Posted on 01/30/2008 9:18:28 AM PST by NormsRevenge
BERLIN (AFP) - Former Federal Reserve chief Alan Greenspan cast doubt on the ability of the central bank to prevent a US recession in an interview to appear on Thursday.
Greenspan told the German weekly Die Zeit that the Fed or political policies could "probably not" keep the world's biggest economy from sliding into recession, as financial markets widely expected the US central bank to cut its main lending rate.
"The influences of the global economy today are stronger than almost any monetary or budgetary response," the German-language weekly quoted Greenspan as saying.
Although he left the post of Fed chairman two years ago, Greenspan's opinions on the economy are still sought after.
"Real long-term interest rates have much more influence over the heart of economic activity than national decisions," he was quoted as adding.
"And central banks have less and less power to influence long term rates."
The former Fed chief put the chances of a US recession at 50 percent, but added: "We have few indications that would allow us to say we are already there."
Some analysts have said that low interest rates under Greenspan's watch were responsible in part for the US housing bubble that burst last year, and led to the current financial crisis.
Die Zeit quoted him as saying he found it hard to understand that "the Federal Reserve policy had somehow allowed housing and stock prices to rise."
Fallout from the crisis, which began with a meltdown of the US market for high-risk, or subprime, mortgages, continues to rock international financial markets and now threatens the US economy with a recession.
For Greenspan however, the turmoil was "entirely the result of market forces at a global level."
The Fed's Open Market Committee (FOMC) was to announce its decision on US lending rates later on Wednesday.
It surprised markets last week by slashing the base Fed funds rate by three quarters of a percentage point to 3.50 percent, but it is widely expected to follow through with another cut to 3.0 percent.
Hey Alan,your comments are neither wanted or appreciated. in other words just STFU.
He failed to credit himself for his contribution to the disaster.
Why doesn’t Greenspan his thoughts to himself?
If the odds are 50% of a recession, they what's up with saying the fed is unable to stop a recession? Ever since Greenspan left, he has done nothing but talk down the US economy as if he had nothing to do with the current situation.
Well Greeny, the your Fed started the recession by raising the fed fund rates too quicky and too high.
This from THE architect of “Irrational Exuberanceâ€. He was all hot air and bubble production in the past and he continues on in that role now.
How many times does this guy need to mouth off ? Last week he said no recession.
If high interest rates didn’t cause the economic problems, lowering them won’t help.
Also the stimulus. Our problem is not spending, it’s not producing. Goosing up consumer spending just kicks problems down the road till after election.
I wish my fingers didn’t get ahead of my brain like that
;~ p
This from a guy who was a disaster as Fed Chief. Only the hack politicians and left wing media have heaped tons of praise on him. He was always a dollar late and a day short. Now, after causing a recession by his failure to act, and then allowing a housing bubble to happen because of his failure to raise interest rates, he can’t keep his mouth shut.
Greenspan, you suck big time. History will tell the truth about you. In the meantime, as a previous poster already has noted, STFU.
Greenspan is exhibiting irrational exuberance over the prospect of a Bush/Bernanke recession
We are locked into cheap money with low interest rates. What are the implications? Chaos(more short term decisions) and inflation. Is there opportunity? Yes for some and No for others. What is the Strategy? Enjoy the ride.............
Personally I locked in a 5% 15 year house mtg loan yesterday, and am getting rid of debt that I can’t lock in at a low rate. Look for opportunities and be flexible.....there are always opportunites in the most unexpected places.
I'm glad I'm not the only that remembers reading that! For a second I thought I was on Bizarro Earth.
Remember, this is the guy that wasn’t smart enough to see it coming.
I second that.
Greenspan is an egotistical has-been who craves attention like Jimmy Carter. Taking financial advice from him is like taking foreign policy advice from Jimmy.
Sought after my foot! He talks to his wife and she turns it into a news story.
Bingo!
Corrected headline.
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