Published January 13, 2015
A panel of prominent economists this week pondered a question that many Wall Street investors find unthinkable: Who will take the helm of the world's most powerful central bank when Alan Greenspan leaves?
The closely watched newsletter Blue Chip Economic Indicators saw fit to broach the sensitive topic of Greenspan's potential successor in its February economic survey.
While the smart money is not on an early departure date for the Federal Reserve chairman, whose term does not end for more than two years, the group that conducted the survey said the question did raise some economists' eyebrows.
Asked who they thought would "eventually" be chosen to fill Greenspan's big shoes, Blue Chip's panel of 53 forecasters leaned heavily toward John Taylor, the renowned monetary economist who is now undersecretary for international affairs at the U.S. Treasury.
He was the top pick of more than 40 percent of the poll participants. Taylor was followed by New York Fed President William McDonough, who was selected by nearly 19 percent of the panelists, and then by former U.S. Treasury Secretary Robert Rubin, cited by 13.5 percent of the economists.
Others people who made it onto the Blue Chip list included Harvard economist Martin Feldstein, Fed Vice Chairman Roger Ferguson and Glenn Hubbard, chairman of the White House Council of Economic Advisers.
Princeton University economist Ben Bernanke -- who is believed to be in the running for one of two empty seats on the Fed's Board of Governors -- was also mentioned on the Blue Chip list for the top Fed job.
WHAT DO YOU KNOW?
Such a list may or may not have a bearing on President Bush's decision-making process. Bush would get to pick a Greenspan successor if the Fed chief departed within the next three years or if Bush won a second term as president should, Greenspan leave after 2005.
The question from Blue Chip, a Kansas City, Missouri-based newsletter, was not a reflection of inside knowledge, however.
"It's interesting that the biggest question I've gotten about the Greenspan question is 'What do you know that we don't know?"' said Randell Moore, editor of Blue Chip Economic Indicators, which is based in Kansas City, Mo.
"The answer is, nothing," he added.
With the economy struggling to escape recession and corporate accounting worries weighing on the stock market, the last thing that many investors want to fret over is the potential departure of the venerated Fed chairman.
Wall Street can probably rest easy for a while, because Greenspan's exit doesn't appear imminent despite his advancing age.
Greenspan turns 76 in March. His current term as Fed chairman does not end until June 2004, although he could chose to retire early at any time. However, Washington insiders get the impression that he is in good health and does not plan to make an exit any time soon.
RUMOR MILL CHURNS
Yet the rumor mill about the Fed chief's potential successors has been churning quietly and the Blue Chip list reflects many of the most talked-about possibilities.
Pierre Ellis, economist at Decision Economics in New York, said that given Greenspan's near-mythic stature on Wall Street, anyone picked to succeed him could have a tough time living up to his reputation.
The mere length of Greenspan's tenure at the Fed -- 14 years and counting -- will make for an adjustment process for the markets, analysts said. His many accomplishments include building on former Chairman Paul Volcker's battle against U.S. inflation.
But his reputation ascended into the stratosphere amid the economic boom of the 1990s when he embraced the idea of a productivity-driven New Economy and became associated with the era of prosperity and a heady stock market.
The pop of the high-technology bubble, the ensuing bear market for equities and the U.S. recession took some of the luster off Greenspan's reputation, but he remains hugely popular and still commands every Wall Street ear.
Still, at least one analyst, Chief Economist Neal Soss of Credit Suisse First Boston in New York, said the transfer of power at the Fed -- when it happens -- need not be a particularly rocky one for the markets.
"It won't matter what markets do on the first day a new person takes office," Soss said. "The new chairman will either earn the credibility that Greenspan had on the job or they will lose it. It is the actions that person takes on the economy that will matter."
For his part, Soss, a participant in the Blue Chip survey, thought Fed Vice Chairman Roger Ferguson would be the most suitable Greenspan replacement. He praised Ferguson's "moral presence" and his able handling of the financial market turmoil in the aftermath of the Sept. 11 attacks on the United States.
September 11 was one of the first times of economic tumult when the markets could not immediately turn to Greenspan himself. The Fed chief was overseas, and with air traffic shut down, he could not fly back to Washington until the next day.