London, October 31:

There has been a strange sense of anti-climax to the changing of the guard at the US Federal Reserve, announced out of the blue last week. There was none of the worldwide outpouring of grief, for example, that accompanied the death of Pope John Paul II earlier this year. But make no mistake, the end of Alan Greenspan’s reign at the Fed is as key a moment for the world’s financial markets and economy as a change of pope is for the Catholic church.

Everyone knew that 79-year-old Greenspan’s fourth term was to expire at the end of January. It is just that for 18 years he has been in the hot seat of the world’s most powerful central bank and that made it difficult to imagine life after Greenspan until it actually happened.

But, assuming that the senate approves President Bush’s nomination of Ben Bernanke, his chief White House economic adviser, to the role, then change there will be and Greenspan will head off into the sunset and perhaps pore less over economic data every month (although you would not bet on it) and worry less about irrational exuberance in the markets.

So what do we make of the Greenspan years and how will history judge him? It it is too early to tell. Not surprisingly, he has attracted as many detractors over the years as fans, being labelled ‘’maestro’’ by supporters while others have accused him of allowing imbalances to develop that threaten to tip the United States and global economies into an almighty slump.

As yet we do not know, for example, what will become of the US housing bubble, if indeed it is a bubble. We do not know how painful the eventual unwinding of the US enormous budget and current account deficits will be. And we do not know whether inflation - which is higher today than when Greenspan took over at the Fed in 1987 - will continue rising and require a sharp rise in interest rates to bring it back under control. In other words, judgment day for Greenspan lies somewhere in the future, although probably not too far.

But we do know that US inflation has been low on his watch - averaging 3 per cent over 18 years - while economic growth, particularly in the second half of his tenure, has been strong and remains strong. While not all of this success can be attributed to Greenspan alone, his shrewd operation of monetary policy will always be considered to have made a significant contribution.

But the flipside of the strong growth, which has sucked in imports and capital from around the world, is a giant current account deficit now heading for an unprecedented GBP800bn, or 6.5 per cent of gross domestic product. Mr Greenspan stands accused of allowing the dotcom bubble to inflate so far in the late 1990s that it burst spectacularly, at which point he slashed interest rates and allow another bubble - in housing - to inflate.

That is happening alongside very little saving by Americans, who prefer to regard their rising house prices as a form of saving and extract money to fund consumption by remortgaging. A similar phenomenon, although less powerful, has been occurring in Britain in recent years. This has been combined with high oil prices, which have pushed up inflation to uncomfortable levels.