Former Federal Reserve Chairman Alan Greenspan gives the chance of recession less than 50/50—but does believe the probability of one occurring has increased, Reuters reports.
Greenspan said the slowdown in the housing market will “significantly” affect the “wealth effect” but won’t hit consumer spending as dramatically.
“The danger of recession has obviously risen but in my judgment, is still less than 50/50. It’s less optimistic than one would like,” he said.
When asked by BBC Radio if the U.K. housing market could similarly crash, he said it was premature to offer an opinion. “The probabilities have risen, but I’m scarcely at the point where I’m forecasting [that] we’re about to experience significant recessions either in the United States or in Britain,” he said.
Greenspan also said hedge funds were probably “the largest culprit” behind the subprime loan crisis and the resulting market turmoil.
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.