Greenspan Sees Steep Decline In U.S. GDP

Ex-Fed Chair Has No Doubt About Global Recession, Predicts Big Drop In Gross Domestic Product

(CBS/AP)  Former Federal Reserve Chairman Alan Greenspan said Friday there is no doubt the world economy is in a very severe recession and that U.S. gross domestic product will decline significantly in the last three months of the year.

Speaking at a business lunch in Toronto, Greenspan said the economy is not quite in a free fall but something close to it.

"That we are in a recession, very severe, there's no question," Greenspan said. "Gross domestic product in the United States in the fourth quarter is going to be down significantly."

The former Fed chairman said early data for October show the GDP in a severe contraction that could top a 3 percent annual rate of decline.

"We know we are going down and there's very little we can do about that," Greenspan said.

U.S. home prices and stock prices are critical, he noted. Housing values might have another 5 to 10 percent to decline before they bottom, which could come sometime in the first half of next year, he said.

"It's important to recognize we are not in quite a free fall but something close to it," Greenspan said. "This economy, and indeed the world economy, has tilted over and is moving down fairly aggressively, pretty much across the board."

On Wall Street Friday buyers returned after two days of heavy losses, mindful of the economy's growing problems but attracted by stocks' lower prices. Analysts said the advance, which also came amid relief that a bad report on unemployment wasn't worse and followed dour third-quarter reports from Ford and General Motors, was to be expected as Wall Street experiences a rocky recovery from October's devastating selling.

The major indexes jumped more than 2 percent, including the Dow Jones industrial average, which rose 250 points in light trading. For the week, the Dow and broader benchmarks like the Standard & Poor's 500 index lost about 4 percent after surging 10 percent or more last week.

The market briefly came off its highest levels of the session after President-elect Obama reiterated there is a great deal of hard work to be done to restore the economy to health. Investors had optimistically sent prices higher, only to temporarily pull back when Obama underscored what they already know: that the economy's problems won't be easily solved.

The broader S&P 500 index added 26.11, or 2.89 percent, to 930.99, and the Nasdaq composite index rose 38.70, or 2.41 percent, to 1,647.40.

Greenspan, who was the head of the U.S. central bank for 18 1/2 years before stepping down in 2006, said stock prices are important because higher prices increase equity and improve balance sheets.

"If the value of equity goes up, that amount of capital is available to be disbursed most anywhere," he said. "Stock prices tend to lead to recovery. There comes a point where the market gets exhausted on the downside and that to me is going to be a very critical variable as to when we actually turn it around. There's no way of preventing what's going on now. That was caused by the shock of the financial system a couple of months ago."

Greenspan, 82, described it as a once-in-a-century event.

He said the current pattern has all the characteristics of a market bottom.

"All bottoms look like what we're looking at now, but it doesn't follow that this bottom always leads to a recovery," he said. "It may just be another stage before you go down again, and I'm not going to forecast where we are going because I frankly don't have a clue."

In his testimony before the U.S. House Oversight Committee last month, Greenspan acknowledged that the crisis has exposed flaws in his thinking and in the workings of the free-market system.

He said then that his belief that banks would be more prudent in their lending practices because of the need to protect their stockholders had been proven wrong by the current crisis. He called this a "mistake" in his views and said he had been shocked by that.

[marshall65]

"In his testimony before the U.S. House Oversight Committee last month, Greenspan acknowledged that the crisis has exposed flaws in his thinking and in the workings of the free-market system.".......Frankly, Greenspan should close his trap. Since he didn''t know what he was talking about before, he should stop making these money making speeches in which all he cant spout out is dire predictions. He has no credibility.

[charlotteda-2009]

Please stop giving him an ear!!!!!!!!!!!!!!!!

[Michael Arnold]

Please but this sorry SOB in jail and take away his cell phone. He''s done quite ENOUGH damage.

My own view is I hope the whole stinking edifice known as the USA breaks up and thence slips into the Atlantic Ocean. What''s going on in this society, and the behaviors in evidence, are beneath contempt. I voted for Obama but its becoming all too apparent that even he doesn''t have a remote clue and is now well along the way to being bought out wholesale by the capitalist bloodsuckers (his own chief of staff is a former gazillionaire leech from Wall Street implicated in the mortgage mess). My advice is wear your seatbelt: you ain''t seen even the tip of the economic collapse due to the crushing debt that most people, and corporations, have saddled themselves with. Americans are textbook fools (who don''t know how to read textbooks either!!)

