Friday, May 11, 2007

Greenspan behind the curve

I hate to say this, but Alan Greenspan does not understand what is going on in the world anymore when he predicts this:
Further gloom gathered over the US economy today as retail sales lurched lower while former Federal Reserve chairman Alan Greenspan issued a fresh warning that the world's largest economy could be headed into recession.
The world is no longer a collection of regionally independent economies - we are all interdependent. Therefore, the recession predictive indicators of the past no longer apply. In other words, despite all the economic situation that indicated recessions of the past - housing downturn, consumer spending drops - the US economy is not in a recession already. The global economy is growing which is buffering the US from recessionary pressures. The proof is in the stock market and tax receipts, all at all-time highs. This is not to say there are not troublesome trends or that the business cycle is broken. Believing such would be delusional. All I am advocating is a new approach at looking at the global economic factors instead of just US factors. This is why I think Greenspan is behind the curve.

Time will tell.


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