Greenspan: Dark Days Ahead for the Global Economy
Posted on Mar 17, 2008
Those hoping for better news about the state of the U.S. economy—not to mention the bigger picture—aren’t going to hear it from former Fed chair Alan Greenspan anytime soon, judging by his ominous forecast released Monday.
“The current financial crisis in the US is likely to be judged in retrospect as the most wrenching since the end of the Second World War,” Greenspan said in a Financial Times commentary.
“It will end eventually when home prices stabilise and with them the value of equity in homes supporting troubled mortgage securities,” he said, referring to the meltdown in the US subprime home loan market and subsequent massive losses for the banks holding the debt instruments.
“The crisis will leave many casualties,” he said, his remarks coming after Bear Stearns, the fifth largest US investment house collapsed Friday and was taken over by JPMorgan Chase for a fraction of its value of only a week ago.