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Suddenly, Amazon Doesn't Love Its Moms AnymoreHowever, Greenspan said the Fed's efforts in March to revive credit have reduced instability. "Things do at this particular stage look a little bit better," Greenspan told Bloomberg News via a conference call, but added that financial doldrums are likely to linger a "good number of months or into next year."
Further, when asked if the U.S. economy was in a recession, Greenspan said, "We are on the brink," Reuters reported Tuesday.
Greenspan's remarks occur one day before the now Ben Bernanke-led Fed announces it interest rate decision, on Wednesday at 2:15 p.m. EDT. The Fed is widely expected to keep interest rates the same, while in its accompanying statement also striking a balance between concern over rising inflation and a pronounced economic stall.
In an effort to jump-start the U.S. economy slowed by the nation's worst housing slump in a generation, the Fed has cut short-term interest rates by 325 basis points to 2% since September 2007.
Greenspan: U.S. inflation pressure growing
The notoriously-opaque and taciturn Greenspan did not comment specifically on monetary policy Tuesday, but did note that inflation pressure is growing in the U.S. economy. He said "... significant pressures are coming from oil and food, but they are none the less real" and that "... unless the central bank leans against them ... you will get a highly unstable inflation environment," Reuters reported Tuesday.
Economic Analysis: Greenspan was expansive regarding global and U.S. macroeconomic headwinds, but characteristically cryptic regarding monetary policy. However, I'll interpret his comments referring to a potentially highly unstable inflation environment as his signal to financial players that monetary policy has to tighten at some point to put a lid on U.S. inflation. That's not to state that the Bernanke-led Fed is likely to increase interest rates Wednesday -- it won't -- but a rate hike almost certainly will occur in the fall after the Fed's summer break.
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Reader Comments (Page 1 of 1)
6-24-2008 @ 2:13PM
Vikki said...
Greenspan is one of the "gurus" who brought us to the debacle--he has totally relinquished his responsibility, developed convenient amnesia, and yet still considers himself capable of predicting the future...
he is an ass
6-24-2008 @ 2:17PM
B. Harrison said...
Pardon me for saying this; but "Alan Greenspan is an "intellectual IDIOT". Yeah I read his book The Age of Turbulance" In retrospect it is more of an attempt to justify what he did for so many years.
I consider Greenspan to be ONE of the persons primarialy responsible for the subprime mortgage loan debacle. It was primarialy Greenspan's leaving the prime interests rate too low for too long; and his ardent belief in "industry self regulation" that created the atmosphere and the ability for the debacle to occur.
So, now that he is no longer the head of the Fed, he is trying to be a little more realistic about the damage that occured due to his misfeasance, and abominally poor judgement. Pathetically, as late as a month ago, he was still touting and extolling the "virtues" of "industry self regulation". The man is a blooming IDIOT!
6-24-2008 @ 2:30PM
Charles said...
Greenspan knows what he's talking about
6-24-2008 @ 2:38PM
Warren said...
"Greenspan knows what he's talking about"
Let me guess - what he's saying falls in line with what you personally believe? Hey, he's a genius!
The above posters are correct. He's a big part of the reason we're in this mess. Why anyone wants to continue to give him air time is beyond me.
Hey Al? Maybe you didn't get the memo but you've been replaced. Move on.
6-24-2008 @ 2:38PM
william lindblad said...
I don't feel compelled to defend Greenspan either, but he is hardly alone on the blame front. While the Fed does have rate control it does not have total banking control. It did however, have control of fraudulent and unscrupulous mortgage lending. Trouble is, offering 100% financing to people with obvious inability to pay does not fit the above. Neither does making multiple loans to people with good credit. None of this falls into predatory lending in the context that the Fed was supposed to guard against. Green span is neither moron nor fool, he is simply talking to keep himself in the limelight so that he will continue to be paid well for his speaking and other services. At this point though, he is little more than an echo on what is commonly held by a multitude.
So. Allen, if you don't have anything worthwhile to say - SHUT UP.
6-24-2008 @ 8:40PM
Carrie said...
Ron Paul says in his new book, The Revolution: a manifesto:
"For most people, in fact, the Fed is a complete mystery, its operations incomprehensible. That seems to be just the way the Fed likes it. We are supposed to be bored by it. We are supposed to treat it as a given, like the air we breathe. We are supposed to have confidence in it--surely the experts who run our monetary system for us (and of course have a vested interest in perpetuating the system we now have)couldn't be giving us bad advice! But point to it as the source of our eroding standard of living, the ravages of the boom-bust business cycle, and the financial bubbles that have ruined countless Americans? That is simply not to be found anywhere along the spectrum of allowable opinion in America."
IT'S TIME TO ABOLISH THE FED AND START CREATING OUR OWN AMERICAN CURRENCY--INTEREST FREE! WHY SHOULD WE GIVE A GROUP OF PRIVATE BANKERS THE POWER TO CONTROL OUR WHOLE ECONOMY???