We were all out on a houseboat, and the kids wanted to drive. The first kid took over and the boat began to lurch from one trajectory to another. The second kid was worse. The adults began to grip the arms of their chairs and conversation stopped. The third kid stepped up to the wheel, and all of a sudden the boat was sailing smoothly and competently. Conversation resumed and the air of relaxation returned. The third kid had “the touch”.
Some presidents have the touch, and many don't. It's not a matter of left or right. It's not a matter of the direction the ship of state is taking. It's a matter of proceeding smoothly and competently. Eisenhower had the touch. So did Bill Clinton, and Ronald Reagan.
It seems that Alan Greenspan also has the touch. We have been sailing smoothly toward economic calamity for many years under his leadership. But he will retire at the end of January in 2006. The chances that his successor will also have the touch are slim. The hidden monetary rocks and economic icebergs that he has been artfully but narrowly evading for many years will still be there.
As I see it, Greenspan has made very flawed policies seem to work. He has been skillfully saving up calamity for the future, and the future is likely to rear it's ugly head as he exits.
Greenspan was once a believer in the gold monetary standard. I don't know whether he just changed his mind, or sold out for money and power but he still seems to have retained enough integrity to make a pyramid scheme last for an unusually long time. The pyramid scheme I am referring to is the US dollar, which is now nothing more than an illusion shared by a lot of people, and it is an illusion that could vanish at any time.
Greenspan's successor will face major problems, which have been successfully evaded and ignored by the current US economic elite. People all over the world will be watching nervously as the next Fed chairman takes “control” of the US economy. Even if he has as much aptitude for the job as Greenspan, he may fail because people won't have unconditional faith in him the way they did with Greenspan. But the new Fed Chairman is unlikely to have that “magic touch”. Integrity and talent of that kind are rare in the general population, and almost non-existent in the criminal enterprise that is the US Government in the beginning of the 21st Century.
Since President Bush will appoint the next Fed Chairman, and Bush doesn't have the touch himself, it is unlikely he will appoint someone who does. As they say, it takes one to know one. Based on his track record, Bush will likely appoint some neocon ideologue with delusions of grandeur and the morals of a vulture.
I have a proven track record of being wrong about many predictions, but that doesn't excuse me, or anyone else, from having to bet on the future of the economy. Life is a gamble and there is no way to escape having to place your bets.
I am currently betting that there will be major economic chaos a few months after Greenspan retires.