Posted on 09/14/2008 2:11:39 PM PDT by Reagan Man
The United States is mired in a "once-in-a century" financial crisis which is now more than likely to spark a recession, former Federal Reserve chief Alan Greenspan said Sunday. The talismanic ex-central banker said that the crisis was the worst he had seen in his career, still had a long way to go and would continue to effect home prices in the United States.
"First of all, let's recognize that this is a once-in-a-half-century, probably once-in-a-century type of event," Greenspan said on ABC's "This Week."
Asked whether the crisis, which has seen the US government step in to bail out mortgage giants Freddie Mac and Fannie Mae, was the worst of his career, Greenspan replied "Oh, by far."
"There's no question that this is in the process of outstripping anything I've seen, and it still is not resolved and it still has a way to go," Greenspan said.
"And indeed, it will continue to be a corrosive force until the price of homes in the United States stabilizes.
"That will induce a series of events around the globe which will stabilize the system."
Greenspan was also asked whether the United States had a greater-than 50 percent chance of escaping a recession.
"No, I think it's less than 50 percent.
"I can't believe we could have a once-in-a-century type of financial crisis without a significant impact on the real economy globally, and I think that indeed is what is in the process of occurring."
The former Federal Reserve chairman also predicted that the financial crisis would see the failure of more major financial institutions, even as embattled Wall Street investment giant Lehman Brothers scrambled to find a buyer.
"In and of itself that does not need to be a problem.
"It depends on how it is handled and how the liquidations take place. And indeed we shouldn't try to protect every single institution."
On Saturday, Democrat Barack Obama's campaign seized on a warning from Greenspan about John McCain's tax plans to portray the Republican as economically reckless.
In an interview with Bloomberg Television Friday, Greenspan said the nation could not afford 3.3 trillion dollars of tax cuts proposed by McCain without matching cuts in spending.
Greenspan, a long-time friend of McCain and a Republican, said about the Arizona senator's plans to extend massive tax cuts imposed by President George W. Bush: "I'm not in favor of financing tax cuts with borrowed money."
McCain has said he would pay for his cuts by ending pet funding projects for US lawmakers' districts known as "earmarks."
I hope we aren’t on the verge of another depression.
If there’s a geezer who knows “once in a century”, it’s gotta be Greenspan.
He oughta know. His “leadership” was a once in a century F-up.
And Greenspam said what about Obambi’s spend-and-spend-more plan with tax cuts to 95% of taxpayers ?
Of course he is right about McCain, but both candidates need to plan on large spendng cuts immediately after gaining the office.
This man should shut up and let those who are responsible take care of it. Perhaps if he had helped control the greed running rampant in the financial industry we wouldn’t be in this mess.
“A far more powerful incentive, however, is the fear of loss of the dealer’s good reputation, without which it cannot compete effectively, regardless of its financial strength or financial engineering capabilities. In these respects, derivatives dealers bear no resemblance to the “bucket shops” whose activities apparently motivate the exchange trading requirement.”
http://www.federalreserve.gov/boarddocs/testimony/1998/19980724.htm
1998: Greenspan on derivatives and the self-regulating market policeman of “good reputation.”
As if the gazillionaires who parachuted out of Bear Sterns or Lehman cared about their money’s “reputation.”
Greenspan - married to Andrea Mitchell. Who can believe this buffoon during a Democrat crisis. This is nothing more than a way to give the press an issue to use against the Republicans. Ignore him . . . .
The man who created this situation should know better than anybody.
We aren't - The world is now a global economy and wealth is increasing around the globe - There are more customers and true potential customers today than ever before - There will be no depression....and likely not even a true (2Qtr) recession....(unless there is a tax-hike).
Why does no one ever ask Greenspan about that article he wrote early in his career where he talks about gold and fiat currency?
Am I the only Freeper who thinks Greenspan is an overrated buffoon?
As I recall, Greenspan is married to the Foam-at-the-Mouth Liberal Andrea Mitchell. You don’t suppose he’s trying to help his Sweetheart do damage to the McCain/Palin ticket, do you?
The man is mostly correct, with mccains massive spending plans and more Bank bailouts, prove he is wrong instead of attacking him. Where is the money, zillions, coming from???
Greenspan is the Robert McNamara of economics. At least McNamara was man enough to admit he was wrong.
No, you aren’t.
a very lucky overrated buffoon?
Wasn’t Greenspan a “player” in this financial mess?
Was it not partly due to his monetary policy of “easy money” this is partly to blame for the problems of today?
I’m going to defend Greenspan here. Without him the Reagan revolution would’ve been a failure. Remember, it was he who chaired the committee to save social security the first time to great success. It was also Greenspan who dealt with the big crash during Reagan’s term successfully. And it was also Greenspan who helped figure out how to sell of the assets of all the failed Savings and Loans companies as well, preventing greater financial catastrophe.
And oh yeah, it was Greenspan who presided over the last, unprecedented 20 years of solid economic growth with low inflation.
Greenspan is doing his job and being objective. He hates the deficit, and most fiscal conservatives should too.
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