Maestro — Chapter 15

1. 1. President Clinton reappointed Alan Greenspan as Federal Reserve chairman in January 2000 for a fourth term.
2. 2. Greenspan accepted the reappointment with sober rapture, confident his mental faculties remained sharp at age 73.
3. 3. Clinton and Greenspan exchanged mutual praise during the announcement, each crediting the other for the economic success.
4. 4. The irony of the moment was that Greenspan, at 73, could continue as Fed chairman for another four years, while Clinton, at 53, was constitutionally barred from a third term and had only one year left.
5. 5. Greenspan had raised rates three times since June 1999, each by 0.25%, and was expected to continue tightening.
6. 6. The U.S. economy had created more than 20 million new jobs since Clinton took office, with unemployment at an unheard-of 4% and the Dow above 11,000.
7. 7. Greenspan attributed the extraordinary productivity improvement to information technology, particularly computers and the Internet, enabling vastly better inventory management and rapid dissemination throughout society.
8. 8. Greenspan argued that a debt-free federal government would not lose its ability to act expansively, as it could reborrow trillions in a crisis.
9. 9. In spring 2000, the Nasdaq plunged 30%, with many dot-com stocks dropping 80-90%, while the Dow stabilized between 10,000 and 11,000.
10. 10. Greenspan worried about the unprecedented winning streak, wondering when the boom would end and what hidden crisis might emerge.