From the forecast on subprime meltdown dated Dec. 15, 2006 as the mortgage crisis impacted Europe (Perfect Storm Over Europe Sept. 28, 2007), the mortgage crisis snowballed into the Great Recession of 2008. This is the forecast made on Dec. 15, 2007 as posted on the World Association of International Studies (WAIS)
US: Greenspan Says Odds Rising for Recession (Bienvenido Macario, Philippines) Dec. 15, 2007
Link: http://waisworld.com/go.jsp?id=02a0&objectType=post&objectTypeId=13049&topicId=1
Dec. 15, 2007 Bienvenido Macario writes:
This is a bit of bad news for the US economy. Maybe the private sector could ask presidential candidates how they would each handle the economy if they have been recently sworn in as the president. Unfortunately the media won’t ask this question.
(1)If by March 2008 the private sector has done nothing for themselves, meaning they continue to rely on lowering or holding interest rates at their current level, then we’ll be heading into a recession. (2)The thing is the Federal Reserve Bank officers are not supposed to give direct advice or suggestions to the private sector . (3)TV financial/market news present interviews of guests and analysts, but nothing seems to be done. It makes you wonder if these guests and TV show hosts really know what is going on .
(1) I repeat my reminder: the private sector has three and half months to do something about the impending recession .
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Market Watch 12-13 30 yr fix ave. at 6.11% Thu 12-13-07
Dow 13,517.96 +44.06 + 0.33%
Nasdaq 2,668.49 -2.65 – 0.10%
S&P 500 1,488.41 +1.82 + 0.12%
10 Yr Bond(%) 4.1700% +0.0940
Chart for 10 Yr Bond(%)
See the attached news item from 13 December 2007:
Greenspan: Odds Rising for a Recession
Thursday December 13, 2007
By Jeannine Aversa, AP Economics Writer
Greenspan: Odds of a Recessions Are Rising, Economic Growth Is Getting
Close to ‘Stall Speed’
http://biz.yahoo.com/ap/071213/greenspan_economy.html
WASHINGTON (AP)—Former Federal Reserve Chairman Alan Greenspan says
the odds the U.S. will fall into a recession are “clearly rising” and he believes economic growth is “getting close to stall speed.”
Greenspan, who ran the central bank for 18 1/2 years, until early 2006, offered his views on the economy in an interview on NPR News’ Morning Edition that will air on Friday. Excerpts of the interview were released on Thursday.
A severe slump in the housing market, a stubborn credit crisis and turbulence on Wall Street are endangering the country’s economic health. Growth in the current October through December period is expected to have slowed to a feeble pace of just 1.5 percent, or less.
Economists, including Greenspan, have warned that the chances of a recession are growing.
Asked whether the economy will tip into a recession—something that has not happened since 2001—Greenspan said, “It’s too soon to say, but the odds are clearly rising.”
He said he felt this way because of the slowing pace of growth. “We are getting close to stall speed,” he said. “We are far more vulnerable at levels where growth is so slow than we would be otherwise,” he added. “Indeed, it’s like someone who has an immune system that’s not working very well is subject to all sorts of diseases and the economy at this lever of growth is subject to all sorts of shocks.”
Greenspan’s remarks come just days after the Federal Reserve, under Chairman Ben Bernanke, sliced a key interest rate for a third time this year to prevent the housing and credit troubles from sinking the economy.
The situation poses the biggest challenge yet to Bernanke since succeeding Greenspan in February 2006.
Some analysts have questioned whether Bernanke waited too long to cut the Fed’s key rate and whether he has acted aggressively enough to soothe the economy’s woes. The Fed initially dropped its key rate in September, the first reduction in four years. That was followed up by additional rate cuts in late October and then again on Tuesday.
Greenspan again rejected criticism that his policy actions helped to feed a housing boom that eventually went bust. Critics say Greenspan held interest rates too low for too long after the 2001 recession.
To have prevented such euphoria in housing that fed a bubble in prices, Greenspan said the Fed would have had to jack up interest rates so high that it would have damaged the economy. “That would have broken the back of the economy, and brought the housing boom down,” Greenspan said.
JE comments: I invite comments on November’s inflation figures in the US, which were the worst in three decades. I hope Bienvenido Macario’s forecast of economic doom does not come to pass, but I am very concerned…
—For information about the World Association of International Studies (WAIS), and its online publication, the World Affairs Report, read its homepage by simply double-clicking on: http://wais.stanford.edu/
John Eipper, Editor-in-Chief, Adrian College, MI 49221 USA
This entry was posted on Saturday, December 15th, 2007 at 7:03 pm and is filed under Varia. Both comments and pings are currently closed.
