"The behavior in what we are observing in the last seven weeks is identical in many respects to what we saw in 1998, what we saw in the stock-market crash of 1987, I suspect what we saw in the land-boom collapse of 1837 and certainly [the bank panic of] 1907," Former Federal Reserve Chairman Alan Greenspan told a group of economists Thursday night in Washington. Economic expansion, Greenspan said, is driven by euphoria, while contraction is driven by fear. The two polars, he said, don't act similarly: "The expansion phase of the economy is quite different, and fear as a driver, which is going on today, is far more potent than euphoria." Greenspan told the group that euphoria-lead economic bubbles can not be remedied by Fed interest rate hikes: "The human race has never found a way to confront bubbles," he said.
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