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Former Federal Reserve Chairman Alan Greenspan said on Tuesday the U.S. economy was in recession, and said it would be appropriate to tap public funds to resolve the mortgage-related crisis that has helped pull the economy under.
Greenspan went farther than the Fed has by saying outright that the economy is in a recession, although he said it is too soon to say how deep or prolonged the downturn will be.
"Consumers are beginning to shrink in, the automobile markets are beginning to contract, production is beginning to ease, and we are in the throes of recession," he said.
The U.S. economy will not stabilize until housing markets recover, Greenspan said. To speed that process, the Bush administration should look to the 1980s savings and loan crisis for lessons on settling the crisis by committing taxpayers' money to the project.
"I think if you're going to deal with a situation like this it's an issue for appropriated funds of the Treasury to set up something like the Resolution Trust Corporation, which as you remember was very successful in resolving the S&L crisis," Greenspan said.
The Bush administration so far has adamantly refused to commit public money to help settle a housing crisis in which millions of Americans are expected to lose their homes through foreclosure.
Originally posted by biggie smalls
I've been saying this for months. We're in some deep trouble here in the US. Foreign countries/companies will only prop the economy up for so long.
After that, fire sale time, oh boy. We'll be able to buy corporations for $1 a share...(see Bear Stearns deal originally set for $2 a share, but later moved up higher not to piss of the shareholders so much).
Better start stockpiling now, the crap is hitting the fan.