Like Alan Greenspan, Ian Macfarlane left his central-banking job at a near-perfect moment: just as the good times were ending.

Greenspan basked in the glow of exuberant praise as he left the US Federal Reserve in January 2006. His policies had cheered investors and politicians alike. Little did his replacement, Ben Bernanke, know that all hell would break loose the following year.

Macfarlane also was a hero when he left the Reserve Bank of Australia in September 2006. His handiwork set the stage for the 17-year expansion making the Asia-Pacific region’s fifth-largest economy a global standout. Little did his successor, Glenn Stevens, know that he would face today’s chaotic mix of market turmoil and accelerating inflation.

Yes, it must be nice to be safely back in the private sector—Greenspan at his own consulting firm and Macfarlane at Goldman Sachs Group Inc.

Yet, there’s a big difference between the men who probably are the most celebrated monetary policymakers of the last two decades. Macfarlane has moved into the background, rarely speaking publicly or giving interviews. You couldn’t escape Greenspan if you tried, meanwhile. He can’t seem to stop talking.

Exposure gap

Why the exposure gap? Macfarlane has little explaining to do about his policies between 1996 and 2006, while Greenspan has lots. Australia’s economy, for all the risks it faces, is the envy of many peers. The US’s problems are sending financial contagion around the globe.

When Stevens visited Europe in January, he noted a striking difference in confidence when traveling from the Pacific time zone to the West. It’s a good point. Asia’s growth, driven increasingly by China, is far outpacing the United States and Europe. Australia also has a better-than-average chance of riding out the global crisis.

While the Fed seems poised to cut short-term rates to Japanese levels, the RBA yesterday left its overnight cash rate target at 7.25 percent. If the global economy slides into recession, the RBA has considerable ammunition to fight it.

The economy is growing almost 4 percent year-over-year at a time when the United States is probably in recession. Australia has had a budget surplus for nine of the last 10 years, offering another big cushion to protect Australia’s 21 million people from global events.

China’s boom

Risks abound, of course. Australia is dependent on China, which in July became its biggest trading partner. That helps explain why, as Kevin Rudd carries out the most extensive world tour of any Australian prime minister in a generation, he’s visiting Beijing, but not Tokyo.

Yet, China’s 11-percent growth is more reliant on the United States than officials in Beijing admit. China’s demand for commodities stoked a mining boom in Australia that has driven unemployment to the lowest in three decades and fueled consumer spending and corporate profits. If China slows, so will purchases of Australian resources.

The dynamic is producing domestic price pressures, while rising oil costs are forcing Australia to import more inflation. Even here, things aren’t as dire as they appear. Unlike the United States, Australia’s consumer prices are increasing less than year-over-year gross domestic product.

All this helps explain why investment strategists such as Simon Grose-Hodge of LGT Group in Singapore remain bullish on Australia’s currency, which is up 11 percent against the US dollar over the last year.

Overdone fears

“The difference between the Australian dollar and other high-yielders like the New Zealand dollar, British pound and Iceland krona is that the economic fundamentals are much stronger, especially given commodity exports,” Grose-Hodge says.

One senses much soul-searching in Sydney these days when chatting to policymakers, bankers and average consumers. The concern is that global gloom will soon drift Down Under. Such fears may be overdone.

Australia is among the world’s most open economies, making it anything but immune from global risks. At worst, though, Australians may need to adjust to slower growth for a couple of years. That’s a far better fate than the United States and Japan, both of which may be experiencing recessions.

For all this, Macfarlane deserves considerable credit. While no central banker is omniscient or omnipotent, Macfarlane smoothed out economic gyrations to the point where former Prime Minister John Howard’s team could manage fiscal and financial policies reasonably responsibly.

‘Weathering the storm’

Speaking at a Euromoney conference in Sydney on March 27, Stevens noted that Australia was “weathering the storm,” thanks to “robust economic growth, sound regulatory foundations and prudent risk management.”

Contrast that with the United States, where Greenspan’s partisan ways helped President George W. Bush blow budget surpluses and fueled asset bubbles with low rates. A disciple of Ayn Rand’s laissez-faire beliefs, Greenspan also took a hands-off approach to warnings about aggressive subprime lenders suckering customers into mortgages they couldn’t afford.

Now, Bernanke finds himself dodging financial landmines everywhere, shoring up investment banks such as Bear Stearns Cos. and grappling with how to avoid a meltdown. Greenspan, meanwhile, is in legacy-protection overdrive, explaining why he’s to blame for none of it.

Unlike Greenspan, Macfarlane’s legacy speaks for itself. Hence the relative silence of a man who has little clearing-up to do about an economy that continues to impress.

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