[hermitdave]

OH yea this old coot is as big a crook as the rest. His "gosh I had no idea things were that bad" goes right along with Cheney saying Iraq was involved in 9/11 and the play president lying about mushroom clouds

[hennighg]

So, this is what tax breaks for the rich and the corporations brings us. I''m not surprised. Ever since Reagan, I''ve thought "trickle down economics" was as phony as Cheney''s smile. Money doesn''t trickle down. Job loss, money loss, bail-outs, and on and on, THEY trickle down. We''ve got Obama now. Even if he fails, we will have done our best to reverse the treachery of the last 8 years. And I don''t think he''ll fail. I''m just saying that Bush has been so bad that William Henry Harrison rates as a better president.

"He said then that his belief that banks would be more prudent in their lending practices because of the need to protect their stockholders had been proven wrong by the current crisis. He called this a "mistake" in his views and said he had been shocked by that."
**************

I can usually listen to a man who has the cojones to admit he''s made a mistake.
Now we know that those wall street clowns will not even protect their own stockholders. Be nice if I could believe we would remember that in the future.

[brianp55]

If Greenspan was still the chairman of the Fed, he would be using terminology like....."I see the opportunity for minor transient perturbations in the GDP which will enjoy some positive offset by the decreased price for energy". Master BS artist.

[payasyougo]

"Greenspan Sees Steep Decline In U.S. GDP"
----
wow. What foresight interpolated from hindsight. Sign this guy up.

[txgrouch2007]

I highly recommend that we all start studying this website:

http://www.bumwine.com/

We need to start learning what our new lifestyle will be after a few years of Democrats running our country.

Seems like some famous Democrats have already sampled Cisco at some point...

[txgrouch2007]

Greenspan was a faithful puppet to WHATEVER administration was in power at the time. That''s why he got re-appointed over and over by Republican and Democrat alike.

He was nothing but a lackey, and he should be in jail.

He finally DISPROVED the Libertarian beliefs once and for all.

[txgrouch2007]

It has finally come around to bite us in the ***.
Posted by mortal3 at 08:30 PM : Nov 07, 2008

That''s what I''ve been saying for years. Too bad nobody believed it until now, when it''s almost too late.

The ONLY way out of this box is TARIFFS to band-aid our economy until it can get competitive again. And the tariffs should stay until the rest of the world catches up to our protections of the envoronment, the workplace, and PEOPLE.

[donbl1]

Outsourcing is not our problem.

Bubbles from greed are our problem: S&L/housing, .com, housing and Investment Bank created dirivatives. Bubbles have been around since the beginning of Americas capitalism. They are rough but they are part of the system and much better than socialism or communism.

[s0055d]

There needs to be a steep and unhindered decline. The economy that is disappearing now was a false economy to begin with. It was modeled after the tulip mania and the stock market of the roaring twenties. Both ended in disaster , this should too. This time instead of tulip bulbs or stocks, homes were the source of the speculation.
These efforts to shore up failure are futile at best. How can you stop a tidal wave? The attempts to save everyone will fail and just result in a longer deeper contraction before a recovery. Better to have 2 to 3 years of harsh pain and get the inevitable over with. Now it can last for decades.

[hypnotoad72]

Outsourcing is not our problem.

Bubbles from greed are our problem: S&L/housing, .com, housing and Investment Bank created dirivatives. Bubbles have been around since the beginning of Americas capitalism. They are rough but they are part of the system and much better than socialism or communism.

Posted by donbl1 at 08:38 PM : Nov 07, 2008
----

You know, I have to agree as the truth is in the middle, though it''s also true that, if it costs less - by a wide margin and because their cost of living is that much lower - isn''t offshoring a partial result of greed? (giving tax breaks to companies that offshore, like in those Franken vs Coleman commercials, seems bizarre too.)

[len134]

If he thinks this is a bottom, I have bridge in Alaska...

[txgrouch2007]

Greenspan sees a steep decline in the economy?

