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Thread: Greenspan - double dip on the way

  1. #1
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    Greenspan - double dip on the way

    Yeah, thanks for this Alan - pity you didn't pick that it was your own actions that would create the GFC in the first place.

    [B]Greece default almost certain, Greenspan says[/B] June 17, 2011 - 10:25AM

    Alan Greenspan, former Federal Reserve chairman, said a default by Greece is ‘‘almost certain’’ and could help drive the US economy into recession.

    ‘‘The problem you have is that it’s extremely unlikely the political system will work’’ in a way that solves Greece’s crisis, Greenspan, 85, said in an interview overnight in New York. ‘‘The chances of Greece not defaulting are very small.’’

    Greek government bonds slumped, pushing the yield on the two-year note above 30 per cent for the first time, as Prime Minister George Papandreou’s failure to win support for more austerity fueled speculation the European country will fail to meet its obligations.

    More than 20,000 people protested in Athens this week against wage reductions and tax increases, with police using tear gas on crowds and strikes paralysing ports, banks, hospitals and state-run companies.

    The chances of Greece defaulting are ‘‘so high that you almost have to say there’s no way out,’’ said Greenspan, who ran the central bank from 1987 to 2006. That may leave some US banks ‘‘up against the wall.’’

    Greece’s debt crisis has the potential to push the US into another recession, Greenspan said. Without the Greek issue, ‘‘the probability is quite low’’ of a US recession, he said.

    ‘‘There’s no momentum in the system that suggests to me that we are about to go into a double-dip,’’ Greenspan said.

    Economic data released today show confidence in the expansion eroding among Americans and businesses, as unemployment remains above 9 per cent.

    The US recovery is being hindered by apprehension among businesses over the long-term outlook, and there’s nothing more for Fed policy makers to do, Greenspan said.

    US lawmakers are wrangling over spending cuts and budget reforms as they seek an agreement to increase the $US14.3 trillion debt limit before August 2, the date on which the Treasury Department said it will have exhausted its borrowing authority.

    The US debt issue is becoming ‘‘horrendously dangerous,’’ said Greenspan, who added he doubts lawmakers have another year or two to solve it.

    After leaving the Fed, the former chairman founded the consulting firm Greenspan Associates and became a consultant or adviser to Deutsche Bank, Pacific Investment Management Co and Paulson & Co, a hedge-fund firm that profited from the collapse of the US subprime-mortgage market.

    Greenspan, appointed Fed chairman by Republican president Ronald Reagan, was once described as ‘‘the greatest central banker who ever lived’’ by economist Alan Blinder, the central bank’s former vice-chairman.

    He has since been blamed for contributing to the US financial crisis by keeping interest rates low for too long and failing to regulate the mortgage market, according to critics including Allan Meltzer, a professor at Carnegie Mellon University in Pittsburgh, and members of the Financial Crisis Inquiry Commission.

    [URL="http://www.smh.com.au/business/world-business/greece-default-almost-certain-greenspan-says-20110617-1g6px.html"]link[/URL]

  2. #2
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    Your title is a bit misleading.

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    [QUOTE=long island leprechaun;4049155]Your title is a bit misleading.[/QUOTE]

    ‘‘There’s no momentum in the system [B]that suggests to me that we are about to go into a double-dip,’’ [/B]Greenspan said.

    The wording is ambiguous but apparently the highlighted is what he meant - put a comma or semi-colon in between 'system' and 'that' and it reads the way the title says. ie "There's no momentum in the system [and] that suggests to me that we are about to go into a double-dip." Greenspan wouldn't be saying there is any momentum in the system because there isn't.

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    even with the semi-colons or commas, greenspan isn't nostradamus. in fact his powers of prediction are sub par.

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    [QUOTE=bitonti;4049167]even with the semi-colons or commas, greenspan isn't nostradamus. in fact his powers of prediction are sub par.[/QUOTE]

    I certainly agree with you there - you are a serial optimist about the US economy, which is probably why you would say that about Greenspan. I'm pessimistic about the US economy and have been for some time - the weight of data is more in line with my view right now. Hopefully I'm wrong and the weak numbers released recently are just the recovery hitting a "soft patch" rather than a sign of something more terminal. I am also am no Nostradamus, more pragmatic, and would be glad for my realistic view to be proven wrong.

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    [QUOTE=Black Death;4049175]you are a serial optimist about the US economy, which is probably why you would say that about Greenspan. I'm pessimistic about the US economy and have been for some time[/QUOTE]

    its true i am optimistic. altho a greek default is probably bad for everyone. And has very little to do with the fed printing money.

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    [QUOTE=Black Death;4049161]‘‘There’s no momentum in the system [B]that suggests to me that we are about to go into a double-dip,’’ [/B]Greenspan said.

    The wording is ambiguous but apparently the highlighted is what he meant - put a comma or semi-colon in between 'system' and 'that' and it reads the way the title says. ie "There's no momentum in the system [and] that suggests to me that we are about to go into a double-dip." Greenspan wouldn't be saying there is any momentum in the system because there isn't.[/QUOTE]
    I read it as "No (compounding, negative) momentum in the system (US economy) that would suggest we are about to go into (another US recession)".

    jmo

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