Link: http://cgi.stanford.edu/group/wais/cgi-bin/?p=13049
Update Dec. 16, 2007
Greenspan sees early signs of U.S. stagflation
Sunday December 16, 2007 12:02 pm ET
http://biz.yahoo.com/rb/071216/usa_economy_greenspan.html
WASHINGTON (Reuters) – The U.S. economy is showing early signs of stagflation as growth threatens to stall while food and energy prices soar, former U.S. Federal Reserve Chairman Alan Greenspan said on Sunday.
In an interview on ABC’s “This Week with George Stephanopoulos,” Greenspan said low inflation was a major contributor to economic growth and prices must be held in check.
“We are beginning to get not stagflation, but the early symptoms of it,” Greenspan said.
“Fundamentally, inflation must be suppressed,” he added. (1) ”It’s critically important that the Federal Reserve is allowed politically to do what it has to do to suppress the inflation rates that I see emerging, not immediately, but clearly over the intermediate and longer-term period.”
The U.S. central bank has lowered its benchmark interest rate three times since mid-September as a housing downturn, tightening credit conditions, and steep food and energy prices threaten to push the U.S. economy into recession.
But cutting rates can have the unwanted side effect of pushing up prices, so the Fed finds itself in a tricky position of trying to revive growth without spurring inflation.
Last week, U.S. data showed that wholesale inflation rose at the highest rate in 34 years, while consumer prices rose the most in more than two years.
Greenspan repeated his assessment that the probability of a U.S. recession had moved up toward 50 percent but noted that corporate America’s debt levels were in good shape, which should help cushion the blow from tightening credit terms.
(1) “The real story is, with the extraordinary credit problems we’re confronting, why the probabilities (of recession) are not 60 percent or 70 percent,” he said.
“Because of the decline in long-term interest rates for a protracted period of time, American business was able to fund a significant part of its short-term liabilities and take out low-cost, long-term debt, so the credit needs have not been all that large,” he said.
(News abbreviated)
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Three and a half months later.
(1) Greenspan, on CNBC: U.S. in recession
Tuesday Apr 8, 2008 6:28 PM ET
http://news.yahoo.com/s/nm/20080408/bs_nm/usa_economy_greenspan_dc;_ylt=AkWg._VXjpYSAZeQ7RD3zQhv24cA
WASHINGTON (Reuters) – Former Federal Reserve Chairman Alan Greenspan said on Tuesday the U.S. economy was in recession, and said it would be appropriate to tap public funds to resolve the mortgage-related crisis that has helped pull the economy under. (News abbreviated)
===================================
(1, 2) Bernanke: New Crisis Must Be Stemmed Now
Thursday April 10, 2008 2:21 pm ET
By Jeannine Aversa, AP Economics Writer
Bernanke: Regulators Must Move Ahead to Prevent Next Financial Crisis
http://biz.yahoo.com/ap/080410/bernanke_credit_crisis.html
WASHINGTON (AP) — Federal Reserve Chairman Ben Bernanke said Thursday that regulators must move ahead on ways to prevent a future financial crisis from occurring even as they battle one that threatens to plunge the country into recession.
“We do not have the luxury of waiting for markets to stabilize before we think about the future,” Bernanke said in a speech in Richmond.
Last month Bernanke, Treasury Secretary Henry Paulson and other top economic policymakers called for stricter regulation of mortgage lenders as part of a broad effort to prevent a repeat of the credit and financial problems that have damaged the economy.
(news abbreviated)
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BONUS: Technology Merger & Acquisition Analysis
April 9, 2008 Market Forecast, impact date May 23, 2008
| Date: | Wed, 9 Apr 2008 13:55:47 -0700 |
| From: | “Ned Macario” <ned.macario@gmail.com> |
| To: | “Ned Macario” <ned.macario@gmail.com>, “Bienvenido Macario” <laspinassja@yahoo.com>, “lazir888” <lazir888@yahoo.com> |
| Subject: | Yahoo in talks to use Google search ads: source |
April 09, 2008
This is good. Factor in a drop of the stock market on the third week of May, right around Memorial Day weekend. Most probably on or before Fri. May 23, 2008. It’s the ‘pre-summer’ jitters.
Price of gas at the pumps pretty much will dictate the mood of summer this year.
