TJ...
I did not mention "avoiding a recession" as being part of AG's plan -- we were already in a recession and had been so for a good while. His problem, as you said, was to prevent that recession from getting supercharged by spiraling deflation, which was (and in my mind, still is) a very real possibility.
The problem facing him was that the consumer had for a long time been supplementing earned income with asset inflation generated by a wildly inflated stock market bubble to continue spending at an unsustainably high level, but when the markets collapsed, that extra fuel for consumer spending disappeared and we went into recession. AG knew that the only chance for recovery (or at least to stave off deflation) was to replace that fuel with something else) so he began pumping massive amounts of fiat money into the economy and to lower rates to levels unheard of in recent times, thus clearing the way for real estate to enter its own bubble encouraged by the Fed. That enabled the consumer to replace the stock market generated source of income with a real estate generated income by refinancing and cashing out money from his principal asset - his home.
Although that was a huge source of funds, it was obvious that it was a temporary source, both because the new source was built on debt and because there was only so much equity available, even in a real estate bubble. When the end of that run ran was on the horizon, AG's only option was to reflate the equities markets, returning to the original (and more easily expanded) source of consumer funds for spending. To accomplish that transition, he first had to stop the market decline, then he had to engineer a "new bull market" to inflate equity assets enough to give consumers enough fuel to continue spending, thus keep the economy afloat.
Both of those needs were accomplished through a combination of market intervention whenever necessary, jawboning (both verbal and by manipulating data), and by effectively putting a floor under the market because the big players knew their real risk was nominal since Greenspan would be there to prevent any selloff from taking hold and virtually guaranteeing that the markets would go up over time. That was easily accomplished in the early stages of the "bull", but the higher the markets go the more inherent risk is in the markets (the Fed cannot drive the markets up forever), and the higher the markets rise, the less credible the Greenspan Put becomes unless there is real and sustainable economic recovery to underpin the markets -- in my mind, that has yet to happen nor does it seem likely now, for a lot of reasons.
Perhaps I am underestimating him (or the power of a determined Fed) again, but should downside market momentum get underway coupled with evidence that the economy is once again slowing, I doubt that AG can stop it at current levels. I also doubt that he can get much out of real estate as a source of income a second time, and he certainly has little room for significant rate cutting this time, giving him few options should the economy turn south again. It could get ugly, both for the economy and for the markets.
mlsoft
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