Former Federal Reserve chairman Alan Greenspan dies aged 100

Former US Federal Reserve chairman Alan Greenspan has died at the age of 100.

He died on Monday from complications of Parkinson’s disease, said his wife of 29 years, NBC News correspondent Andrea Mitchell.

“To me he was my husband, who shaped my life from our very first date in 1984,” Ms Mitchell said.

“He had ‘irrational exuberance’ for baseball, the Washington Commanders, tennis, golf, and music, especially jazz. He will be remembered for his brilliance and his kindness. Being his life partner was the joy of my life.”

In his 18 and a half years at the helm of the Fed, Mr Greenspan presided over a sustained era of American growth and prosperity, yet one that ended with devastating consequences in 2008, two years after he had left the central bank.

Mr Greenspan was so respected during his many years as head of the world’s most influential central bank that by the time he stepped down in 2006, he was widely celebrated as the “Oracle” and “Maestro”.

Mr Greenspan’s reputation suffered a serious setback however, when the American housing market collapsed, igniting a global financial crisis that nearly toppled the US banking system and plunged the economy into the worst recession since the 1930s.

Critics pinned much of the blame for the crisis on Mr Greenspan’s easy-money policies and on what they believed was an over-exuberant faith in lightly supervised financial markets.

Mr Greenspan himself later acknowledged that “I made a mistake” in assuming the nation’s banks, whose stability underpins the financial system and the entire economy, could essentially regulate themselves.

In his time at the Fed, Mr Greenspan presided over a breathtaking surge in stock prices and a 10-year economic boom that began in March 1991.

He was widely celebrated as a virtuoso who nurtured America’s economic wellbeing and whose nearly every utterance was examined for clues as to where interest rates, the economy and the financial markets might be headed.

Mr Greenspan’s intentions were so intensely theorised that it gave birth to new Fed folklore: The “Briefcase Indicator”.

A stuffed briefcase carried into Fed meetings implied changes may be afoot because Mr Greenspan carried with him charts and research to make his point.

Mr Greenspan’s reputation suffered almost as soon as he left the Fed in 2006, however.

American housing prices began to slide, then accelerated into a dizzying plunge that inflicted huge losses for banks, pension funds and other investors that had bet heavily on real estate.

As housing values plummeted, millions of Americans, many of them stuck with mortgage debts, lost homes to foreclosure. The spiralling financial crisis sent the US economy sinking into the Great Recession of 2007-2009, the worst downturn since the Great Depression of the 1930s.

The crisis in the US spread overseas rapidly, leading to a debt crisis for nations in Europe and it led Beijing to engineer a massive government stimulus package to stabilise its economy.

Until then, however, it seemed that Mr Greenspan could do no wrong. Not only in the United States but across the world, he was regarded with a mixture of reverence and awe. Many even openly dreaded the day when he would leave the Fed.

Investors hung on his sometimes inscrutable observations. In the most well-known such remark, Mr Greenspan sent financial markets reeling on December 5 1996 when he suggested with just two words — “irrational exuberance” — that stock prices were too high.

Mindful of his power to move markets, Mr Greenspan typically resorted to obfuscation. At times, he even satirised his habit of doing so.

“I know you believe you understand what you think I said, but I am not sure you realise that what you heard is not what I meant,” Mr Greenspan once told a befuddled congressional committee.

Born in the Washington Heights neighbourhood of Manhattan, the young Mr Greenspan was a maths whizz who was trotted out by his mother to show off for visitors.

“I was a prop at parties,” he said in a 2007 interview with PBS NewsHour. A Julliard School dropout, he worked as a professional musician in his teens, playing clarinet and saxophone alongside the future jazz great Stan Getz — a humbling experience that persuaded him to seek another line of work.

He pursued undergraduate and graduate study in economics at New York University, eventually earning a doctorate there.

For most of three decades, he ran an economic consulting firm. During the 1950s, he became a disciple of the libertarian philosopher Ayn Rand, who stuck him with the nickname the “Undertaker” for his dark clothes and quiet bearing. When Mr Greenspan was sworn in as president Gerald Ford’s chief economic adviser in 1974, Ms Rand stood beside him.

President Ronald Reagan hired Mr Greenspan to run the Fed in 1987.

He was tested almost immediately. On October 19 1987, which came to be known as “Black Monday”, the stock market suffered the worst one-day percentage loss in American history just two months into his term.

The Dow Jones Industrial Average shed 22.6% of its value rapidly for reasons that were not entirely clear then, and remain opaque to this day.

Mr Greenspan won credit for helping restore calm and stability. He assured Wall Street that the Fed would supply as much money to the financial system as was needed to restore calm. Stocks recovered, and the American economy emerged unscathed by the market crash.

Mr Greenspan’s crisis management skills were tested again in 1997 and 1998, when a financial crisis in Asia threatened to spread economic devastation around the globe. Under Mr Greenspan, the Fed arranged an emergency loan to Thailand in the early stages of the crisis and persuaded US banks to roll over short-term loans to a teetering South Korea.

During his tenure at the Fed, Mr Greenspan drew praise for presiding over what was at the time the longest economic expansion in American history — a 10-year streak of prosperity that ran from March 1991 to March 2001. Over that time, the nation’s unemployment rate briefly dropped below 4% for the first time since 1970.

And inflation, which had bedevilled the United States and much of the global economy during the 1970s, was remarkably dormant during Mr Greenspan’s chairmanship, something many economists had not thought could occur for so long a period.

During the long boom, Mr Greenspan argued that improvements in technology had made the economy so efficient that it could run faster, at lower rates of unemployment, without unleashing inflation. As a consequence, the theory went, the Fed could keep interest rates low even when the economy was roaring.

As Fed chairman, Mr Greenspan relished poring over obscure economic data, all in a bid to assess where the economy was headed. He would often phone economists at other government agencies to discuss details. He would rise early each morning for a two-hour soak in his bath, time that he used to review statistics and Fed staff memos.

Improbably, Mr Greenspan also made the gossip pages as something of an unlikely ladies’ man. He dated the television journalist Barbara Walters and later married Andrea Mitchell of NBC News after a 12-year courtship. They had no children.

In the years after stepping down as Fed chairman in 2006 just shy of his 80th birthday, Mr Greenspan kept busy doing what he loved to do most — following the economic data. He ran his own consulting firm, Greenspan Associates, through which he dispensed advice to Wall Street clients and collected handsome speaking fees.

He kept up a busy schedule well into his 90s, writing his memoir and two other books on the economy, as well as opining on the latest economic developments on television news shows.

Mr Greenspan’s tenure as Fed chairman – from August 1987 through January 2006 — was just five months shy of the longest Fed chairman’s tenure. That distinction belonged to William McChesney Martin, who served from 1951 until early 1970.

In his 2013 book The Map And The Territory, Mr Greenspan defended himself against critics who assigned him significant blame for the 2008 financial meltdown. He argued that traditional economic forecasting was no match for the irrational risk-taking that can feed catastrophic price bubbles.

“Bubbles go up very slowly as euphoria builds,” Mr Greenspan said in a 2013 interview with the Associated Press. “Then fear hits, and it comes down very sharply. When I started to look at that, I was sort of intellectually shocked.”