Larry Elliott - That Old Greenspan Magic Seems to Be Fading 汉译

For the best part of 20 years, Alan Greenspan has been a symbol of the stupidity of ageism. He became chairman of the US Federal Reserve at 61, when plenty of workers have already been tossed on the scrapheap and many others are preparing to wind down for retirement. His golden years in charge of the US economy were when he was pushing 70 and he's still there aged 78. Greenspan is the doyen of central bankers, still talked about in almost reverential terms by his peers. The fact that the Fed chairman rarely gives interviews and makes public pronouncements that are to economics what Finnegans Wake is to literature only adds to the mystique.<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

It is, then, with some trepidation that the question has to be asked: has Big Al finally lost the plot? At the start of last week, Greenspan presided over a meeting of the Fed which kept interest rates on hold at 1%, the level they have been pegged at for nearly a year. A statement accompanying the decision said the risks to inflation were balanced, which means the Fed thinks there is as much chance of the cost of living going up as going down. On Thursday, new joblessness claims in the US fell to their lowest level in getting on for four years, and the picture of a recovering labor market was underlined by Friday's non-farm payrolls which showed an increase of 288,000, above what had been expected. The economy is expanding at an annual rate of 4.5%, surveys of both manufacturing and the service sector are strong, the housing market is booming, inflation has started to pick up.

Hardly surprisingly, Greenspan's call on inflation is now coming under the microscope, even by those on the Keynesian left who tend to favor expansionary macroeconomic policies. "Show me something, other than computers, where the price is falling," says Dean Baker of the Centre for Economic Policy Research in Washington. Baker is right. Clearly, risks to inflation are on the upside, and massively so. The economy has been injected with a cocktail of three growth-inducing drugs - negative real interest rates, a rising budget deficit and a falling currency. Oil prices have touched $40 a barrel and the labor market is tightening. It is hard to believe that Greenspan, a junkie for economic data no matter how seemingly trivial, has not spotted all this. Rates in the US are far below a neutral level, which would probably be around 5%, yet Greenspan is in no hurry to act.