II
Rising and falling is the essence of Dow
Stand before it and there is no beginning.
Follow it and there is no end.
Try to grasp it, and it drops more than 100 points
in heavy trading.

III
Advances and declines arise together.
Highs and lows rest upon each other;
Bear follows bull
Bust follows boom
This is the Eternal Way
But few investors understand its essence.

IV
The ancient Master
Is one with the Dow
For want of a better name
We call him Greenspan.
The Master
acts without speaking
Quarter point, quarter point, quarter point
Where will it end?
Mystery of mysteries

V
That which expands
Can be shrunk.
That which is strong
Can fail.
That which is raised
Can be cast down.
Just ask Amazon.

VI
The wise investor does nothing,
Content to observe the Dow as it rises and falls
Oversharpen the blade, and the edge will soon blunt.
Amass a store of new economy stocks
and nothing can protect you.

VII
Being fully mindful,
Can you be as a first-time investor?
Cleansing the vision,
Can you be without stain,
As though viewing CBS Marketwatch with new eyes?
Understanding and being open to sudden downturn
Are you able to accept your fate?
This is the Primal Virtue.

VIII
The 30 industrials blind the eye.
The 30 utilities deafen the ear.
The 30 transportations dull the taste.
The 30 brokers insist there’s nothing to worry about
The racing bull maddens the mind.
And chaos is loosed upon the market.
Better to become one with nothingness
Like Lucent.

IX
Accept disgrace willingly.
You bought Cisco at 79?
What the hell were you thinking?
Accept misfortune as the human condition.
Do not be concerned with loss or gain
Even when your spouse starts asking where the money went.

X
The ancient investors were subtle, mysterious, profound.
They knew the wisdom of buying and holding
The ten thousand stocks rise and fall while the Self watches their return.
Knowing this, you will attain the divine.
Being divine, you will be at one with the Dow.
And though the body dies, your portfolio will survive
Thus, the Dow will never pass away.

XI
Knowing the market is wisdom,
Knowing the self is enlightenment.
Mastering others requires force,
Mastering the self requires strength.
He who knows he has enough is rich.
He who doesn’t know
Is stuck with a lot of Yahoo stock

XII
A superior athlete leaves no tracks
A superior speaker makes no slips
A superior broker stops calling when you’re tapped out
When the way of the Dow is forgotten,
Speculation and irrational exuberance arise
The root of all suffering.

XIII
Do you think you can take over the market and improve it?
I do not believe it can be done.
The Dow is sacred.
You cannot improve it.
If you try to change it, you will ruin it.
If you try to manipulate it, you will go to jail
Unless you have friends in high places

XIV
Without going to Wall Street,
you may know the whole world.
Without stepping onto the trading floor,
you may see the ways of the market.
The more you invest, the less you know.
Therefore the truly wise investor dwells on what is real
and not what is on the surface
The fundamentals
not the closing price.

XV
Those who know
do not talk.
Those who talk
do not know.
Therefore, avoid financial message boards.
Give up easy profit
And it will be a hundred times better for everyone.
Buy and hold
That is the Eternal Way.

“We just think Mary is the best,” Braddock said. “That was the distinguishing reason we chose Morgan.”

Braddock was hardly alone in his enthusiasm. Wall Street analysts spent much of the late ’90s basking in the media spotlight’s full glare and enjoying the trust of investors and, consequently, investment banking clients. But in the wake of the dot-com implosion, analyst reputations have also suffered. Stockholders are suing by the dozens, arguing that conflicts of interest led to bogus, biased “buy” recommendations. According to Cole, analysts and their optimistic predictions played a key role in duping the public by forging a system that allowed institutional and inside investors to profit on IPOs while average investors lost out.

Congress and the Securities and Exchange Commission are now investigating whether Wall Street and its analysts illegally stoked the once-hot IPO market. In June, the SEC issued an alert warning investors not to rely solely on analysts’ recommendations because of “the potential conflicts of interest analysts might face.” In response, the Securities Industry Association, a trade group, drafted a code of conduct recommending that firms keep analyst compensation packages separate from investment banking revenue, forbid analysts from trading against their stock recommendations and require them to disclose their own stake and their firm’s stake in the stocks they cover. So far, 14 investment firms have endorsed the code. Merrill Lynch has gone even further, announcing that its 600 analysts would soon be barred from buying shares of the companies they cover.

The logic of the proposed reforms is clear: Remove the financial incentives that lead to analysts’ bias and the public will once again trust in Wall Street research and the firms that produce it. The “free” market will then do the rest. With confidence restored, the argument goes, investors will stop kvetching, new regulations will be unnecessary and all will once again be well.

