The Three Marketeers

MICHAEL O'NEILL FOR TIME
MONEY MEN
Greenspan, left, Summers, center, and Rubin are facing a global economy that has obliterated the models

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Their success has turned them into a kind of free-market Politburo on economic matters. Clinton relies on the men to a level that drives other Cabinet members nuts. One weekend this summer, when both Summers and Rubin were on vacation, Clinton began to panic about Russia's weakness. "Where's Bob?" the President kept asking nervously in a morning meeting. Turning to White House staff members, he told them to pull together a plan. The team spent a weekend crashing a strategy, only to be shut out again when Rubin arrived back in town. An aide to Secretary of State Madeleine Albright regularly worked the phones during last summer's Russian collapse, insisting that reporters were missing the story--Albright's involvement in economic policy. No one spent an ounce of ink on it. But other Administration officials say they are comfortable with the power balance. Says Gene Sperling, head of the National Economic Council: "You are often in a situation where other people far less experienced are coming in with very simple solutions, sure things that are going to work. And here are Rubin and Greenspan and Summers, with all their knowledge and expertise, showing the most humility. That is very reassuring."

Clinton doesn't bestow his trust blindly. He has immersed himself in economic details over the past six years. Rubin recalls a fishing vacation he took last summer as the President was trying to formulate his response to the Russian crisis. As Rubin stood streamside near Homer, Alaska, his Secret Service agent's phone rang with call after call from the White House. Rod in hand, Rubin helped Clinton develop a clear understanding of the options. "He doesn't just sit by and sign off on policy," Rubin explains. And, Rubin says, Clinton has been willing to make politically tough decisions when necessary to assure U.S. growth--bailing out Mexico in 1995, for instance. "I really don't know what would have happened with this global climate if we hadn't had a President who had within him the framework to do what was best for the global economy," Rubin says.

Clinton's grasp of Realeconomik includes the tenet that short-term political gains are never worth long-term economic risks. Even though this year he had plenty of incentives to pump up his role in Asia and Russia, he has remained mum. In particular, that meant resisting the temptation to "talk up" the dollar or the stock market or bash the Fed for interest-rate moves. And Clinton has, in typical style, been an aggressive autodidact. Aides recall the time last fall when, nursing an aching back, Clinton spent an afternoon stretched out on a White House couch with one eye on the TV and the other on George Soros' complex new book on the risks of capitalism. He finished it in a day and quickly passed the underlined, dog-eared copy to his aides as required reading.

The White House has also played a role in averting crises before they appeared on the radar screens. There were times in the past year when countries including Egypt, South Africa and Ukraine were possibly just days away from becoming the next victims of Asian Contagion. But patient and highly secret intervention by Vice President Al Gore helped change policy and avert collapses that would surely have shaken global confidence again.

The contagion has been a kind of object lesson in the risks of the new economics, and many developing nations are paying more attention to their policies. Says a Treasury official: "It was awfully hard to tell the Thais they had something to worry about when they were growing at 8% a year. They're a lot more attentive now." Greenspan and Rubin hope they can turn that attention into the kind of reforms that will make these emerging markets closer to ideal. Among the top priorities: cleaner international banking systems, transparent lending practices and more open markets. As soon as they can ram those changes through, they expect growth to pick up again--possibly just in time to help a flagging U.S. economy.

There are many challenges to face between now and then. Japan, which, as a banker and buyer, is crucial to any plans for a recovery in Asia, continues to struggle with economic reform. And in the U.S., growth is more dependent than ever on the stock market--which has been powered to new highs on the back of Greenspan's interest-rate cuts during the fall. The link between the Dow and the GDP means that a major correction in the stock market could send the trio's fondest hopes into the dustbin. "They have done a masterful job so far," says Stephen Roach, a Morgan Stanley economist. "Unfortunately, in financial markets you are only as good as your last move. If Greenspan's legacy is a stock-market bubble, he will not be treated kindly by history."

None of the three men will talk about life after government, though Rubin says of Summers, "Larry is one of the few people smart enough to be either chairman of the Federal Reserve or Secretary of the Treasury." Few who know Summers doubt that he will someday hold one of those jobs.