Arguably, Greenspan warns against the results of actions that he took when he was the Federal Reserve Chairman.
The economic crisis that Alan Greenspan warns about isn’t really surprising to conservatives, libertarians, or anyone else who is economically literate. But it is noteworthy that a person who is thoroughly enmeshed in the establishment is admitting to the coming economic bust. Furthermore, he acknowledges that this might be comparable to the recession of the seventies. I don’t know if all the details of Bloomberg’s analysis are accurate, but he is surely right in predicting a crash.
Bloomberg reports, “No Bubble in Stocks But Look Out When Bonds Pop, Greenspan Says.”
“By any measure, real long-term interest rates are much too low and therefore unsustainable,” the former Federal Reserve chairman said in an interview. “When they move higher they are likely to move reasonably fast. We are experiencing a bubble, not in stock prices but in bond prices. This is not discounted in the marketplace.”
“The real problem is that when the bond-market bubble collapses, long-term interest rates will rise,” Greenspan said. “We are moving into a different phase of the economy — to a stagflation not seen since the 1970s. That is not good for asset prices.”
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