But extinguishing doubts about Wall Street’s integrity and preventing the rise of new regulations may not be that easy. Cole’s analysis is complemented by Martin Mayer’s “The Fed: The Inside Story of How the World’s Most Powerful Financial Institution Drives the Markets.” Mayer suggests that the analyst crisis could be only the first sign of a major financial meltdown. Even if the industry goes along with the SIA code of conduct, which contains no enforcement mechanism or form of punishment for disobedience, taken together, these books suggest that the American financial system is poised for destabilization. Decades of deregulation, lax enforcement and the increasing dominance of the world’s interconnected stock markets have dramatically changed the landscape. Never mind whether analysts can get their act together and behave more responsibly; not even the mighty Fed, argues Mayer, has the ability to control today’s economic excesses.

The modern securities industry came of age with the Glass-Steagall Act of 1933. Glass-Steagall barred banks and other financial institutions from trading and underwriting stocks, bonds and other securities. Congress aimed to eliminate conflicts of interest — to keep banks from “floating a new issue of corporate stocks or bonds, then hyping the sales by pushing dubious securities off on their own deposit customers and trust accounts,” as William Greider put it in 1987′s “Secrets of the Temple: How the Federal Reserve Runs the Country.”

The division also mandated stability. Congress aimed to create a system that would reduce the risk of panic, so Glass-Steagall and later laws protected both banks and brokerages from failure. Deposit insurance became common; fixed commission rates became the anti-failure, anti-competitive tool given to brokerages.

The strategy worked by keeping the industry fat and happy, Cole reports. Ordinary trades cost clients anywhere from $100 to several hundred dollars (as of the late 1960s), and large trades could often generate five- or six-figure commissions. There was plenty of money to go around. In a typical year, such as 1967, only one of the New York Stock Exchange’s (NYSE) 330 member firms was reported to have sustained a net loss. That same year, Merrill Lynch earned 57 percent of its total revenue from retail commissions.

“All a brokerage had to do to make big money was to keep its stockbrokers — and their retail clients — happy,” Cole writes.

Analysts helped meet these goals. They played an important but hidden role in the system, researching companies and feeding their knowledge to brokers who sold their recommended stocks to clients.

“We put out 2-inch-thick black binders on different industries, which we would work months and months to produce,” says Stephen Koffler, an analyst who started researching the aerospace industry in 1968, and whom Cole quotes in his book. “People who bought our reports paid us, so to speak, by trading through us.”

Ultimately, “it was a sweet deal,” Cole writes.

But the deal didn’t last. On “May Day,” May 1, 1975, a new law took effect that prevented the NYSE from regulating rates. The industry would never be the same. What was once perhaps the most sheltered industry in the nation turned ferociously competitive.

Trading volume started climbing. In the ’60s, a typical day on the NYSE might see a total of 10 million shares change hands. In 1982, the market witnessed its first 100 million-share day, and by 2001, the market crossed a new threshold: 2.1 billion shares were traded in a single day.

But even with the increased volume, it became harder and harder to make money through commissions. Between 1975 and 1998 (taking inflation into account), full-service brokerages slashed their rates by fully 95 percent. As a result, consolidation roared through the industry. Of the 30 largest securities firms in 1971, only two have remained intact — Merrill Lynch and Bear Stearns.

Brokerage houses looking for new revenue sources also started doing more underwriting. (This is essentially the market-related services that an investment bank performs for new ventures: collecting the vital figures, writing a prospectus that explains why the stock or bond is worth buying and then conducting a “road show” to the offices of institutional investors.) Underwriting can be very lucrative, particularly during a go-go speculative bubble like the dot-com boom. Fees generally range from 7 to 9 percent of the underwriting dollar volume. Then there are the paper profits. A firm that agrees to underwrite an investment usually receives a discounted stake in the new venture, which it can then sell (or “flip”) when share prices climb above the initial asking price.

The underwriting mania peaked in the 1990s. As the stock market rose steadily, the securities industry turned aggressively toward initial public offerings, secondary or follow-up stock offerings and doing mergers-and-acquisitions work.

The shift toward corporate finance proved fruitful for the firms. But the bounteous revenue stream also poisoned the integrity of research, Cole argues. The so-called Chinese wall between research and investment banking collapsed under the weight of cold, hard cash.

Consider the Global Crossing IPO. When the investment bank CIBC Oppenheimer took the telecom firm public in March 1998, it earned several million in fees and bought $30 million in stock. By March 1999, the firm’s stake was worth $4.6 billion. When a few investment bankers can bring in so much cash so quickly, “Is it any wonder,” Cole asks, “brokerages now look to investment bankers to make money and to analysts and stockbrokers to assist?”

Cole’s retelling of the late ’90s bubble is harsh — some of his examples make Wall Street analysts look like they belonged not on the Street, but on infomercials.

Take Hemant K. Shah, an independent high-profile pharmaceutical analyst who used his pulpit to sell, then slam, Biovail, a Toronto company that manufactured time-release versions of popular drugs. Shah’s gripe had little to do with fundamentals; he praised the company when it got a new CEO in 1989, and even helped the small company raise money. He touted the company’s shares to his money manager clients even as he tried to manage a deal for Biovail — an obvious conflict of interest that he didn’t disclose at the time.

