Federal Reserve chief Alan Greenspan this weekend made his final appearance as headliner at one of the world's most exclusive clubs -- with five months left in his post and no successor yet in sight.
As Greenspan closed out the Kansas City Fed's annual symposium with brief but unusually frank remarks to a select crowd of about 130 from all over the globe, accolades were pouring in for his 18 years of service.
But corridor buzz was about the difficulty of replacing him when he steps down at the end of January and how soon the White House will get around to making its choice.
The sooner the better, most participants said.
"Financial markets are going to become uneasy about this because Alan Greenspan has become an oracle," said former Fed Governor Lyle Gramley, now an adviser to Stanford Washington Research Group, recalling the tension before Greenspan was picked in 1987 to replace former Fed Chairman Paul Volcker.
This year's Jackson Hole gathering was devoted to "The Greenspan Era," one in which the 79-year-old chairman has come to virtually personify the Fed and its power.
"He has been on the job so long, and has been so dominant and so successful, that few Americans any longer draw a distinction between 'Alan Greenspan' and 'the Federal Reserve'," said a paper by former Fed Vice Chairman Alan Blinder and fellow Princeton University academic Ricardo Reis.
The three most regularly mentioned potential replacements -- Glenn Hubbard, a past adviser to President Bush; Harvard economist Martin Feldstein; and former Fed Governor Ben Bernanke who now is a White House adviser -- were at the weekend gathering. Another seen as less likely, former Fed Governor and White House adviser Lawrence Lindsey, was not.
None of the chatter pinpointed a front-runner and many said the Bush administration, guided by a famously tight-lipped Vice President Dick Cheney, might well look beyond the usual array of names, possibly to Wall Street.
"My guess is that we'll hear by November who it is, given the need to have time for Congressional approval to occur, but I think the selection is wide open," said David Hale, chairman of Chicago-based Hale Advisors LLC.
Former Treasury Secretary Robert Rubin, now a top Citigroup executive, reeled off a formidable list of qualities a Greenspan heir needs, but said history offers reason for hope.
The person "should not only have great insight in reading economic data, strong macroeconomic understanding, and a deep commitment to macroeconomic policy, but also a keen understanding of the psychology of markets and of business and a feel for the politics of Washington and of the global financial community."
Rubin added: "putting all those together is a tall order, but Paul Volcker and Alan Greenspan show it can be done."
Volcker weighed in at the close of the conference, in a message read by Kansas City Fed President Thomas Hoenig that praised Greenspan for being able to "command respect and maintain integrity" in policy-making.
Several meeting participants -- some of whom requested anonymity -- said they thought Greenspan might have considerable sway in advising Cheney on his successor.
This is because of his skill in the job and the importance of choosing someone who can both keep the economy stable and leave a lasting imprint once the devotedly free-enterprise Bush administration passes into history in 2008.
If Greenspan does have a say, Gramley suggested, current Fed Governor Donald Kohn could be "one of the names he would whisper into the President's ear," given the close working relationship between Greenspan and Kohn, who has been a governor since 2002 and a senior fed staffer before that.
Along with great prestige, the job carries hefty responsibilities.
Greenspan on Saturday outlined some challenges that his successor will inherit, including a warning that persistent huge government budget deficits and a looming bulge of retirees create a threat of potential inflation.
"I assume that these imbalances will be resolved before stark choices again confront us and that, if they are not, the Fed would resist any temptation to monetize future fiscal deficits," he said, effectively warning that printing money to meet promises could take the country back to the "stagflation" of the 1970s.
In the nearer term, he noted, "the housing boom will inevitably simmer down." That would mean an end to the soaring home price gains Americans have grown to expect and could even lead to a price decline with a consequent drag on spending.
Still, Greenspan implied a cooler housing market could ultimately lead to a healthier economy if it helps shrink a record current account shortfall by forcing people to save more and buy fewer imported goods. It will be partly the job of his still-unknown successor to minimize the pain of that process.
"Whether those adjustments are wrenching will depend ... on the degree of economic flexibility that we and our trading partners maintain, and I hope enhance, in the years ahead," said Greenspan.
As he finished, the crowd of top economists and central bankers leapt to its feet in a standing ovation.
