Greenspan Warns of Likely U.S. Recession

[bishop]

Greenspan Warns of Likely U.S. Recession: Financial News - Yahoo! Finance

HONG KONG (AP) -- Former U.S. Federal Reserve Chairman Alan Greenspan warned Monday that the American economy might slip into recession by year's end. He said the U.S. economy has been expanding since 2001 and that there are signs the current economic cycle is coming to an end. "When you get this far away from a recession invariably forces build up for the next recession, and indeed we are beginning to see that sign," Greenspan said via satellite link to a business conference in Hong Kong. "For example in the U.S., profit margins ... have begun to stabilize, which is an early sign we are in the later stages of a cycle." "While, yes, it is possible we can get a recession in the latter months of 2007, most forecasters are not making that judgment and indeed are projecting forward into 2008 ... with some slowdown," he said. Greenspan said that while it would be "very precarious" to try to forecast that far into the future, he could not rule out the possibility of a recession late this year. The U.S. economy grew at a surprisingly strong 3.5 percent rate in the fourth quarter of 2006, up from a 2 percent rate in the third quarter. A survey released Monday by the National Association for Business Economics showed that experts predict economic growth of 2.7 percent this year, the slowest rate since a 1.6 percent rise in 2002. Greenspan also warned that the U.S. budget deficit, which for 2006 fell to $247.7 billion, the lowest in four years, remains a concern. "The American budget deficit is clearly a very significant concern for all of us that are trying to evaluate both the American economy's immediate future and that of the rest of the world," he said via satellite at the VeryGC Global Business Insights 2007 Conference. Greenspan also said he has seen no economic spillover effects from the slowdown in the U.S. housing market. "We are now well into the contraction period and so far we have not had any major, significant spillover effects on the American economy from the contraction in housing," he said.

[RickSp]

Wait ! Greenspan is speaking in understandable English. Something is very wrong here.

[Gods_Mercenary]

NOOOOO!

Please, like he said, it's a cycle, meaning circular, meaning it's not permanent.

[Joe Doakes]

Damn the economic indicators!,fiat money printing presses full steam ahead!.

[Osborn F Enready]

Exactly Joe.

Another excuse to print more non-backed currency, at the expense of the American tax-payers, without their approval.

Theres a war goin on dontcha know?!? :rolleyes:

[bishop]

i'd like this thread to be focused on the economy, rather than another topic for/against the gold standard.

it looks like greenspan's comments may have just tipped off a major market correction... depending on how long this correction lasts, we will likely begin to see its impact made in the cost/job cutting - setting the stage for the downward spiral typical of the business cycle.


Dow Industrials Plunge More Than 200: Financial News - Yahoo! Finance

NEW YORK (AP) -- The Dow Jones industrials plunged more than 200 points Tuesday as Wall Street joined a global stock decline sparked by growing concerns that the U.S. and Chinese economies are cooling and that U.S. stocks are embarking on a major correction. In early afternoon trading, the Dow Jones industrial average dropped 209.25, or 1.66 percent, to 12,433.01. The last time the index saw a one-day decline of more than 200 points was May 17, 2006. The Dow is now 2.8 percent below its record high close of 12,786.64, reached just a week ago. Broader stock indicators also fell sharply. The Standard & Poor's 500 index plummeted 28.16, or 1.83 percent, at 1,422.80, and the Nasdaq composite index dropped 64.79, or 2.59 percent, at 2,439.73. A 9 percent slide in Chinese stocks earlier set the tone for U.S. trading, a day after investors sent Shanghai's benchmark index to a record high close. Investors' confidence has been knocked down by a slew of data showing that the economy may be decelerating more than anticipated. A Commerce Department report that orders for durable goods in January dropped by the largest amount in three months exacerbated jitters about the direction of the U.S. economy, which were raised a day earlier when former Federal Reserve Chairman Alan Greenspan said the economy may be headed for a recession. "It looks more and more like the economy is a slow growth economy," said Michael Strauss, chief economist at Commonfund. "Moderate economic growth is good -- an abrupt stop in economic growth scares people." The market had been expecting the government on Wednesday to revise its estimate of fourth-quarter GDP growth down to an annual rate of about 2.3 percent from an initial forecast of 3.5 percent, and grew increasingly nervous on Tuesday that the figure could come in even lower. The housing market, which the Street had been hoping had bottomed out, also looked far from recovery after a Standard & Poor's index indicated that single-family home prices across the nation were flat in December. A later report from the National Association of Realtors said existing home sales climbed in January by the largest amount in two years, but the data didn't erase housing-related concerns, as median home prices fell for a sixth straight month. A suicide bomber attack on the main U.S. military base in Afghanistan where Vice President Dick Cheney was visiting also rattled the market. China's stock market plummeted Tuesday from record highs as investors took profits when concerns arose that the Chinese government may try to temper its ballooning economy by raising interest rates again or reducing more of the money available for lending. "Corrections usually happen because of a catalyst, and this may be it," said Ed Peters, chief investment officer at PanAgora Asset Management. "The move in China was a surprise, and when a major market has a shock it ripples through the rest of the market. With all the trade that goes on with China, there tends to be a knee-jerk reaction with that kind of drop." The Shanghai Composite Index tumbled 8.8 percent to close at 2,771.79, its biggest decline since it fell 8.9 percent on Feb. 18, 1997. Since Chinese share prices doubled last year as investors poured money into the market after the completion of shareholding reforms, trading in Shanghai has been very volatile. Hong Kong's benchmark Hang Seng Index dropped 1.8 percent, and Malaysia's Kuala Lumpur Composite Index fell 2.8 percent. Japan's Nikkei stock average fell a more moderate 0.52 percent, but European markets were rattled -- Britain's FTSE 100 lost 2.31 percent, Germany's DAX index dropped 2.96 percent, and France's CAC-40 fell 3.02 percent. <snip> The dollar slipped against other major currencies, while gold also fell.