Then the company did a deal of its own, cutting Shah out. He turned nasty. According to court documents that Cole collected, Shah planted false negative news about the company in the press, told his clients not to buy and even claimed (falsely) that George Soros was following his advice. Biovail stock rose in value anyway, but the company sued. Executives now estimate that Shah’s 1996 and 1997 campaign forced Biovail’s stock to trade at a third below the proper level.

Shah’s case is hardly unique. Cole has collected quotes from several analysts and former analysts who readily admit that their research was biased toward their firm’s investment banking interests. Sean Ryan, a Bear Stearns analyst, told Bloomberg Markets Magazine that in 1999 he recommended the online bank NetBank even though he thought it was a crummy company. “I put a buy on it because they paid for it,” he said. Though he told institutional investors what he really thought of the company, Ryan maintained his stance of public praise.

Another analyst, who regularly put “buys” on stocks she covered, said she couldn’t remember the last time she read a 10-Q quarterly report — a key set of documents that a public company must file with the SEC. Still another, eyeing the close relationship between investment banking and analysts, told Cole that “research is supposed to be independent, but it is hard to see how it can be.” Corporate pressure and the incentive to earn cash by brining in new clients, he said, damned the system.

Even Benjamin Edwards III, scion of the A.G. Edwards investment banking empire, admits that “an analyst has a hard time being objective if the client is important. They [the investment bankers] always want us to be optimistic and bullish.”

A few of the analysts that Cole quotes counter his claim that Wall Street research has become a form of “customer service” rather than a tool for accuracy. They admit that during the boom their ratings didn’t tie in to fundamentals but they argue that fundamentals weren’t driving the market. “Stocks don’t go up and down because they have a specific ‘value,’” says superstar analyst Henry Blodget, in a quote that Cole pulls from a May 1999 Fortune magazine article. “They go up and down because investors decide to buy or sell.”

Or, as Meeker put it: “A stock can go up and down based on money flows at a much more rapid clip than it can on the fundamentals.” In other words, “buy” ratings were justified because people kept buying.

Cole points out, however, that analysts maintained buy ratings even after people started selling. In the spring of 2000, with Amazon.com down 70 percent from its high, Blodget still called the stock a “buy.” The other Internet stocks he covered — eToys, Pets.com and others — also suffered a bloodbath but until July, Blodget maintained his recommendations. And even then, he only downgraded the companies to “holds.”

The numbers confirm that Blodget’s upside bias was hardly unique. Cole cites three independent studies, which show that analyst picks have become increasingly less accurate since the 1970s, underperforming the market and tending to be overly optimistic by a 3-to-1 margin. Of 33,169 buy, sell and hold recommendations in 1999, for example, only 125 — or 0.3 percent — were pure sells, according to Zacks Investment Research.

But is there an actual danger to such overwhelming optimism? Cole concludes that unsophisticated investors lost out. But the greatest weakness of “The Pied Pipers of Wall Street” is that Cole never quantifies the damage. He never even bothers to quote from investors who supposedly lost money by relying on analysts. Indeed, because of this oversight — along with its scattered, collagelike structure and insider focus — “Pied Pipers” will probably not become the definitive work on the shifting role of Wall Street analysts.

Still, Cole’s overall argument is hard to disagree with. When analysts treat retail clients differently from institutional investors, the playing field becomes unequal. The team with the most money wins, while smaller investors suffer.

And when correct information is absorbed by only part of the market — when the general public trusts biased advice from supposed experts — the market works inefficiently. The exact conflict-of-interest pitfalls that Congress tried to avoid with the Glass-Steagall Act become more common. Bubbles and busts become more extreme. The entire economy — as evidenced by the present economic slump — becomes more fragile.

Enter the Fed, the single most important institution entrusted with the job of easing the pain of downturns and catalyzing upticks in the market. But can the Fed work its magic again?

Not necessarily, argues Martin Mayer. The veteran financial journalist picks up where Cole leaves off. Although written in impenetrable prose, “The Fed” makes a strong case for skepticism — providing a welcome antidote to previous paeans to Alan Greenspan’s leadership of the economy.

Mayer starts by showing that the Fed has steadily grown more powerful over the past century, relentlessly claiming ever more jurisdiction, independence and political clout. Although the Treasury and the Office of the Comptroller of the Currency (OCC) formerly competed for primacy on several occasions, today, says Mayer, the Fed is the undisputed “cock of the walk in American financial regulation.” The 1999 Gramm-Leach-Bliley bill, which made the Fed an “umbrella advisor” to the banking securities and insurance industries, simply legitimized the institution’s rise to prominence.

But the central bank suffers from at least two dangerous weaknesses. First, the Fed’s expertise lies with traditional banking. And since banks are on the decline (they once controlled 60 percent of the country’s commercial and industrial financing, but now manage only about 20 percent), the Fed’s influence has also dipped.