He SHOULD be seeing the bars of a prison cell. FROM THE INSIDE.

Greenspan is a bum.

[txgrouch2007]

isn''''t offshoring a partial result of greed?
Posted by Hypnotoad72 at 09:09 PM : Nov 07, 2008

Ummmm - I''m going out on a limb here - YES?????

[Hybdiesel]

Will never forget the day I heard Greenspan say, it does not matter where THINGS, are built. I wonder if he is getting the picture yet. A dumb old man like my self knows, people without job''s do not purchase homes, cars and etc. How can such highly educated people be so stupid?

[missingamerica]

"If the value of equity goes up, that amount of capital is available to be disbursed most anywhere," he [Greenspan] said.

Yah, like in bonuses to the C-level execs.

[txgrouch2007]

How can such highly educated people be so stupid?
Posted by zolefart at 11:09 PM : Nov 07, 2008

Ah, yes. The age-old question. Why do successful people seem so stupid?

It''s because they have gained the meta wisdom. They aren''t really stupid. But they know when it''s better for their own success to PRETEND they are. So you can pretend to believe in what makes you successful, even if that''s not what''s rational.

Greenspan had a long, long career. He got re-appointed over and over again by Republicans and Democrats alike. Why?

Because he played stupid and pretended to believe whatever they wanted him to pretend he believed. The scary part is, he''s a libertarian. Sometimes he WASN''T pretending to be so stupid.

But more often than not, he knew d@*n well he was spouting political pablum just to pander to the one who would re-appoint him.

THAT''S WHAT MAKES IT CRIMINAL. That''s why he belongs behind bars.

[judygee100]

we gave accolades to the companies that restructured and laid off workers, making smart moves to the cheapest labor, the import of toxic, filthy foods,and crappy products. the crappiest, were the strange financial products no one can actually explain, except to say they are the closest things to quarks. there were those million dollar commercials, with actors we could believe in, their sonorous voices reminding us how these companies with their worldwide visionary ceo''s (the guys who were busy cleaning out the vault) were getting even bigger while their workforce got smaller. meantime, back at the ranch (pun) we needed jobs that no longer existed. whole communities, cities were becoming devastated. people, began living solely on charge cards. paying for food. the doctor. socks, the kids school notebooks and underwear. just the slobs needed jobs. savvy guys would live off the market and some shmuck who would buy their house for ten times what it was worth 3 years before they sold it. you needed greenspan to tell you this was not going well? don''t greenspan me. or obama me, ooh my goodness he has no plan. maybe he''ll pull an all nighter and figure it out. it''s got to a better plan than the one for AIG. good thing we caught them before they spent our money on a spa retreat. our plan for the banks to loosen up credit, that one was good, too. now, the potato sack race for the money is over. if only someone had taken photos, we could have seen how really stupid we looked.

[judygee100]

we gave accolades to the companies that restructured and laid off workers, making smart moves to the cheapest labor, the import of toxic, filthy foods,and crappy products. the crappiest, were the strange financial products no one can actually explain, except to say they are the closest things to quarks. there were those million dollar commercials, with actors we could believe in, their sonorous voices reminding us how these companies with their worldwide visionary ceo''s (the guys who were busy cleaning out the vault) were getting even bigger while their workforce got smaller. meantime, back at the ranch (pun) we needed jobs that no longer existed. whole communities, cities were becoming devastated. people, began living solely on charge cards. paying for food. the doctor. socks, the kids school notebooks and underwear. just the slobs needed jobs. savvy guys would live off the market and some shmuck who would buy their house for ten times what it was worth 3 years before they sold it. you needed greenspan to tell you this was not going well? don''t greenspan me. or obama me, ooh my goodness he has no plan. maybe he''ll pull an all nighter and figure it out. it''s got to a better plan than the one for AIG. good thing we caught them before they spent our money on a spa retreat. our plan for the banks to loosen up credit, that one was good, too. now, the potato sack race for the money is over. if only someone had taken photos, we could have seen how really stupid we looked.

