Greenspan, Rubin: Stay the Course

But the Fed chairman and the treasury secretary may be testifying before deaf House ears

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WASHINGTON: Alan Greenspan gave the House Banking Committee a tour Wednesday through the hospital ward that is the global economy, and once you untangle what committee chairman James Leach laughingly called "international banking-ese," the Fed chairman sounded a lot like Patton. While acknowledging that the modern ultra-connected economy is less forgiving than at any other time in history, Greenspan chastised both borrowers and lenders for irresponsibility and bad risk assessment, attacked the nonparticipation strategy of China and India (and by association Malaysia), and in general told the ailing: Quit whining and clean up your economic acts, and free capitalism will save you in the end.

Treasury Secretary Robert Rubin, sitting next to Greenspan, stuck mainly to his good-cop stance. After the traditional call for Japan to take "swift, strong fiscal action," Rubin went back to doing the administration’s business -- trying to squeeze IMF funding out of the House as soon as possible. Indeed, both men –- who these days are not-so-laughingly deemed the last two viable leaders in the economic world -– remain convinced, even as the contagion continues to spread, that their bitter-pill regimen is the only way to go, not only to cure today’s ills but to immunize economies against tomorrow’s tremblings. House members, as always, nodded politely, but two moments Wednesday seemed to capture perfectly the persistent understanding gap between economists and politicians. One was when a member asked an exasperated Rubin if IMF funding was an issue that Congress should take home to their constituents and take up again in 1999. The other was Greenspan’s retort to Leach’s gibe about his comprehensibility: "If I spoke English," Greenspan said, smiling, "you wouldn’t understand."