Monetary policy, adding or subtracting from the money supply, garners its power from the demand for bank loans. When interest rates are low, the theory goes, more people will borrow; adding cash to the economy. When they’re high, people will trim their spending. But now, when people can get cash from credit cards, home equity loans, stock and other financial instruments, the Fed’s power over liquidity “will not necessarily go where you want it to go when you need it to go there,” Mayer writes.

“Now the ‘new economy’ is financed by ‘venture capitalists’ and underwriters who push initial public offerings, and the movement of a few basis points in short-term interest rates matters nothing to them unless the result is a noticeable change in the valuation of — one hesitates to say it — stocks.”

In order to affect the economy, the Fed must influence the markets. But this is getting harder and harder.

“Do we really understand the long-term consequences of the technologically driven disintermediation of payment flows away from credit-sensitive financial institutions [or traditional banks]?” asks E. Gerald Corrigan, former president of the New York Fed.

“No,” Mayer answers, “we don’t.”

The Fed in particular “knows relatively little about securities, and even less about insurance,” Mayer argues. And the institution may not be ready to learn either.

In fact, the Fed’s second weakness lies with its penchant for secrecy and aversion to change. Unlike the SEC, which has a reputation for encouraging openness, according to Mayer the Fed tends to be managed with a closed, top-down form of efficiency. Bank examiners aren’t allowed to publish their findings, even if a bank is about to fail, and all staffers report to the chairman. Even Federal Reserve bank governors are rarely allowed to voice opinions that differ from the official stance.

“The Fed has never believed in sunshine as a disinfectant,” Mayer writes. And yet, now more than ever, disclosure matters. The Asian crisis might have been avoided if banks in Thailand and Malaysia had publicly revealed their risky investments before collapse was imminent. Damage from the real estate fallout of the ’80s and the savings and loan scandal could have been minimized, Mayer argues, if the institutions were forced to regularly divulge their finances. Greenspan has opened up the Fed more than other chairmen, but in Mayer’s view, the Fed needs to go much further if it wants to ensure stability.

Mayer, who once acted as an advisor to President Reagan, stops just short of asking for legislation that would actually mandate openness. Like Cole, he seems to believe that the onus is on investors, who must learn for themselves that the markets and the economy are far more fragile than they may believe. But the dangers that these books identify offer hints into what could become a changing cultural mood. Through the ’90s, when the markets and the Fed could do no wrong, regulation resembled an unnecessary burden. But if the economy continues its downward spiral, government may look less like a villain — and more like a white knight.

Liberals still fuming over Al Gore’s loss argued that the nation’s central banker only slashed rates to make the economy glisten for fellow Republican George W. Bush. Yes, layoffs have begun to extend outside the dot-com sector into manufacturing and a recession may not be far behind, but, they argue, Greenspan has never made a habit of engineering economic shocks. Caution has been the mantra of his 17-year term. The half-a-point cut — a break from recent quarter-point tradition — was nothing but political, Democrats say, an action inspired by the GOP not the GNP.

Are the criticisms valid? Bob Woodward, author of 10 books on Washington including “All the President’s Men” and more recently, “Maestro: Greenspan’s Fed and the American Boom,” agreed to discuss the Fed’s recent actions, the criticism enveloping Greenspan — and the economy’s ultimate future.

Was Greenspan’s half-point rate cut on Jan. 3 a gift to the incoming Bush administration — an attempt to prop up the economy for the new president?

That just doesn’t make sense. If you’ve read through the book or read about the period of ’94-’95 when they raised rates, then started lowering them, you’ll see that [the recent interest rate cut] fits that model. Greenspan’s trying to execute the second soft landing. A while ago, it was clear to me — and I said this publicly a number of times — that the Fed was soon going to start lowering rates. The timing and degree — the half-point drop — have to do with the numbers they have. I think it’s basically an economic decision, not a political one. Greenspan is certainly aware of politics and apparently wanted to avoid [cutting rates] early in the Bush administration. But you can interpret it either way: It could help Bush advocate his tax cut plan, or it could hurt him.

The interest-rate cut also raised eyebrows because it came between meetings of the Federal Open Markets Committee, the seven-member board that Greenspan oversees. What’s the significance of this, of Greenspan’s power to move policy between meetings, without committee votes?

Well, they normally give him the right to move rates at each regular meeting. It’s ambiguous, that power. In this case, I understand, he held a telephone conference. Actually, there’s one report that he held a vote over the phone of the committee members. There are cases, I report in the book, where he did that to make sure everyone was on board, then made the cut himself. But he dominates the institution in a way that everyone agrees on. It’s not with a heavy hand. He listens, he incorporates people’s views. It’s consensus leadership. But some consensus counts more than others. He decides.

There’s an interesting subtext, though, with Bush. Greenspan and Bush’s circle of advisors — particularly Dick Cheney and Donald Rumsfeld — are old friends, as you point out in your book. Yet George Sr. blamed Greenspan for his loss to Bill Clinton in ’92. How do you think this conflict will play out?

