Greenspan: Odds rising for a recession

It's the holiday season and, for this blog, it is like no other holiday season in that there is one gift that just keeps on giving.

Former Federal Reserve Chairman Alan Greenspan will appear on NPR News' Morning Edition tomorrow to once again make another recession prediction and deny any responsibility for the housing bubble.

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 level of growth is subject to all sorts of shocks."
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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.

Either that or the Fed could have made just the feeblest attempt at regulating the mortgage industry to stop people from buying houses they clearly couldn't afford.

Why doesn't some reporter ask him why Ben Bernanke is now stuck having to come up with disclosure guidelines, regulation, and a plan for oversight while at the same time trying to figure out what the heck to do with a bursting housing bubble.