[judygee100]

we gave accolades to the companies that restructured and laid off workers, making smart moves to the cheapest labor, the import of toxic, filthy foods,and crappy products. the crappiest, were the strange financial products no one can actually explain, except to say they are the closest things to quarks. there were those million dollar commercials, with actors we could believe in, their sonorous voices reminding us how these companies with their worldwide visionary ceo''s (the guys who were busy cleaning out the vault) were getting even bigger while their workforce got smaller. meantime, back at the ranch (pun) we needed jobs that no longer existed. whole communities, cities were becoming devastated. people, began living solely on charge cards. paying for food. the doctor. socks, the kids school notebooks and underwear. just the slobs needed jobs. savvy guys would live off the market and some shmuck who would buy their house for ten times what it was worth 3 years before they sold it. you needed greenspan to tell you this was not going well? don''t greenspan me. or obama me, ooh my goodness he has no plan. maybe he''ll pull an all nighter and figure it out. it''s got to a better plan than the one for AIG. good thing we caught them before they spent our money on a spa retreat. our plan for the banks to loosen up credit, that one was good, too. now, the potato sack race for the money is over. if only someone had taken photos, we could have seen how really stupid we looked.

[judygee100]

we gave accolades to the companies that restructured and laid off workers, making smart moves to the cheapest labor, the import of toxic, filthy foods,and crappy products. the crappiest, were the strange financial products no one can actually explain, except to say they are the closest things to quarks. there were those million dollar commercials, with actors we could believe in, their sonorous voices reminding us how these companies with their worldwide visionary ceo''s (the guys who were busy cleaning out the vault) were getting even bigger while their workforce got smaller. meantime, back at the ranch (pun) we needed jobs that no longer existed. whole communities, cities were becoming devastated. people, began living solely on charge cards. paying for food. the doctor. socks, the kids school notebooks and underwear. just the slobs needed jobs. savvy guys would live off the market and some shmuck who would buy their house for ten times what it was worth 3 years before they sold it. you needed greenspan to tell you this was not going well? don''t greenspan me. or obama me, ooh my goodness he has no plan. maybe he''ll pull an all nighter and figure it out. it''s got to a better plan than the one for AIG. good thing we caught them before they spent our money on a spa retreat. our plan for the banks to loosen up credit, that one was good, too. now, the potato sack race for the money is over. if only someone had taken photos, we could have seen how really stupid we looked.

[judygee100]

we gave accolades to the companies that restructured and laid off workers, making smart moves to the cheapest labor, the import of toxic, filthy foods,and crappy products. the crappiest, were the strange financial products no one can actually explain, except to say they are the closest things to quarks. there were those million dollar commercials, with actors we could believe in, their sonorous voices reminding us how these companies with their worldwide visionary ceo''s (the guys who were busy cleaning out the vault) were getting even bigger while their workforce got smaller. meantime, back at the ranch (pun) we needed jobs that no longer existed. whole communities, cities were becoming devastated. people, began living solely on charge cards. paying for food. the doctor. socks, the kids school notebooks and underwear. just the slobs needed jobs. savvy guys would live off the market and some shmuck who would buy their house for ten times what it was worth 3 years before they sold it. you needed greenspan to tell you this was not going well? don''t greenspan me. or obama me, ooh my goodness he has no plan. maybe he''ll pull an all nighter and figure it out. it''s got to a better plan than the one for AIG. good thing we caught them before they spent our money on a spa retreat. our plan for the banks to loosen up credit, that one was good, too. now, the potato sack race for the money is over. if only someone had taken photos, we could have seen how really stupid we looked.

[judygee100]

we gave accolades to the companies that restructured and laid off workers, making smart moves to the cheapest labor, the import of toxic, filthy foods,and crappy products. the crappiest, were the strange financial products no one can actually explain, except to say they are the closest things to quarks. there were those million dollar commercials, with actors we could believe in, their sonorous voices reminding us how these companies with their worldwide visionary ceo''s (the guys who were busy cleaning out the vault) were getting even bigger while their workforce got smaller. meantime, back at the ranch (pun) we needed jobs that no longer existed. whole communities, cities were becoming devastated. people, began living solely on charge cards. paying for food. the doctor. socks, the kids school notebooks and underwear. just the slobs needed jobs. savvy guys would live off the market and some shmuck who would buy their house for ten times what it was worth 3 years before they sold it. you needed greenspan to tell you this was not going well? don''t greenspan me. or obama me, ooh my goodness he has no plan. maybe he''ll pull an all nighter and figure it out. it''s got to a better plan than the one for AIG. good thing we caught them before they spent our money on a spa retreat. our plan for the banks to loosen up credit, that one was good, too. now, the potato sack race for the money is over. if only someone had taken photos, we could have seen how really stupid we looked.

