Jeremy Warner's Outlook: As Greenspan hands Bernanke the keys to the Fed, US discloses a negative savings rate

Is he the brilliant architect of a golden age of American prosperity who through swift and decisive action saved the world economy from countless crises, or is he more villain than magician, the man who having warned of irrational exuberance let the stock market bubble get away from him and by becoming a cheerleader for the supposed productivity miracle of the new economy only stored up problems for the future?

When the crash came, so the case for the prosecution goes, he cut rates precipitously in order to sustain demand, setting himself up for a series of other bubbles, from house prices to bonds. In so doing, he's handed his successor, Ben Bernanke, a poisoned chalice, an unsustainable consumer boom which when it finally abates will condemn the US economy to years of low or negative growth.

Both views can be argued with equal conviction, and indeed are. The announcement yesterday that last year the US had a negative savings rate for the first time since the Great Depression will be leapt on as evidence of the latter. Yet the judgement of history will take many years to establish, and I suspect that in the end it will be a better one than many of Mr Greenspan's detractors believe. The main reason for thinking this is in my view Mr Greenspan's belief in the transforming powers of the new economy, which paradoxically is also one of the things he is criticised for.

I have to admit to having mocked the key note addresses in which Mr Greenspan argued the case for a new paradigm, driven by advances in technology and the rapid integration of China into the global economy. This was just a load of starry eyed nonsense, I thought at the time. What a fool Mr Greenspan was for having bought it, never mind the fact that even as he made these speeches he was being roundly condemned by the true cheerleaders of the new economy for stifling America's growth potential with too tight a monetary policy.

Be that as it may, when the crash came, Mr Greenspan's belief in the global productivity miracle allowed him to cut interest rates much more deeply than would have been thought wise in previous cycles. True enough, he still didn't manage to avoid a recession, yet it would undoubtedly have been a great deal worse but for the negative real interest rate Mr Greenspan felt confident enough to establish.

There is much about the American economy as it exists today which would seem unsustainable. Yet the growing sophistication of modern technologies, information exchange and financial markets makes its anomalies more benign than conventional economic theory might suggest. Mr Greenspan has recognised this and acted accordingly. As a consequence, he's managed to use monetary policy more effectively and creatively to support stability and prosperity than has ever been achieved before.

There's bound to be some nervousness in markets as the new man beds in. Even so, as a student of the Great Depression, Mr Bernanke ought to make a worthy successor; the present consumer and house price boom in the US has plainly got to be quelled, yet if he thinks there is a serious risk of the slowdown running out of control and turning into deflation, he'll do whatever it takes to prevent it.

Same old game as Permira tilts at HMV

It's hard to be anything other than sceptical about Permira's supposed interest in bidding for HMV Group, the music and books retailer. The manner in which this has emerged follows a well worn pattern. After a couple of days of light research, the private equity firm dispatches a letter to the board which explains that after exhaustive study it might be interested in making a bid. A suggested price might even be mentioned.

The interest is then leaked to the press, forcing the company to announce it has received an approach. As the hedge funds pile in, the board feels obliged to allow the requisite due diligence, at the end of which the private equity firm either tries to knock down the price because of some skeleton that has supposedly been found in the cupboard, or withdraws entirely.

This is what happened with WH Smith when Permira was also the foot in the door merchant, and it was repeated with Woolworths - Apax on that occasion. In both cases, the escapade was hugely costly, distracting and destabilising for the receiving company.

I may have to eat my words, but I'm willing to take money on the same thing happening with HMV. The music stores are in structural, possibly terminal, decline with the growth of digital downloads, and even the bookshops, for which there will always presumably be some sort of a long-term future, are being ravaged by the growth in online retailing and the encroachment of the supermarkets.

Why would anyone want to buy into such a monumental management challenge? There's a price for everything, I guess, but I wouldn't bank on it being anywhere near the present share price, up 17 per cent yesterday on news of Permira's interest.

The Takeover Panel really ought to do something about these phantom bids. As things stand, the rules play straight into the hands of the private equity firms. This would be fine if a proper bid emerges at the end of it, but too often the result is only false hope and a false market.

Mittal's present bid cannot succeed

Lakshmi Mittal's bid for Arcelor has gone down like a lead balloon in Luxembourg. Guy Dollé, the company's chief executive, describes it as hostile, opaque, opportunistic, high-risk, destructive, prejudicial, threatening and unbalanced, which we can only assume means he is not terribly keen on the idea. How dare the Indian-born steel magnate bid for this great European champion - the steel industry equivalent of what Airbus is to aircraft manufacturing, according to M. Dollé - was the underlying message.

Yet beneath the rhetoric and table thumping, only two issues really matter - would the merger be harmful to competition and is the price being offered by Mr Mittal remotely in the ballpark?

On regulatory grounds, there is virtually no case to answer. Mittal and Arcelor are very largely complementary in terms of product ranges, customer bases and geographic coverage, so there is no basis for the bid being blocked by the anti-trust authorities in Brussels. Neelie Kroes, the European competition commissioner, is already under intense political pressure to frustrate Mr Mittal, but if she's as good as her word to operate an open and transparent competition policy, she will leave well alone.

Fortunately for outraged politicians, they won't need to call on her if the bid remains in its current form. The almost complete lack of any overlaps makes it hard to see how Mr Mittal can achieve the $1bn of cost savings he forecasts. That would not matter if he were paying in cash, but he is not. Three-quarters of the offer is in the form of Mittal paper. Arcelor's shareholders are being asked to put their faith in Mr Mittal being a better steel man than the present management. Even after the merger, Mr Mittal will continue to own the majority of the shares, so they will also have to put their faith in Mr Mittal's corporate governance bona fides.

Arcelor argues that the two companies are chalk and cheese - one being a commodity steelmaker operating in politically risky but cheap labour markets and the other a technologically sophisticated producer of high-quality, value-added products.

That, in itself, should not be a barrier to a merger, and in any event, it won't be long before the commodity producers of the emerging markets are moving up the feeding chain to challenge Arcelor at the value-added end. They already are in most other industries. Yet if Mr Mittal wants his bid to succeed, he will have to improve the terms. Arcelor shareholders might be persuaded by a higher offer with a much bigger cash element. Otherwise, Mr Mittal looks destined to fail.

j.warner@independent.co.uk