Amid Fed frenzy, Greenspan plays it cool

(Fortune Magazine) -- The greatest event publicist on earth couldn't have timed Alan Greenspan's latest speaking engagement any better.

The former Federal Reserve chairman appeared Tuesday night before a sold out crowd at Manhattan's 92nd Street Y cultural center, less than six hours after his successor Ben Bernanke cut the fed funds rate by a half percentage point and sent shivers of exuberance up and down Wall Street not felt since the maestro himself was in charge.

Greenspan discussed his new book with a New York audience Tuesday evening, just hours after the Federal Reserve cut interest rates by half a percentage point.

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Sadly for investors, this is what he had to say about the tricky business of economic forecasting: "You're better off than with a toss of a coin, but not much more."

Tongue in cheek observations aside, Greenspan demurred from making statements about the rate cut or the current challenges keeping U.S. central bankers awake at night. Nor did guest host Andrea Mitchell press him on the topic.

The NBC news political reporter, who also happens to be his wife, steered the conversation to the more controversial points from his new book, The Age of Turbulence, criticisms of his fiscal policy, and more personal questions about figures like writer Ayn Rand.

In his 30-year friendship with the controversial Rand, Greenspan said she made him consider the essential role that human nature plays in the otherwise predictable and model driven study of economics and statistics.

"She got me to think in ways that naturally increased my ability to understand how the world works," said Greenspan. "I go around the globe and am fascinated by the ways in which people all behave very similarly."

However, at least one luminary may have had a greater hand in shaping his fate.

"I was a fairly good amateur musician," he told the crowd. "But I got discouraged because I sat next to [jazz saxophone legend] Stan Getz." It was only a matter of time before the Juilliard-trained Greenspan would drop music and take up economics.

Much of the discussion, including his thoughts on Medicaid, the Bush administration, the "dysfunctional" state of U.S. politics, and how the collapse of communism helped fuel the most recent housing market echoed an earlier interview he did with Fortune managing editor Andy Serwer, which can be found here.

So for the crowd of elderly Y members, dignified economists, young Wall Street titans and assorted other groupies that packed the auditorium, this was a chance to see a more relaxed side of Greenspan, even as he answered de rigueur questions about politics (he liked working with Gerald Ford best), the housing market (he never promoted subprime ARMs), and inflation (the work of global forces). Greenspan self-describes as an introvert and is understated and soft-spoken.

Even so he was also wry and witty. After a long grilling from Mitchell, an audience member asked him how to deal with stress. His reply: "Have your wife talk to you nicely and pleasantly."

His levity and candor were a welcome surprise for many attendees, particularly those who have seen his stiff congressional testimony or read his cryptic comments on fiscal policy.

"I regret to say that it was deliberate," he said of being hard to read while Fed chief. "It was very clear that people did take what I said literally. If we lowered rates and implied that we might lower them in six weeks, the fed funds futures would immediately discount the rate [further]."

While he wouldn't discuss the recent rate cut, he surmised that Bernanke, too, is an introvert because, to some extent, he believes it's a requirement of the job.

"Once you take an action it's carved in stone and you can't take it back," he said. "You're not only thinking about the likely consequences, you're thinking about what could go wrong. And a good part of policy addresses what can go wrong."