Well, it’s the classic question of does the enemy of your father — allegedly Greenspan — become your enemy or does he become your friend? Enemy is too strong a word, but father Bush has been public and direct in blaming Greenspan for his ’92 defeat — which I don’t think is correct. During that period, Greenspan and the Fed had to worry about inflation and if you lower the rates too fast, too much, you can still get inflation. That’s the problem right now; the Fed is still basically an inflation-fighting institution. If they didn’t have to worry about inflation, they just would lower rates more quickly and dramatically.

So, it’s my sense that with the way Bush embraced Greenspan — talking about the high regard he held for Greenspan’s skills — he clearly was reaching for the Clinton model of “let’s work together.” And Greenspan realizes that it’s to everyone’s advantage to have a good working relationship [with the White House], to the point which, as I say in the book, he felt that he and [Robert E.] Rubin — Clinton’s Treasury secretary — felt like they were working for the same firm.

You mentioned that Greenspan has been trying to engineer a “soft landing.” Here in Silicon Valley, the land of layoffs, few see the dot-com downturn as anything but hard and bumpy. Are dot-commers correct to blame Greenspan for their woes?

They may turn out to be correct. But if you go back to ’95, which is the equivalent period in terms of the rate increases, there was immense talk of recession but the economy pulled out. So you don’t know. It may be that they raised rates too much and kept them high for too long. The model, the conviction that Greenspan has, is that you’ve got to turn the screw an extra time and really make sure that you slow down the economy. It is a tricky calculation and the economy may have shifted very quickly. People keep saying, “In December [the Fed] said they didn’t have to raise rates, then they did in January.” But that’s the way it always is. There is a moment when they shift. I don’t find that unusual. And it may work, it may not. The conditions now are different than in ’95.

In what way?

The stock market is going down dramatically, or at least in the technology sector. And the big question is, Will the productivity growth continue? It’s been very high in recent years, and that’s the X factor in keeping the economy strong. So maybe the paperback version of my book will have to be entitled “Maestro Emeritus” or “Former Maestro.”

You’re painting a pretty uncertain picture. Your book follows the same pattern. In fact, you seem to be at least as interested in Greenspan as you are in the fragility of the markets that he’s working with.

Exactly, and not just the markets but also the whole economy, the whole system. I couldn’t agree with you more. When you look at the decision to raise or lower rates, you can do it at the wrong time, or there can be a Mexican crisis, or a Russian crisis or that Long Term Capital Management crisis in ’98. In each season, there is a series of events or economic conditions where you can make the wrong decisions. By and large, Greenspan has made the right decisions.

But there’s no guarantee he’ll continue to make those decisions. How will history view Greenspan if he goofs now, if we end up in a prolonged recession?

Well, the book ends — and it was finished in August or September — on the following note. It essentially says Greenspan’s role may lie in the future. “No one knows whether the economic expansion will continue for years or whether it is at its summit. But someday in some form it will end.” Someone with credibility, it goes on, will have to explain what happened, why, and who’s responsible. “Someone will have to propose a course of action and outline what has to be done.” So in other words, it ended on a note of “who knows?”

And yet, despite all this uncertainty about Greenspan’s legacy, he has become an icon of stability. We depend on him because, as you write, “He has become both a symbol and a means of explaining and understanding the economy.” Is this healthy, for the economy and the country? Does Greenspan have too much power?

A lot of Greenspan’s colleagues think so. In the book, I talk about Alice Rivlin (then vice chairwoman of the Fed) coming to him and saying, “There’s too much attention on you.” Then there’s Mike Prell, the head of research, giving that speech in January 1999, saying that everyone expects Greenspan to bail us out, bail the economy out.

How much of a danger is this knee-jerk reliance? Will we be in epic trouble, for example, if Greenspan dies?

Well, what Prell asked two years ago was if there was an exaggerated confidence in the Fed’s ability to cushion economic and financial markets against shock. I think that’s a good question. I think it’s one that haunts Greenspan and everyone who has a role here. Great baseball teams, great institutions, have their golden age. And this is one of the golden ages of the Federal Reserve. But there’s no guarantee that past performance dictates the future.

What about Paul Volcker, Greenspan’s predecessor? What makes Greenspan unique, different from those who came before?

Volcker had a tougher job, quite frankly, because he had to get inflation down. He had to raise interest rates and essentially cause two back-to-back recessions. No one liked that, including Volcker.

Volcker was also much more autocratic, less inclusive, less inclined to listen to people. Greenspan, if he’d not done this, could have been a great intelligence officer or a great journalist because he knows how to listen.

In his 20s, he listened quite a bit to Ayn Rand. How does Greenspan reconcile Rand’s insistence on pure, free-market capitalism with his own increasingly important role as a regulator?

I think he sees the irony in it, but that’s the job; he agreed to take it and he loves doing it. That doesn’t mean that it’s wrong or hypocritical. He sees the free markets, but he also sees that we don’t have a free-market system. So once you have government playing such a significant role in the marketplace, if this one institution did not exercise its power and do its job, then he should resign and give the job to somebody else.

