Washington – The United States is mired in a “once-in-a century” financial crisis which is now more than likely to spark a recession, former Federal Reserve chief Alan Greenspan said Sunday.
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The talismanic ex-central banker said that the crisis was the worst he had seen in his career, still had a long way to go and would continue to effect home prices in the United States.
“First of all, let’s recognize that this is a once-in-a-half-century, probably once-in-a-century type of event,” Greenspan said on ABC’s “This Week.”
Asked whether the crisis, which has seen the US government step in to bail out mortgage giants Freddie Mac and Fannie Mae, was the worst of his career, Greenspan replied “Oh, by far.”
“There’s no question that this is in the process of outstripping anything I’ve seen, and it still is not resolved and it still has a way to go,” Greenspan said.
“And indeed, it will continue to be a corrosive force until the price of homes in the United States stabilizes.
“That will induce a series of events around the globe which will stabilize the system.”
Greenspan was also asked whether the United States had a greater-than 50 percent chance of escaping a recession.
“No, I think it’s less than 50 percent.
“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.”
The former Federal Reserve chairman also predicted that the financial crisis would see the failure of more major financial institutions, even as embattled Wall Street investment giant Lehman Brothers scrambled to find a buyer.
“In and of itself that does not need to be a problem.
“It depends on how it is handled and how the liquidations take place. And indeed we shouldn’t try to protect every single institution.”
On Saturday, Democrat Barack Obama’s campaign seized on a warning from Greenspan about John McCain’s tax plans to portray the Republican as economically reckless.
In an interview with Bloomberg Television Friday, Greenspan said the nation could not afford 3.3 trillion dollars of tax cuts proposed by McCain without matching cuts in spending.
Greenspan, a long-time friend of McCain and a Republican, said about the Arizona senator’s plans to extend massive tax cuts imposed by President George W. Bush: “I’m not in favor of financing tax cuts with borrowed money.”
McCain has said he would pay for his cuts by ending pet funding projects for US lawmakers’ districts known as “earmarks.”
Mr. Greenspan preached the value of Ayn Rand. He does not explain the philosophy of Ayn Rand advocated Darwinian capitalism, that is survival of the fittest. He is the author of this crisis by removing all financial controls and allowing sharpies to sell phony financial instruments. He made his bundle at he will enjoy how about millions who will lose their income and savings.He is the biggest faker.
Well, Mr Greenspan, you can take mush credit for the current Financial Crisis. IUt began in your time and is a direct result of many of your flawed policies.
Now you are coming out and trying to blame the new people. Where were you when many analysts were screaming for years that this will happen because of your policies?
History will still show that you were the worst person for the position you held for so many years.
Actually, as reported on CNN on Sep. 9, Barack Obama was the 3rd largest receipient of Freddie Mac/Fannie May lobbying money! And he wants to be president?!!! (google news Obama Fannie Mae lobbying and it should come up)
Same is true for Lehman. Mr. Obama was one of its’ biggest receipients
It’s been a recession since 1984 AFAIK
While Alan Greenspan was indeed close to Ayn Rand for many years, and he espoused her philosophy as long as she was alive, he has actually been criticized for deviating from her dogma in his role at the Federal Reserve. It appears that he was more of a classical liberal economist there. His commencement address at Harvard in 1999, at which I was in attendance, was a defense not of Rand’s Objectivism but of traditional American economic principles. Given that Rand’s philosophy and personal lifestyle were each totally contrary to Torah values, we can consider that to be a good thing. Greenspan has been out of office since February 2006 so the current problems can’t be completely blamed on him.
who cares what he says – he caused the market fall with his irrational exhuberance speach. Why dosent he shut up and play golf.
Fannie Mae and Freddie Mac under Greenspan was given a green light to lend.
The Clintons installed all the management in both institutions – and those appointees got VERY RICH on their mismanagement with multi-million dollar bonuses..
Where are the congressional hearings and where are the federal prosecutors???
Why should we taxpayers get stuck with the bills while the incompetents walk away wealthy – they should be jailed and prosecuted like Tyco or Enron.
DOOMSAYER
Mr. Greenspan may not have been a true follower of Ayn Rand but he knew that wall street shoved aside transparency. The fact is that the Treasury more than ever is indebted to petro dollars and China and has lost its indpendent maneuvaribility on the world financial market all for the greed of some of the individuals.
This entire problem is because of Barack Obama.
let greenspan shut up !!!!!! he caused this and all problems economcly …
Greenspan is now a monday morning quarterback on his own losing game, nice where can I sign up for that job. To be fair he is not entirely to blame. Some (read: Most)of the blame belongs to the wonderful Mr. and Mr. Clinton’s for their poor decision making, as well as the Bush administration for not being proactive enough in attempting to prevent some of the issues from occuring. Having said that I do not bleive the crisis is as bad as is being portrayed in the media and I do believe this country can weather it.
Now he speaks ! While at Fed you could not get any clear message of what was going on. It was a joke that they called it Fedspeak. It was his fault that we are in this mess since Fed had the power to control mortgage lending.
He should just keep his mouth shut.