Wednesday, March 07, 2007
Former Federal Reserve Chairman Alan Greenspan said there's a "one-third probability'' of a U.S. recession this year and the current expansion won't have the staying power of its decade-long predecessor.But he wouldn't want his opinion to be a problem for current Fed chair Ben Bernanke.
"We are in the sixth year of a recovery; imbalances can emerge as a result,'' Greenspan, 81, said in an interview yesterday at his office in downtown Washington. "Ten-year recoveries have been part of a much broader global phenomenon. The historically normal business cycle is much shorter'' and is likely to be this time, he added.
Greenspan said he has been careful to avoid making life difficult for his successor. ...
"I was aware of the problem that if I stayed public, I could make it difficult for Ben," he said. "For the most part it has worked. I was beginning to feel quite comfortable that I was fully back to the anonymity I was seeking."
"I was surprised at this recent episode," he added.
...Greenspan said he doesn't believe that so-called point forecasts, where economists hone their outlook down to decimal points, can be accurately made in the near-term. "We really can't forecast'' the economy over the next two years, he said.
You know, I could agree with that, except that the Fed he ran gave such forecasts for all of his time as chair and I don't recall him mentioning this during that time. And I don't believe he dislikes the limelight; telling audiences that there can be no recordings drives up the value of his quotes in the press, and gives him the ability to backtrack. As Jeremy Warner says, he seems hellbent to create as much mayhem in the markets as possible.
There's much ado later in the article about his iconoclastic style of forecasting -- he looks at individual industries rather than aggregated data, because the latter averages out important movements. But does he do better than the rest of us? Forecasting sensitive industrial commodity prices has been around almost as long as the field of macroeconomics. It's hardly a new story.
(h/t: Steve Verdon.