So as long as there’s going to be regulation, Greenspan figures he might as well be the one to do it?

I think so. And there are times when he backs off. I think the most important story, perhaps, in the book occurs in ’96, when he wouldn’t let the Fed raise rates. Everyone wanted to raise rates and he wouldn’t let them because, he said, “We’ve got a new economy here. Productivity is higher than we’re measuring.”

It turned out he was right.

Is there anything you left out of the book? For instance, I wanted to know a bit more about Greenspan as a person.

I didn’t leave out anything significant. But if you’ve ever seen him or met him at social occasions, he looks so uncomfortable, like he wants to jump out of his skin. He is a true introvert. He would rather be alone, but I think he sees the necessity of getting out. He just uses it to his own purposes, to gather intelligence.

What’s the main lesson you learned in doing this book? What should readers take from “Maestro”?

That the system is just so fragile. The system is not just an economic system, it’s the political system too. It’s like the human body. It can function really well and then one little nerve or organ or valve in the heart goes and the whole system goes down. When it’s functioning it’s great, but let some 300-pound tackle run into a halfback and the knees crack.

The other thought relates to the governing metaphor. We called the book “Maestro” because it’s the metaphor for how he leads. He’s in charge but he doesn’t play any of the instruments himself. It’s a post-1990s leadership style. If the metaphor for leadership in the ’60s, ’70s and ’80s was “The Godfather” — tough, breaking kneecaps, hold your friends close but your enemies closer, the style of settling scores — then the post-’90s leadership style is Greenspan’s. It’s conducting, being in charge, being responsible but not being there making the airplane engines or running the business, and doing it in a style that’s subtle.

It has implications way beyond the Federal Reserve. He’s not the first to do it, but it is a leadership style that can be incredibly effective. If you want to be hopeful or optimistic, it may be the leadership style that the president-elect is adopting — intentionally or by nature. The idea is that you don’t get down there and turn the dials, and immerse yourself in the details like some presidents have, but stand above it on the podium and raise your arm a little bit. It’s an interesting idea, and in Greenspan’s case, it’s what gets the best results.

In raising interest rates again and
again, Greenspan has been warning “of
the risks that are still lurking.” With
falling household and business savings,
skyrocketing personal debt, a record
trade deficit and a staggering $250
billion href="/news/feature/2000/01/25/stock/index.html">borrowed on margin to play
the market, there are growing indicators
that even this best of all booms will
not, after all, last forever.

It’s against this backdrop that the poor
are making a comeback in the mainstream
media. This week on PBS, Bill Moyers put
a human face on the numbers in a
two-and-a-half-hour documentary,
“Surviving the Good Times.” As Jackie
Stanley, the matriarch of one of the
blue-collar families in the film, put
it: “It’s a good economy, but it’s just
not (coming to) our house.”

She’s not alone. The bull, as we’re
learning, has had a very selective
itinerary. U.S. News & World Report ran
a cover story last month titled “The
Rich Get Richer.” This week, National
Public Radio did a three-part series on
the two faces of Seattle — the city
with nine billionaires, 10,000
millionaires and crumbling public
schools. “My students, they’ve been left
out of this wonderful period of
prosperity,” said Charles Hasse, a
fourth-grade teacher reduced to moving
desks around to protect his students
from falling ceiling tiles. “I think
we’ve squandered an opportunity, really,
to build for the future.”

And there’s been a dramatic shift in the
way major newspapers have been covering
the homeless. There were, for example,
no front-page stories on homelessness in
the New York Times in all of 1998. But
since November, the paper has run at
least a dozen Page One stories on the
subject, including a recent cover story
in its Sunday magazine, “The Invisible
Poor.” Quoted in it was Michael Sandel,
a professor of government at Harvard:
“Today’s accumulation of enormous wealth
is unparalleled since the last Gilded
Age, but the Gilded Age of a century ago
brought in its wake a wave of
progressive reform and public investment
– in parks, libraries, schools and
municipal projects. Today’s gilded age,
by contrast, hasn’t generated any
comparable resolve to ease the effects
of inequality by strengthening public
institutions.”

There has also been a spate of recent
stories about how the high-tech Gold
Rush has turned parts of California into
what one poverty-fighting activist
termed “a Dickensian universe” divided
between the super rich and the
desperately needy.

In San Francisco, the href="/news/feature/1999/10/29/yuppies/index.html">dot.com-driven economy is
booming — but so are evictions, with a
300 percent rise in tenants getting the
boot since 1995. In the shadow of the
city’s cash-rich Multi-Media Gulch –
dubbed the center of geek civilization
– a throng of homeless crowds the
streets and alleys of the fashionable
SoMa district. A minimum-wage worker
here would have to put in 150 hours a
week to make rent on an average
two-bedroom apartment. Maybe if they
called themselves the “iPoor” or
incorporated as “Poor.com” they’d get to
share a little bit of the wealth.

