Greenspan Says Economy Faces Worst Crisis in a Century

by Emilio Lizardo | September 14, 2008 at 12:41 pm

609 views | 42 Recommendations | 16 comments

Allen Greenspan, gone now from the Fed but not at all forgotten, predicts severe problems for the American economy, based on the continuing credit crunch and the still unchecked slump in housing prices.

Greenspan: Economy in 'once-in-a-century' crisis
In an interview Sunday, the former Federal Reserve chairman said that more financial firms will fail and that housing won't stabilize until 2009.
September 14, 2008: 1:08 PM EDT

WASHINGTON (CNN) -- The U.S. credit squeeze has brought on a "once-in-a-century" financial crisis that is likely to claim more big firms before it eases, former Federal Reserve chief Alan Greenspan said Sunday.

Greenspan told ABC's "This Week" that the situation "is in the process of outstripping anything I've seen, and it still is not resolved and it still has a way to go."

"Indeed, it will continue to be a corrosive force until the price of homes in the United States stabilizes," Greenspan said. He predicted that would not happen until early 2009, and said the odds of U.S. recession have gone up in recent months.

"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," he said.

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Karen Hatter

flagged this story as Good Stuff

at 13:05 on September 14th, 2008

Emilio Lizardo, I like this story. It's good stuff.

Emilio Lizardo

at 14:49 on September 14th, 2008

Thanks for flags Karen and Metta.

SOLARLIFE

flagged this story as Good Stuff

at 16:17 on September 14th, 2008

Emilio Lizardo, I like this story. It's good stuff. Now greenspan is telling the truth, well I would say he was one of the main opinion makers who caused over th last 5 years the downhill tour based on sub-prime home credits with cheap money from greenspan. He knew what 's going on. But still he is our orientation like grandma says, don't eat to much icecream. We ate tons of icecream "use your credit card, as if there is no tomorrow".

Emilio Lizardo

at 19:55 on September 14th, 2008

Hi Solar.

These guys - and Greenspan is certainly one of 'em, say whatever they need to say ... they kind of make it up as they go, sort of like in that movie, 'Wagging the Dog.'

Anyway, it's beginning to look like we're almost at the point where the 'rubber meets the road' and the political 'fairy tales' break down ...

Certainly grown-ups must realize that no matter what they tell us about free lunches, eventually it will be time to pay the piper ...

Thanks for the read and the comment and the flag.

Uwe Paschen

flagged this story as Good Stuff

at 19:11 on September 14th, 2008

Emilio Lizardo, I like this story. It's good stuff.

Did he not publish a book saying all was great and the economy was fine?

Emilio Lizardo

at 19:54 on September 14th, 2008

Oh, he probably did ... I never payed much attention to Greenspan - except when he mentioned that timeless phrase sometime back in the 90's, 'irrational exhuberence' ...

Remember when he cautioned us back then ? Of course nobody listened ...

Well, you're not American, so there's really no reason you would remember him saying it ...

It was back during the spectacular rise of the 'dot-com' companies, when experienced investors just couldn't figure out what was going on because the rise in percieved value of these companies defied all the traditional fundamentals ...

We all know what happened to the 'dot-com' bubble - and it wasn't pretty, and the fundamentals didn't lie ...

Well, here we are now, and it looks like what happened at Silverado and Enron may have been going on as well at our largest and most important financial institutions ...

This could get really, really ugly ...

Marshal law, anyone ?

Thanks for the read and the comment and the flag.

Uwe Paschen

at 20:01 on September 14th, 2008

Well, I am aware of the real value of the US Dollar for some time and I mean 15 years not just since 9/11, there was a very good annalist at the European Financial section that made a case that the real value of the US dollar should be 1/5 of what is or was 15 years ago.
Libya and Iran have started trading in EURO all ready. Well, I do hope for your sake and ours around the world that we wound have another 1929 crash again.
And yes I have the uncomfortable feeling that Marshal law may be de-created in the US and a couple of other countries like GB will follow suite.

Emilio Lizardo

at 20:05 on September 14th, 2008

Pashen, my friend - I sincerely hope I am only joking about the marshal law part ...

Uwe Paschen

at 20:11 on September 14th, 2008

I know that and I hope nothing of the likes will ever happen. However we are in a time a very delicate weight balancing and it can very easily tip the great balance of reason and go the wrong way before any one actually realised what has happen, and this not only in the US.

My Philosophy is, "Be prepared for the worth and hope for the best." And if you can not be prepared then Brace your self for the Worth blow and hope you never receive it.

Emilio Lizardo

at 20:21 on September 14th, 2008

Definately an admirable philosphy !

I am with you on that !!

Lee Lecu

flagged this story as Good Stuff

at 19:29 on September 14th, 2008

Emilio Lizardo, I like that you brought this story to our attention. I am not sure if we can say the whole economy will collapse- this is always a point of contentment. Economies are created by the institutions and deemed useful resources around them.

I have been thinking about this a lot today as I heard about the latest possible 'credit crunch;' who can possibly pay for what has "maybe" gone "wrong" - depending on which side of the fence you might sit regarding the analysis of this pertinent issue that plagues the world's biggest consumers.

It seems the only ones who will suffer are those that will lose their homes/ resources to investors who will refuse to figure out a payment reconstruction plan. Considering each and every vested interest probably has a grievance against American excess. Undoubtedly the economy will not fare too well tomorrow.

The international anarchy of state relations once again is showing us that (wishful thinking) global financial institutions need to work together; likewise I do not figure this will ever happen in anybody's lifetime as long as there are human utility maxmizers.

The taxpayers who used the hired money to labour with it will just as soon have to pay either higher taxes to recoup what was lost, or sell out to hopefully friendly foreign venture capitalists, and pay them back slowly- a sort of rent. Ya think??? Maybe the Columbian drug lords can buy the bank out! JK. Well that's not actually funny.

Emilio Lizardo

at 20:03 on September 14th, 2008

This story is currently being featured in the mainstream press, so it wasn't any trouble at all to find. It brings me no pleasure to find stories like this and post them here. But I appreciate the fact you find it interesting. And, really, it is a major story that many have seen on the horizon for a long time now ...

We'll just have to see how bad it gets and how well the technicians can manage the whole thing as it unfolds ...

The question I ask myself is - Assuming the Emperor has no clothes, what happens when the winter comes ?

Thanks for the comment and the flag.