Greenspan Warns of Possible Recession

**RodFarlee** · 02-28-2007, 01:49 PM

Wall Street Journal, Feb 26 07:

"Former U.S. Federal Reserve Chairman Alan Greenspan said Monday 'The American budget deficit is clearly a very significant concern for all of us that are trying to evaluate both the American economy's immediate future and that of the rest of the world,' and warned the American economy might slip into recession by the end of the year.

"'We have extraordinarily low risk premiums now. Risk is no longer perceived as major risk, at least as it was in years past and that, I must say, I find disturbing,' he said. 'We do not and cannot look into history without being very concerned when you see the absence of awareness and concern about risk that we see today.'"

Note: "Risk" = low yields on corporate junk bonds, overpriced stock market (historic highs in P/E ratios), subprime mortgages (undercapitalized lenders and borrowers), derivatives trading, etc., etc., the list is long.

**RodFarlee** · 02-28-2007, 02:14 PM

New York Times, Feb 28 '07:

"The nation’s manufacturing sector managed to slip into a recession with almost nobody seeming to notice. Well, until yesterday.

"Wall Street was caught off guard when the Commerce Department reported yesterday morning that orders for durable goods — big items like home computers and factory machines — plunged almost 8 percent last month. That’s a big number, but it really shouldn’t have come as too much of a surprise. ...this time, the manufacturing downturn stems from a couple of larger economic problems. One, of course, is the housing slump...

"Is it possible that we’re headed for a real recession?

"For months now, the economy seemed to shrug off the forces weighing on it and just kept on growing. But those forces never went away. If anything, a number of them have gotten stronger... interest rates... financial sector... inflation... the economy is facing bigger risks than we imagined just a few weeks ago."

That "R" word again. It seems all the bulls have turned to bears in the last month.

**jabm67** · 02-28-2007, 06:14 PM

Hasn't there been an inverted yield structure recently -- the last few months -- where long-term rates were lower than short-term rates? That condition has almost always been followed shortly by a recession.

Curious George · 02-28-2007, 06:47 PM

Well hear is my 2 cents on the deal . manufacturing has not been good since 2001 I know because I work in it . three things that year stock market went bust Enron an 9/11.
Then we have the flood of outscoring that nobody wants to control just open the flood gates an Walla . in Minnesota as of 04 or 05 there was 350 + manufacturing shops metal fab ,machine shops that went out of business . now most of these jobs are not 8, 9 dollar jobs, they are people who can afford a house an had some sort of health ins. the worker at a bare minn. With opp for his family . then there is ford closing down . you loose the assembly employees an the manufactured parts. 3m hardly makes anything in the state or country anymore . even northwest airline got rid of 2000 mechanics to have there Plaines serviced outside the country. this is just in Minnesota. but I see it happening around the country, you can not loose these that many well paying jobs an replace them with
Wal-Mart, Menards or home depot jobs , you also can only build so many houses
Before you have more houses than Byers. The other thing that hurt the economy is oil.
The price can go up. but not to much to fast . people only have so much money each month . an when they can’t do what they do (ie spend money all around the economy )
An one sector gets it , it hurts all the economy. An will drag it all down. So with that all
Said I do see the economy doing better but when I have no clue . I have seen the outsourcing trend reversing an that is good. I see other countries becoming larger consumers an that will help . I don’t think we will see a rescission like in early 80
High unemployment an high interest rate.

02-28-2007, 01:49 PM	#1 (permalink)
RodFarlee American Join Date: Jan 15th, 2007 Posts: 345	Greenspan Warns of Possible Recession Wall Street Journal, Feb 26 07: "Former U.S. Federal Reserve Chairman Alan Greenspan said Monday 'The American budget deficit is clearly a very significant concern for all of us that are trying to evaluate both the American economy's immediate future and that of the rest of the world,' and warned the American economy might slip into recession by the end of the year. "'We have extraordinarily low risk premiums now. Risk is no longer perceived as major risk, at least as it was in years past and that, I must say, I find disturbing,' he said. 'We do not and cannot look into history without being very concerned when you see the absence of awareness and concern about risk that we see today.'" Note: "Risk" = low yields on corporate junk bonds, overpriced stock market (historic highs in P/E ratios), subprime mortgages (undercapitalized lenders and borrowers), derivatives trading, etc., etc., the list is long.

02-28-2007, 02:14 PM	#2 (permalink)
RodFarlee American Join Date: Jan 15th, 2007 Posts: 345	A Recession That Arrived on Cats’ Paws New York Times, Feb 28 '07: "The nation’s manufacturing sector managed to slip into a recession with almost nobody seeming to notice. Well, until yesterday. "Wall Street was caught off guard when the Commerce Department reported yesterday morning that orders for durable goods — big items like home computers and factory machines — plunged almost 8 percent last month. That’s a big number, but it really shouldn’t have come as too much of a surprise. ...this time, the manufacturing downturn stems from a couple of larger economic problems. One, of course, is the housing slump... "Is it possible that we’re headed for a real recession? "For months now, the economy seemed to shrug off the forces weighing on it and just kept on growing. But those forces never went away. If anything, a number of them have gotten stronger... interest rates... financial sector... inflation... the economy is facing bigger risks than we imagined just a few weeks ago." That "R" word again. It seems all the bulls have turned to bears in the last month.

02-28-2007, 06:14 PM	#3 (permalink)
jabm67 Member Join Date: Jan 16th, 2007 Location: Seattle, WA Posts: 173	Re: Greenspan Warns of Possible Recession Hasn't there been an inverted yield structure recently -- the last few months -- where long-term rates were lower than short-term rates? That condition has almost always been followed shortly by a recession.

02-28-2007, 06:47 PM	#4 (permalink)
Curious George Banned Join Date: Jan 08th, 2007 Location: Minnesota Posts: 1,028	Re: Greenspan Warns of Possible Recession Well hear is my 2 cents on the deal . manufacturing has not been good since 2001 I know because I work in it . three things that year stock market went bust Enron an 9/11. Then we have the flood of outscoring that nobody wants to control just open the flood gates an Walla . in Minnesota as of 04 or 05 there was 350 + manufacturing shops metal fab ,machine shops that went out of business . now most of these jobs are not 8, 9 dollar jobs, they are people who can afford a house an had some sort of health ins. the worker at a bare minn. With opp for his family . then there is ford closing down . you loose the assembly employees an the manufactured parts. 3m hardly makes anything in the state or country anymore . even northwest airline got rid of 2000 mechanics to have there Plaines serviced outside the country. this is just in Minnesota. but I see it happening around the country, you can not loose these that many well paying jobs an replace them with Wal-Mart, Menards or home depot jobs , you also can only build so many houses Before you have more houses than Byers. The other thing that hurt the economy is oil. The price can go up. but not to much to fast . people only have so much money each month . an when they can’t do what they do (ie spend money all around the economy ) An one sector gets it , it hurts all the economy. An will drag it all down. So with that all Said I do see the economy doing better but when I have no clue . I have seen the outsourcing trend reversing an that is good. I see other countries becoming larger consumers an that will help . I don’t think we will see a rescission like in early 80 High unemployment an high interest rate.