The Three Marketeers

Economist heroes? It sounds silly unless you understand how close we came to economic meltdown last year. This close

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To operate effectively in this new world, Rubin has remade the Treasury into an organization that is "more like an investment bank," says Tim Geithner, the 37-year-old Under Secretary for International Affairs. Unlike past Secretaries, who wanted decisions presented as thumbs-up, thumbs-down recommendations, Rubin wants debate. "He is a master at eliciting opinions," says David Lipton, a former Treasury official. The emblematic Treasury encounter is what Rubin calls a "rolling meeting," which cruises from one corner of the globe to the other as aides sprint in and out of the room. Says Lipton: "Often in meetings Rubin will cut right through the hierarchy, reach down to one of the youngsters at the table and ask what that person thinks. It creates a whole lot of energy--and an awful lot of fresh thinking."

And fresh thinking has been crucial in the new economic order. One legacy of 1998 has been the destruction of some of academe's and Wall Street's most cherished models of the world. More data and faster markets, says Greenspan, mean more opportunities to make money. They also mean more chances to lose your shirt, something he calls "the increased productivity of mistakes." Computers make it possible to push a button and destroy a billion dollars of wealth. The chairman was warning about the problem long before Long-Term Capital Management vaporized $4 billion, but that debacle silenced any skeptics of the new risks.

Summers, who was the youngest tenured professor in Harvard history, was every bit as much a rocket scientist as the economists at LTCM. But Greenspan says one of the keys to Summers' success in Washington is his ability to unlearn much of what he once taught. "Larry has one overriding virtue: he is very smart," Greenspan explained one afternoon last week, as a springlike day cooled into night outside his Washington office. "And unlike people who are smart and believe they are smart, he is open to the recognition that a lot of what he thinks is true is not. That is a very rare characteristic. The academic model is far too simplistic a structure to explain how this whole thing works. Larry had the intelligence to very rapidly grasp that."

In private, Greenspan is full of insights like this. He is as much an observer of people as of markets. Rubin, among others, says the joy of working with Greenspan lies in both the power of his intellect and the sweetness of his soul. Though the world has come to know him through his opaque congressional testimony, friends know him as the Juilliard-trained saxophone player who spent two years touring with a swing band before taking up economics. The quiet romance of the man has always been present if you looked hard enough. Ayn Rand told friends, "What I like about A.G. is that basically he has his feet on the ground. I love his love for life on earth. He really is a passionate person in his own quiet way." Greenspan, who ran his own consulting firm on Wall Street for nearly 30 years, could have returned to the private sector and racked up a fortune. But his interest is elsewhere. Says Rubin: "Like all of us, Alan just has a driving interest to see how this will develop."

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