his every grin.

Because second to the president, Alan Greenspan is arguably the nation's most powerful person . ...

With a couple of choice words he can momentarily send the stock market to heaven or hell." After his retirement from the Fed, Greenspan confessed his strategy for using perplexing language with a clear explanation. "It's a language of purposeful obfuscation to avoid certain questions coming up, which you know you can't answer, and saying 'I will not answer' or basically 'no comment' is, in fact, an answer," he said in a 2007 interview on CNBC . "So, you end up with when, say, a congressman asks you a question, and [you] don't want to say, 'no comment,' or 'I won't answer,' or something like that.

So, I proceed with four or five sentences which get increasingly obscure.

The congressman thinks I answered the question and goes on to the next one." Greenspan was born to Jewish parents on March 6, 1926, in New York's Washington Heights.

His father was a stockbroker and financial analyst.

As a boy growing up in the 1930s during the Great Depression, the future Fed chairman received an allowance of a quarter a week. "Twenty-five cents, I will tell you, bought a lot more then than it does these days," Greenspan told an audience in 2003.

Greenspan played the clarinet and saxophone and briefly attended the Juilliard School.

He played in Woody Herman's jazz band (as did another future White House official, Leonard Garment), before he enrolled in New York University, earning bachelor's and master's degrees in economics by 1950.

He eventually received his Ph.D. in 1977 — at age 51.

Among his teachers and mentors were the future Fed Chairman Arthur Burns and the free-market proponent Ayn Rand, to whom Greenspan was introduced by his first wife, the artist Joan Mitchell.

By the time he received his doctorate, he had worked at Brown Brothers Harriman, the National Industrial Conference Board and the Townsend-Greenspan consulting firm, which closed after he was nominated as Fed chairman.

His three-decade stint at Townsend-Greenspan was interrupted when he served as chairman of President Gerald Ford's Council of Economic Advisers from 1974 to 1977.

From 1981 to 1983, he was chairman of the National Commission on Social Security Reform.

His first job as an economist didn't pay much more than his childhood allowance: He got $45 a week .

The first of his five terms at the Fed began just before the 1987 financial crisis.

The Senate confirmed his nomination to succeed Paul Volcker on Aug.

11.

That was only 69 days before "Black Monday" crushed Wall Street on Oct.

19.