Greenspan: 2007 Mirrors Worst Recessions

"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 Scare • Strategists Hold Year-End S&P 500 Price Targets Steady

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Comments

[fg144331:]

As in most things, the MEDIA keep churning and churning all the news
and the 'what ifs'. Just let the news die on its own. We've heard
enough about the housing problem, now stop reading about it and
move on to something else.

2007 Sep 07 11:06 AM

[No Name or ...:]

Shame on you for using misleading and alarmist headlines. The quote merely states that the behavior of investors mirrors recessions, not that market conditions, the economics, or anything else does. He is merely saying that when stocks go down, people get worried, and stocks go down further. Duh. By using an alarmist headline, you suggest that this is much worse than it really is. Why do reporters have to sensationalize the news?

2007 Sep 07 01:07 PM

[David Roskoph:]

Everyone puts Al in the "dottering old economist" file because he has sounded the alarm a bit too early. He has seen more than a few ecnomic cycles and he is free to say what he could not say when he wore the mantle. Why do we arrogantly think we are somehow more sophisticated now; immune to the temporary lunacy of the moment? The shame to me is that the Federal Reserve hasn't learned to temper the Animal Spirits, that lead to economic excesses, any better with time and experience.

2007 Sep 07 01:32 PM