Bernanke Must Hate this Guy

He shows up at all the wrong times saying all the wrong things. Some yearn for his return, others are glad he's gone. Ben Bernanke must hate this guy by now.

Like last year's star quarterback returning to the practice field long after he graduated, attracting a crowd and generally causing a commotion, former Fed Chairman Alan Greenspan is talking about the economy again.

According to this report from the Associated Press, he smells a recession coming on.

Greenspan warns of likely U.S. recession
Former U.S. Federal Reserve Chairman Alan Greenspan warned Monday that the American economy might slip into recession by year's end.

He said the U.S. economy has been expanding since 2001 and that there are signs the current economic cycle is coming to an end.


"When you get this far away from a recession invariably forces build up for the next recession, and indeed we are beginning to see that sign," Greenspan said via satellite link to a business conference in Hong Kong. "For example in the U.S., profit margins ... have begun to stabilize, which is an early sign we are in the later stages of a cycle."

"While, yes, it is possible we can get a recession in the latter months of 2007, most forecasters are not making that judgment and indeed are projecting forward into 2008 ... with some slowdown," he said.

Greenspan said that while it would be "very precarious" to try to forecast that far into the future, he could not rule out the possibility of a recession late this year.

The U.S. economy grew at a surprisingly strong 3.5 percent rate in the fourth quarter of 2006, up from a 2 percent rate in the third quarter. A survey released Monday by the National Association for Business Economics showed that experts predict economic growth of 2.7 percent this year, the slowest rate since a 1.6 percent rise in 2002.

Greenspan also warned that the U.S. budget deficit, which for 2006 fell to $247.7 billion, the lowest in four years, remains a concern.

"The American budget deficit is clearly a very significant concern for all of us that are trying to evaluate both the American economy's immediate future and that of the rest of the world," he said via satellite at the VeryGC Global Business Insights 2007 Conference.

Greenspan also said he has seen no economic spillover effects from the slowdown in the U.S. housing market.

"We are now well into the contraction period and so far we have not had any major, significant spillover effects on the American economy from the contraction in housing," he said.

No word of the housing rebound he was yammering on about a month or two ago and apparently no recommendation for the future path of short-term interest rates was offered.

The book tour should kick off in a few months - can't wait.

Barry Ritholtz thinks this may be a good contrary indicator.

Uh-oh: I read something today that all but pushed me into the Bullish camp, nearly cancelled my recession forecast, and almost made me revise my market prediction to Dow 16,000: Former Federal Reserve Chair Alan Greenspan warned that the U.S. economy might slip into recession by the end of the year.

Me?

That picture with his finger pointing has lingered around here just waiting for a good opportunity to be used again.

Memories...