In Santa Clara County, which encompasses
a large portion of Silicon Valley, 34
percent of the area’s homeless have
full-time jobs but are unable to afford
the area’s sky-high rents and soaring
home prices — which are more than
double the national average. Some have
resorted to paying $3 for an all-day
pass, so they can spend the night taking
a series of two-hour naps on a bus that
is now known as “the rolling hotel.”
Others among the local working poor have
to live in horrendous conditions, such
as 26 men sharing a house — each paying
$400 a month.

The anecdotal evidence of an alarming
decline in affordable housing was
confirmed this week in a new report
issued by the Department of Housing and
Urban Development showing a record
number of working-poor families living
in substandard conditions or having to
devote more than half their income to
housing.

“Our clients, who have always been on
the bottom tier, now can’t even compete
for the miserable housing they’ve had,”
housing advocate Christine Minnehan told
the Los Angeles Times. “People in San
Jose are even renting their living-room
floors. People don’t live like that
unless they have no choice.”

Could this sudden explosion of stories
on the invisible poor be, as the first
swallows are to spring, a harbinger of
an economic downturn that we refuse to
even contemplate? Are the mainstream
media tapping into an inchoate fear
among the multitude of debt-laden,
savings-strapped, middle-class Americans
that “there but for the grace of God and
tech stocks go I?”

Consider the maniacal zeal with which these people, led by Ken Starr,
carried out their insane witch hunt against their most hated enemy,
President Clinton. We can breathe a huge sigh of relief that the
effort
failed, for it could have permanently weakened the institution of the
presidency and resulted in grave consequences for our constitutional
system
of government.

Future historians will judge not the personal flaws of this president,
but,
rather the deliberate attempt by self-righteous demagogues to overthrow
him. That judgment will be harsh.

– Christopher Lobash

Whatever change the new millennium brings, it will surely leave Joe
Conason’s narrow, bigoted mind untouched, as he keeps it well
protected in
its underground abode.

I can only hope that his flippant description of American religious
belief
as “superstitions,” “prejudices,” “idiocy” and “militant ignorance”
will
stay with him as much as Jesse Ventura’s similar comments did some
months
ago.

Conason’s tired, old-school leftie warnings of subjugation, outlawed
heresy, stifled inquiry and authoritarian hierarchies from the right
are
brazenly ironic, given how much the left has co-opted public discourse
with
these very devices. How else would Conason feel so free to spit such
bile
at his fellow citizens but for his dogmatic belief that he is “right”
and
those that disagree with him are not only wrong but basically evil.

– Scott McKim

In his article, Conason comes dangerously close to painting all
Christians
with the same brush. The religious right (or Religious Right as
they would probably prefer to be called) are not Christianity, only the
loudest and most attention-seeking part of it.

There are many people (myself included) who understand themselves to be
disciples of Jesus Christ who also strongly disagree with the divisive
and
oppressive agenda of the ultra-conservatives. These “other Christians”
are
doctors and scientists, teachers and social workers, parents and
children
who work humbly and faithfully for those in need in their communities
each
day. They are individuals who see in the example of Christ the call to
feed
the hungry, to provide medical care to the sick, compassion to those
who
mourn and justice for the oppressed around the world.

I realize that these non-fundamentalist Christians do not provide the
most
interesting stories to be covered by the press. We do not ask for it
either. However, we do ask that if we are to be critiqued, this
critique is
to be done fairly and objectively, not by simply assuming we are all no
more than our very worst elements.

– Rev. Douglas Forrester

Conason describes the effects of fundamentalism forcefully, succinctly,
and
sadly. Hopefully the religious right of all faiths will just make a lot
of
noise
as they are dragged kicking and screaming into the 21st century. But
when,
oh when, will we get a presidential candidate willing to stand up to
these
guys? We need more voices like Conason’s.

– Joe Nathan

Descent of the Divas
BY DAMIEN CAVE

(01/10/99)

For such a good article, I am disappointed in Cave for rattling off the
“fact” that gay men are statistically better educated and make more
money.
These “statistics” are often used against the gay community and are
egregiously inaccurate. Whenever such data is presented, it is
important to
note that people with a better education and financial situation are
not
more likely to be gay, but only more comfortable revealing their
sexuality
to a pollster.

– Andy Bosselman

I only wish what Cave were saying were true. He obviously has never
heard a
young gay man proudly announce he has never seen a Bette Davis movie,
then
repeat every Sigourney Weaver line in any movie (especially
“Working
Girl”), then launch into every “Absolutely Fabulous” episode while your
face
hits the table from boredom. And of course there is Sandra Bernhard.

No, there is no single person like Judy Garland. And no, I don’t much
personally subscribe to this cult (that is what liberation is about –
choice), but every day of my experience as a gay man tells me that this
phenomenon is far from gone. Diluted maybe, by the vast choices in
today’s
cable-ready world (“Are you a Cordy-Buffy queen or a Sandra queen?”) but
not
over.

