This world-famous man helped found a band and toured as a member. Many years later, in 2002, he received an honorary knighthood. No, it’s not Sir Paul McCartney – it’s Alan Greenspan, head of the Federal Reserve.
After studying clarinet at Julliard, Greenspan played saxophone with a swing band, reportedly dating Barbara Walters before settling down as the spouse of NBC correspondent Andrea Mitchell. The 79-year-old economist reportedly plays a mean game of tennis.
Oh, yes, and he helped steer the American economy through the crash of 1987, the recession of the early 1990s, the dot-com bubble and the terrorist attacks of Sept. 11. According to ABC News, in 1998 unemployment reached a 24-year low, inflation hit an 11-year low and consumer confidence was the highest it had been in 30 years thanks in part to Greenspan.
As chairman of the Board of Governors of the Federal Reserve of the United States, Greenspan’s decisions, first, to substantially lower the federal bank rate during the early 2000s, and then, starting last summer, to gradually increase it, have made him one of the most influential people in real estate today.
The federal bank rate, which the Fed’s Open Market Committee controls, is not directly tied to long-term interest rates. But it almost inevitably affects them. When the committee substantially lowered the nation’s benchmark interest rate in the early 2000s, many said this helped to fuel the housing boom that continues to this day.
Beginning last summer, Greenspan’s committee has raised the bank rate by a quarter percentage point 10 times. It now stands at 3.5 percent. Interest rates on 30-year and 15-year mortgages are rising in the wake of these actions by the Fed.
Greenspan, who received a bachelor’s, master’s and Ph.D. in economics from New York University, has only to speak, and the real estate market and other markets respond. (“Today, when Alan Greenspan sneezes, at least half the planet’s financial population catches cold,” Larry Kudlow, National Review Online economics editor, famously said in 2003.)
For example, a substantial rise in mortgage rates this June was attributed to Greenspan by Bankrate.com, Inman News reported. Early in 2005, Greenspan called it a “conundrum” that long-term rates had fallen since last June, even as the Fed had raised short-term rates. He said something similar in congressional testimony in June, when he called the decline in long-term interest rates among “the biggest surprises of the past year” and “without recent precedent.”
Wall Street thought about Greenspan’s comments overnight, and bond yields and mortgage rates rose the next morning, according to Bankrate.com. They kept rising in the following days, even in the face of weaker-than-expected economic data.
Such is the power of Alan Greenspan, who originally took office as chairman of the Fed and to fill an unexpired term as a member of the Board on Aug. 11, 1987. Greenspan was reappointed to the Board to a full 14-year term, which began Feb. 1, 1992, and ends Jan. 31, 2006.
Few people can claim the kind of impact Greenspan has had – not to mention his popularity. Despite his advanced years and less-than-colloquial speech, he has his own “ultimate Alan Greenspan teen dream fan page,” an honor not extended (at least so far) to such luminaries as, for example, President Bush.
And who knows what this man of many talents will do when his term ends in January 2006? He could return to the private sector; Greenspan had his own economic consulting firm, Townsend-Greenspan, for a number of years. Perhaps he’ll once again take up the saxophone. Regardless, Greenspan can rest assured that he has made his mark on the worlds of finance and real estate.
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