Greenspan: 2007 Mirrors Worst Recessions

by: SA Eli Hoffmann

"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.

Sources: Wall Street Journal, Reuters
Commentary: A Careful Look At The Recession ScareStrategists Hold Year-End S&P 500 Price Targets Steady

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