Former Fed chairman says recession likely

Feb. 15, 2008 at 8:30 AM
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CAMBRIDGE, Mass., Feb. 15 (UPI) -- Former U.S. Federal Reserve Chairman Alan Greenspan said the U.S. economy has more than a 50 percent chance of sliding into recession.

Commenting at the Cambridge Energy Research Association's annual meeting of oil industry executives in Massachusetts, Greenspan said the chance of a recession is "50 percent or better," The Dallas Morning News reported.

Greenspan, who led the Fed from 1987-2006, said the economy was cushioned by capital gains that preceded the current mortgage crisis and said corrections in the housing market had "a long way to go." The housing market would start to stabilize when the accumulated inventory of new homes is sold, he said.

He offered two solutions. If the United States opened doors to skilled immigrants, he said, they would compete for high-paying jobs and create more income equality. He also advocated for nuclear power.

Greenspan said U.S. companies are spending money on energy efficiency and the cap on greenhouse gases contemplated by the U.S. Congress would divert capital and lead to unemployment.

The answer to that is nuclear power, Greenspan said.

"I don't think there's been enough discussion about what we mean by cap," Greenspan said in the Morning News article. "There's a presumption, well, that we'll solve every problem by new technology. I wish that were true."

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