Amid the Craziness, Greenspan Stays the Course

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Alan Greenspan arrives for work in Washington

It would take a wildly indelicate Fed chairman to make a policy change at a time like this, and indelicate is one thing Alan Greenspan is not. Surprising absolutely no one, Greenspan's FOMC board announced at 2:15 Wednesday that it was leaving interest rates alone. Even its bias — slightly worried about inflation, but not overly — will remain unchanged until its December meeting, and few expect the Fed to do anything then either. In the middle of a wild and crazy fourth quarter for investors, politicians and everybody with a healthy interest in where America is headed, the economy is on its own.

The only thing that might rouse Greenspan now is — you guessed it — Florida. If the current election madness lasts long enough to put the financial markets in a serious slide, there's a possibility Greenspan will intervene with a rate cut that would put worriers in a sunnier mood. He did it in the fall of 1998, when the Asian crisis-cum–Long Term Capital fiasco was threatening to ruin his boom, and he'll be tempted to do it again if Al Gore and George W. Bush's lawyers start to do the same.

But the markets are handling the ongoing non-election pretty well. Since taking a deep dip Monday that had Bush surrogate-in-chief James Baker invoking "instability" as a reason to stop the re-recounting in Florida, both the Dow and NASDAQ have been going about their bargain-hunting unperturbed by the legal and political quagmires in the Sunshine State. Both indexes posted steep three-digit gains Tuesday. On Wednesday the buyback continued — apparently some investors see an end to the Florida mess by next week.

Maybe investors didn't like playing pawn in the never-ending campaign; maybe they remember Dubya henchman Jim Baker as a member of the administration that presided over the last American recession. Probably they're dealing with their own issues, like slowing sales growth, disappointing corporate earnings and the prospect that Greenspan's "soft landing" might actually be quite hard on everybody.

But that last part is still a minority opinion. Greenspan could have gotten away with a friendly quarter-point rate cut Wednesday if he thought the slowing economy needed to slow a little slower — it certainly wouldn't have bothered investors. But Greenspan has plenty of numbers, like Tuesday's minuscule hike in retail sales, telling him everything's unfolding just like he planned it.

At least it's happening for someone. Greenspan has long been called the second most powerful man in America, and these days he's gotta be making a run at number one. The Commotion by the Ocean in Florida has plenty of folks squawking about a constitutional crisis. But as long as there's no power vacuum at the Fed, you won't hear much about a financial one.