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. 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.
What does this mean? It has been less than a century since the Great Depression. Speaking of depressing, how about today's news from Wall Street?:
In one of the most extraordinary days in Wall Street's history, Merrill Lynch is near an 11th-hour deal to avert a deepening financial crisis while another storied securities firm, Lehman Brothers, hurtled toward liquidation, according to people briefed on the deal.The dramatic turn of events was prompted by the cataclysm of losses that has shaken the American financial industry over the last 14 months.
The moves came after a weekend of frantic negotiations between U.S. government officials and Wall Street executives over how to avert a downward spiral in the markets. Questions still remain about how the market will react and whether other firms may still falter like AIG, the large insurer, and Washington Mutual, both of whose stocks fell precipitously last week.
Coming just a week after the government took control of mortgage lenders Fannie Mae and Freddie Mac, the magnitude of the industry's reshaping is staggering: two of the most powerful firms on Wall Street, Merrill Lynch and Lehman, will disappear.
I have no idea what this means. Ye who do -- Pyrrho, I'm looking at you -- please explain what we have to look forward to.
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Lord Karth,
All good questions, but I'll have to respond sometime this evening. I'll be up late communicating with people in Tokyo. In the meantime, I have to figure out what I'm going to tell them.
But quickly, I agree in general with everything you say in your posts prior to mine above but think it is a subset of the overall problem.
More later.
The blood is on Greenspan's hands; I don't know what he is complaining about. His policies were at least partially instrumental in getting this going - along with the "ownership society" rhetoric *by Republicans,* with "loan everyone money whether they qualify or not."
And we have the unedifying sight of Greenspan quoted in the MSNBC crawl saying the country "can't afford another Republican administration" while his wife sits on a panel for MSNBC explaining in very careful chosen, loaded words that Palin "is no reformer" and implying that she's a liar and opportunist.
Even if you could somehow convince me that Mitchell isn't biased against McCain-Palin (and that explanation would have to account for the obvious deep sorrow she showed as the crowd responded to Palin's acceptance sppech and again the next night before she drowned in GOP balloonage), how can no one at NBC/MSNBC not sniff a smell test problem as their lead political correspondent does damage control in tandem with a spouse? Greenspan has plenty of reason to want to make the economic failures we're working through today an entirely Republican problem, when his work in a Democrat administration and the Democrat Congressional resistance to repair work can and should be laid in some part at his door.
LK,
I have a full day of stress testing ahead of me, and I'm both stressed and testy. I'll have to return to lurker mode for the time being. We'll take these issues up again at a later day, I'm sure.
Pyrrho @ 8:46 AM writes:
"I have a full day of stress testing ahead of me, and I'm both stressed and testy. I'll have to return to lurker mode for the time being. We'll take these issues up again at a later day, I'm sure."
Having been through stress testing myself, I must say that I sympathize. By all means take care of your business.
Some later day we will address this business. Hopefully without GETTING the business from some of the more....shall we say "colorful" characters who hang about this place. :-)
Your servant,
Lord Karth
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