[liuuu-2009]

One of 3 thermometers is confirmed bad while other 2 are not sure.
Obama tries to take accurate temperature by picking up the bad one (Bush) & his uncertain one (work with Bush to solve the economy problems)
Even kids know to abandon bad one & try the other 2(McCain)

[shanev137]

Greenscam made this meltdown happen.

[perk235]

The Federal Reserve is neither Federal, nor a Reserve. It is a conglomeration of PRIVATELY OWNED BANKS, whom we know make huge bonuses.

Interesting that JFK started the treasury printing silver-backed dollars that competed with the Federal Reserve Notes we all carry in our wallets. Apparently that died out with him.

[hypnotoad72]

snopes.com -- it is a trusted source and they denounced the NAU and ''Amero'', as specified in fringe media outlets, a long time ago.

[txgrouch2007]

All criminal jewbermans and neocons must be arrested for destroying america with their greed
Posted by shazam138 at 07:43 AM : Nov 08, 2008

News flash - Greenspan was a favorite of Democrat and Republican Presidents alike. Because he faithfully spewed whatever pablum the current administration wanted him to spew to support their agenda.

Greenspan spent his career as a stooge, a drone, a puppet, and a lackey. HE GOT RICH by pretending to be stupid and believing whatever they wanted him to believe.

He was "DOING WHAT IT TAKES" to be successful. Like John Belushi, Brittney Spears, Paris Hilton, and all the other stars who melted down. I guess James Dean and Marilyn Monroe fit that description, too.

Greenspan was a meltdown, but his meltdown MELTED DOWN THE COUNTRY instead of him.

[txgrouch2007]

our plan for the banks to loosen up credit, that one was good, too.
Posted by judygee100 at 01:55 AM : Nov 08, 2008

Apparently you haven''t heard. Paulson has DIVERTED THE MONEY from the bank bailout to INVEST IN THE STOCK MARKET INSTEAD.

Imagine having $850 BILLION of TAXPAYER MONEY to invest in the stock market... mmmmm, green. But I digress.

DOES THIS SOUND LIKE A CONFLICT OF INTEREST?

We grew up being taught not to be conniving devious double-crossing criminals like this. I guess "they" taught us that so they''d have LESS COMPETITION. Because it looks like that''s the formula to become ONE OF THE MOST POWERFUL INDIVIDUALS IN THE WORLD!!!!

LOOKIT ME, MA! I''M ON TOPPA THE *WORRRRRRRLD*!!!!!!

But I guess you''re too young to remember that movie.

And it''s NOT just Republicans... Kennedy, Clinton, Barney Frank are good examples, too.

[txgrouch2007]

"If things get any worse, we''''ll have to combine Mexico, Canada and the United States into one country, toss the Constitution, the dollar and of course, our guns, and then let the Messiah run everything. "--Posted by Deck

Who said "It''s better to die fighting on your feet than to live begging on your knees."

I''m pretty sure he meant for us to have guns.

Will the government give up ITS guns anytime soon? Yah, I''ll wait for THEM to go first.

[lochlan-2009]

"It may just be another stage before you go down again, and I''m not going to forecast where we are going because I frankly don''t have a clue."

BULL SHH!T!!!! They made this happen intentionaly. The imminent financial collapse of the U.S. government should be here between Feb. and summer of next year. Deregulation of the markets to allow banks to bundle bad debts in with safe invesments was the construction of the bomb, and forcing Lehman Bros. int bankruptcy, was the detonator for the credit/cash freeze. International monetary regulations is their goal with a single global bank. The New Financial Order. How long this change will effect the sheeple will be determined by actions the governments take and how they are recieved and utilized by the sheeple resistance. Start taking steps NOW, and don''t be surprised IF the dollar collapses.

Now you know, only a fool would not look into this.

[txgrouch2007]

The New Financial Order.
Posted by lochlan at 08:37 AM : Nov 08, 2008

Do a news search on the article from 10/30/2008, entitled "White House Defends Billions to Banks."