– Skip J

Girlfriend, get out your VCR and watch “All About Eve” again! When
Bette
Davis utters her most famous line, she is ascending the staircase, not
descending, as reported in “Descent of the Divas.” Otherwise, a
wonderful
article!

– Charles Johnston

A nother sad example of the death of divahood is that no matter how gay
the
author of this article was, and no matter how gay various staff
editorial
members of Salon might be, no one was able to spell-check Liza’s oft
quoted
last name as “Minnelli” and not “Minelli.” It’s two Ls and two Ns,
darling, not one. She’s got Promethean talents, legendary
parents, a
Tony,
a Best Actress Oscar and a career that stretches across five decades
but still
no one in the year 2000 can properly spell the woman’s name.

– Stephen Winter

The Talented Mr
Greenspan
BY IAN WILLIAMS

(01/10/00)

I found your story on the Federal Reserve chairman to be a refreshing
change from the usual glowing endorsement of him as a man and his
policies.
It’s normal now to see commentators on CNBC, CNN and just about every
other business show around bow deeply at everything Greenspan does,
without a whit of criticism.

But please be mindful that the United States is not the only country
with
this problem. Here in Canada, Greenspan’s counterpart, Gordon Thiessen
(the governor of the Bank of Canada) enjoys a similar reverence.
Although
not as high-profile as Greenspan (even in Canada), investors do hang on
his
every “important” word, and do bet on what he might say, and what he
will
likely do in the near future.

And although Thiessen has not been in the job as long as Greenspan, he
is
following closely in the footsteps of the former governor, John Crow,
who
was zealously anti-inflation. He, like Greenspan, can be credited with
keeping our inflation rate below 2 percent for a decade, but can also
be
credited with an unemployment rate of close to 10 percent that Canada
endured for about as long, and which only recently has started to go
down.

– David Michael Lamb

Canada

The free market banquet in the late 20th century has shown decidedly
that
capitalism works! Planned economies languish at the expense of “the
people,” yet backwards publications cling to socialism to the bitter
end.
Why? Is there such a thing as fear of success?

Certainly, in the sake of fairness a pro-Greenspan article must be
forthcoming.
However, if Salon was letting the brilliant economy and the clear
rationality of Greenspan’s policies stand on their own with no
comment necessary, I withdraw my objection.

Thanks for your wonderful publication, I look forward to years of Ian
Williams-free reading.

– Anthony Albini

I find one of the most pernicious aspects of media and government in
Williams’ unquestioning article about Alan Greenspan’s fourth renomination. Rather
than
inform readers, you fed them a simplistic and uninformative puff piece.

This article boasts that the U.S. has “the lowest unemployment
in
30 years.” This does not count people who have been out of the workforce,
underemployed persons and persons unemployed for so long they no longer
qualify.

Also, just because people in high tech Silicon Valley are rolling in
money does not mean that everyone in the country enjoys the same
prosperity. How many people do not dare quit their jobs, knowing that
the
competition for a better job would be more fierce than the competition
to
fill the job they leave?

– Steven Dunlap

Adrift in
America
BY MICHAEL SHAPIRO
(12/02/99)

No one has mentioned [Cuban refugee Elian Gonzalez's] mother except in
terms
of her noble sacrifice of giving her life to “save her boy.” But no one
knows her real motive. Risking a
child’s
life in an overcrowded raft is not necessarily a noble act. Perhaps
staying in Cuba with him, allowing him to know both his parents, a
right to
which every child is entitled, and from which he can only benefit,
would
have been a more noble act.

– Name withheld

I don’t understand the boy’s relatives in Miami who claim to
have
his best interest in mind. This case is clear: a boy who has gone
through a
tremendous trauma should be with his closest relative, his father.
Period.
A great uncle?! Please! We would not allow any other country to
determine
our affairs in such a manner, and I imagine that Cuba is highly
resentful
– with good reason. Return little Elian to his father as soon as
possible!

– Mary Lou Najera

It amazes me how Fidel Castro picks and chooses which
citizens
he wants returned. Exactly what system does he use to determine this?
The
press? Publicity? The almighty dollar? Who rescued the child? Was it
Castro’s government, his navy or his coast guard?

Why doesn’t Castro take steps to stop his citizens from leaving his
beloved
Cuba by the droves in makeshift rafts, overcrowded boats and other
unsafe
flotillas? And why do they take the chances that they do to flee in the
first place? Clearly, they would rather die than stay.

– Janice Lanham

Gulfport, Miss.

Ally McSqueal?
BY AMY REITER

(01/10/99)

I was shocked to read that Melissa Etheridge would want David Crosby to
father her children. Didn’t she see VH-1′s “Behind the Music”? The guy
was
a mess: an addiction-prone former heroin junky who dragged his
“beloved”
wife Jan into the depths of addiction as well. Not to mention he looks
like
a big freaking walrus. Anyway, what can you do?

– David William Tucker