Greenspan Sees US In Or Near Recession: WSJ

Source : The Straits Times, Jan 15, 2008

NEW YORK - THE US economy is probably in a recession or about to slide into it, former US Federal Reserve Chairman Alan Greenspan said in an interview with The Wall Street Journal.

The odds are 'not overwhelming but they are marginally in that direction', he was quoted as saying in the interview, published on Tuesday.

'The symptoms are clearly there. Recessions don't happen smoothly. They are usually signaled by a discontinuity in the market place, and the data of recent weeks could very well be characterized in that manner,' he said.

Mr Greenspan was reported in December as saying that he saw chances of a US economic recession at around 50 per cent, compared with his previous view of a 30 per cent chance.

In the latest interview, he referred to a drop in the Institute for Supply Management's purchasing managers index as well as the rise in unemployment in December, and said the odds of a recession were still close to 50 per cent but 'more likely higher than lower'.

Mr Greenspan is set to join hedge-fund firm Paulson & Co as an adviser, the Journal said.

New York-based Paulson, with assets of US$28 billion (S$40 billion), is set to make the announcement on Tuesday, it said.

Mr Greenspan has been criticised by some for keeping the trendsetting federal funds rate at a low one per cent from June 2003 through June 2004, which some say contributed to a housing bubble that is now bursting.

Paulson & Co was among hedge fund industry's big winners in 2007 after it bet against subprime mortgages. -- REUTERS