(E-mail abbreviated)
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Fri. May 23, 2008
Dow 12,479.63 -145.99 -1.16%
Nasdaq 2,444.67 -19.91 -0.81%
S&P 500 1,375.93 -18.42 -1.32%
10 Yr Bond(%) 3.8310% -0.0900
Thur. May 22, 2008
Dow 12,625.62 +24.43 +0.19%
Nasdaq 2,464.58 +16.31 +0.67%
S&P 500 1,394.35 +3.64 +0.26%
10 Yr Bond(%) 3.9210% +0.0990
Wed. May 21, 2008
Dow 12,601.19 -227.49 -1.77%
Nasdaq 2,448.27 -43.99 -1.77%
S&P 500 1,390.71 -22.69 -1.61%
10 Yr Bond(%) 3.8220% +0.0460
Tues. May 20, 2008
Dow 12,828.68 -199.48 -1.53%
Nasdaq 2,492.26 -23.83 -0.95%
S&P 500 1,413.40 -13.23 -0.93%
10 Yr Bond(%) 3.7760% 0.0000
Mon. May 19, 2008
Dow 13,028.16 +41.36 +0.32%
Nasdaq 2,516.09 -12.76 -0.50%
S&P 500 1,426.63 +1.28 +0.09%
10 Yr Bond(%) 3.84% -0.01
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Update: February 20, 2009
(3) Volcker – Even the experts don’t quite know what’s going on 02-20-09
Volcker sees greater international cooperation on regulations growing from economic crisis
Eileen Aj Connelly, AP Business Writer
Friday February 20, 2009, 6:29 pm EST
http://finance.yahoo.com/news/Volcker-sees-crisis-leading-apf-14430040.html
\NEW YORK (AP) — “Even the experts don’t quite know what’s going on.” 3.
Speaking to a number of those experts Friday, Paul Volcker, a top economic adviser to President Barack Obama, cited not only the lack of understanding of the global financial meltdown but the “shocking” speed with which it had spread across the world.
Update: February 09, 2011
(2)Ben Bernanke’s silence speaks volumes 02-09-11
The Federal Reserve chairman offered no policy to address the grotesque juxtaposition of corporate profits and jobless misery
Richard Wolff guardian.co.uk,
Wednesday 9 February 2011 20.49 GMT
http://www.guardian.co.uk/commentisfree/cifamerica/2011/feb/09/ben-bernanke-congress
Time out: question time is up for Ben Bernanke, testifying before the House budget committee, 9 February 2011. Photograph: Reuters/Kevin Lamarque
Federal Reserve Chairman Ben Bernanke’s testimony before the House budget committee on Wednesday largely repeated what he has been saying recently. It was interesting only for its likewise repeated silences which, as so often, spoke loudly. (2) The biggest silence concerned taxing corporations and the rich in the US.
Many sentences were devoted to the burdens of the huge deficits being run by the US government, to the need to reduce those deficits. Otherwise, Bernanke warned, lenders might one day stop providing those immense flows into the US Treasury. But not one word about reducing the deficit by taxing large corporations and the rich.
On Tuesday, Britain’s chancellor of the exchequer announced a modest tax increase on banks in the UK: a “fair contribution”, he said, “to our recovery”. No such idea, let alone any action, in the US.
Instead, we hear pronouncements like Bernanke’s that seem to believe that cutting outlays in the only way to go. The debate then becomes about which outlays to cut.
Bernanke makes clear his preferred cuts lie in healthcare. Note that the US already spends more than other developed nations for poorer healthcare outcomes as measured by national health statistics. Bernanke says nothing about lowering government outlays by reducing the profits of drugmakers and healthcare providers. Nor do the possible impacts of reduced healthcare upon the wellbeing and productivity of the US workforce merit any comment or concern from Bernanke.
It is worth remembering that when the US borrows trillions of dollars to cover deficits, a significant portion of that borrowing comes from the large corporations and richest individuals who lend to the government the money that, apparently, they did not have to pay in taxes to that government. I can see the desirability for them of lending at interest rather than being taxed. The matter looks otherwise from the standpoint of the rest of us.
Silence on taxation of corporations and the rich should be exposed and opposed for the blatant ideological bias it represents.
(2) Another deafening silence concerned the matter of states and cities. Their currently projected cuts in public services and employment will damage education, infrastructure maintenance and countless social services. Their effects will overwhelm the far smaller initiatives that Obama announced in his state of the union message and which will only be realised in part given the split political control of Congress. Like Obama, Bernanke had nothing to say or offer on the dire crisis of state and city budgets.
(2) Last, consider the silence on unemployment. Bernanke did explain that the current rate of job creation, if maintained, would mean many more years of high unemployment. No word was uttered about even the vaguest idea of government job creation – again, a silence, as if that idea or programme did not exist (despite massive evidence to the contrary provided by FDR in the 1930s).
Of course, taxing large corporations and the rich would have its effects on the larger economy, positive and negative. In any rational debate, those effects would have to be weighed and considered against the positive and negative effects of the alternatives, including those used since this crisis began and those now projected. Instead, we have silences from Bernanke and from Obama, silences that close and narrow, rather than open and widen, discussion over the nation’s crisis and future.
== end of paper US: Greenspan Says Odds Rising for Recession updated 02-09-11 ==
Bienvenido Macario
Lemuria
Ancora Imparo
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