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Greenspan Says U.s. Recession May Be Deeper Than Last

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Feb. 25 (Bloomberg) -- Former Federal Reserve Chairman Alan Greenspan said a possible recession in the U.S. this year may be deeper than the last two contractions.

``The existing financial problems are deeper than we've had for a while, so I wouldn't be surprised if this recession is deeper than the last two shallow recessions,'' Greenspan said at a conference today in Abu Dhabi, United Arab Emirates.

Over the past year, Greenspan has gone from seeing a one-in- three chance of a recession to an estimate of ``50 percent or better.'' Wall Street firms including Merrill Lynch & Co. and Goldman Sachs Group Inc. are forecasting the first contraction since 2001. The last two downturns lasted about eight months.

``We're at stall speed,'' the 81-year-old former Fed chief said today. ``When you're at stall speed, anything that goes wrong takes you lower.''

The proportion of economists who forecast a U.S. recession this year more than doubled over the last three months, to 45 percent, according to a survey released today by the National Association for Business Economics.

The Fed will lower its benchmark interest rate between banks to 2.5 percent this year, from the current 3 percent, according to the NABE survey median.

Growth in emerging economies will continue to outstrip that of the U.S., while their currencies will also appreciate against the dollar, Greenspan said. He also urged nations in the Persian Gulf to move toward letting markets set exchange rates.

Dollar's Primacy

``We have enough liquidity in the world to support more than one major currency,'' he said. ``I doubt the dollar will fall from number one.''

At the same time, he said at a separate conference later in the day that private holdings of euros may exceed those of dollars in the next five to 10 years. ``I imagine that is what will happen,'' Greenspan said.

Referring to Persian Gulf countries, he said ``letting the currency float is probably the best way to stop the flow of foreign exchange into the economy and cause inflation.''

Globally, sovereign wealth funds ``on balance'' have done a ``good job,'' and any restrictions would be a ``very bad idea,'' the former Fed chief said. The funds have increasingly bought stakes in U.S. and European banks in the aftermath of the subprime crisis.

He said it was ``worrying'' that China and other nations are using price controls on food and energy products to limit inflation.

http://www.bloomberg.com/apps/news?pid=206...p;refer=economy

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``We're at stall speed,'' the 81-year-old former Fed chief said today. ``When you're at stall speed, anything that goes wrong takes you lower.''

What the ****** is stall speed supposed to mean? Does he really mean that the speed of the air flow over the roof of the Fed is too low? Or is this just utter drivel?

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You got to hand it to the boy - his timing is immaculate. The Dow finishes up after 2 consecutive days of rallying and out comes old misery guts with doom and gloom again. Ruddy ripe when there are many who now believe his policies helped us get into this mess in the first place?

Is he deliberately trying to scupper things? Is he really Bin Laden in disguise?

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What the ****** is stall speed supposed to mean? Does he really mean that the speed of the air flow over the roof of the Fed is too low? Or is this just utter drivel?

He's 81 don't you know. It's dementia, maybe he thought he was talking about his bowel movements. :lol:

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He's 81 don't you know. It's dementia, maybe he thought he was talking about his bowel movements. :lol:

lol, all from the man who brought america adjustable rate mortgages without explaining the risks!

Edited by mew too

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  • 293 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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