Outlook: Famous double act draws to a close
Thursday 13 May 1999
Succession is always a delicate matter in public life as much as business, and never more so than when it comes to replacing those who retire from the two top jobs in managing the US and world economy. Any sensible chief executive will, like a sports star, try to leave on a high note. Mr Rubin certainly seems to have managed this - the world crisis is over, the US economy has clocked up eight years of expansion, and Wall Street remains close to its all time record.
But in public life, the verdict of posterity is important. Mr Rubin is also handing over the reins to somebody with whom he has worked closely for the past four years. Mr Summers has taken a leading role in responding to the global economic and financial crisis. Mr Greenspan is one of the team too. As a recent adulatory Time magazine cover feature on Bob, Larry and Alan noted, they even play tennis together.
The fact that the dive in shares, bonds and the dollar was so limited yesterday reveals the essential similarity of Mr Rubin and Mr Summers in the eyes of the financial markets. Even though the former is an urbane Wall Street investment banker who made millions at Goldman Sachs before going into public life, and the latter an often brusque Harvard economist, there is not a whisker between them on policy. Some members of Congress will give Mr Summers a rough ride at his confirmation hearing, but the markets will welcome his nomination. It will be much harder to ensure a smooth transition at the Fed when the time comes for the revered Mr Greenspan to go. He has been in the job since August 1987 - his first challenge was responding to the crash that October. His current term ends in June 2000, though this might be extended by convention until the new President takes office the following January. By that time he will be nearing 75.
If Wall Street has crashed disastrously by then, the idol of the financial markets will turn out to have had feet of clay all along. But in that case President Al Gore - if it is he - might be all the more inclined to try and lure Mr Rubin back into the public eye.
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