Paulson has DIVERTED THE HUNDREDS OF BILLIONS OF DOLLARS to invest it in the STOCK MARKET.

The article doesn''t mention Paulson by name. They coyly refer to him as the "Treasury Secretary," as if they forgot the name of that person. IT''S PAULSON.

There''s your NEW FINANCIAL ORDER.

[ocasanas]

Okay, that''s it. I''m not buying anything else that I don''t need to survive. Good buy to plane tickes, good buy to cable, good buy to another car, good buy to a cell phone, good buy to new clothes, good buy to expensive food, good buy to restaurants, good buy to the movies. I''m going to the library and check out DVDs and books and enjoy them for free. I''m going to use a prepaid phone plan calling only in emergency situations, I''m going to not use a dryer for my clothes, I''m going to buy mostly fruits and vegetables and cook my own food. Good bye economy: it was good while it lasted. So long.

[ocasanas]

Oops, in my previous posting: my "good buys" meant "good byes". I''m going to buy a dictionary (or check it out from the library). Good bye.

[txgrouch2007]

Good bye economy: it was good while it lasted. So long.
Posted by nfclrd at 09:53 AM : Nov 08, 2008

Sounds like you''d enjoy Countryside and Small Stock Journal. It''s a magazine for "off grid" homesteaders. Full of good advice and reports about what works to become self-sufficient on your own land.

They''ve been predicting the demise of the economy for about, oh, FIFTY YEARS now...

[irmcvet97]

This mess is going to take some time to get out of and will without a doubt be very painful. Let''s just commit to ourselves and our children that the NEXT Politician who steps up and wants to take us down the Path of "Trickle Down"? Let''s commit that we will gang up on that low life and ride him right out of town on a RAIL. IT does NOT nor has it EVER worked.

[shyam8]

Old Greenspan needs to shut up and go into retirement. He is the man responsible for this catastrophic meltdown. With setting senility, he might have forgotten!

[amazing_g]

Greenspan, SHUT UP!

[nothappyatall]

Go away Greenspan you are NO LONGER employed you are an *EX* Govt employee, go away we dont need your negativity.

[pvperson]

I''ve always respected Greenspan but his comments aren''t welcome today. He has no real input anymore and his negativism is hurting, not helping. It''s time to shut up Allen.

[bm6005]

Outsourcing is not our problem.

Posted by donbl

When nobody''s working, nobody''e buying MORON. Typical krap from you. You either have an MBA or are just fundamentally stupid! In the past we''ve had mfg. lead us out of recession/depression. They are gone fool!! *** is going to replace them?

[bm6005]

Offshoring''s effects on our job market is not rocket science. There are only so many hamburgers to flip, insurance policies to write, little old ladies life savings to steal, etc.

[omega40]

When nobody''''s working, nobody''''e buying MORON. Typical krap from you. You either have an MBA or are just fundamentally stupid! In the past we''''ve had mfg. lead us out of recession/depression. They are gone fool!! *** is going to replace them?

Posted by bm6005 a


Exactly, look at our last recession which most experts classified as shallow, we had a jobless recovery.

[perk235]

Outsourcing is not our problem.
-------------------
It''s not a problem to the CEOs of the companies that outsource. They make a killing.

However, when our GDP is built on consumer spending, and we don''t make what we buy, then the money flows from the hands of those who spend to those who make the goods.

[bm6005]

Look, I spent more than 40 yrs in mfg. From Auto''s to aerospace to hi tech. Mis-Management by those supposedly in charge of it coupled with reliance on kids wet behind the ears passing themselves off as consultants/experts got us where we are today. Sure they have an MBA but to them an ice cream cone is the same as a car. NOT!! We have done this to ourselves and until we rid ourselves of these "CONsultants who know not of what they speak we will be in t.urd heaven. Bring back those who know *** it is they''re making!!!

[bm6005]

Outsourcing is not our problem.

Posted by donbl

When nobody''''s working, nobody''''e buying MORON. Typical krap from you. You either have an MBA or are just fundamentally stupid! In the past we''''ve had mfg. lead us out of recession/depression. They are gone fool!! *** is going to replace them?