Greenspan Predicts Slowdown Not Recession

“We’re heading towards a slowdown” states Allen Greenspan, former Fed Chief, on a Meet the Press interview today. He followed up commenting “Whether that actually leads to a recession is dependent on things we can’t forecast at the moment.” Greenspan guesses the odds of a recession at less than 50-50 at this time stating that it’s still too soon to state anything for sure. There’s still also significant pressure on home prices that are expected to go down considerably lower.

Greenspan also reiterated to critics that he was not to blame for the U.S. housing bubble that we’re now dealing with. He states that he did not say in 2004 that subprime borrowers should take adjustable rate mortgages. When asked about it back then he stated “When I take out a mortgage, I take out a 30-year fixed-rate mortgage. I was referring to a special, small category of people. But It had nothing to do with subprime.” He also explained that the whole housing boom that we’re currently dealing with is a world problem. More than two dozen nations are experiencing exactly what we’re experiencing right now. This called for a global explanation not for the individual explanation which is what central banks do. This was made obvious to him when they tried to raise the rate in both 2004 and 2005 and failed to affect long-term mortgage rates.