WASHINGTON - Former Federal Reserve chairman Alan Greenspan said Sunday the US economy has a better than evens chance of beating a recession but warned that a housing slowdown could hit spending hard. "We're heading for a slowdown," he said on NBC in the latest television appearance to publicise his new memoirs, "The Age of Turbulence: Adventures in a New World."
"My own guess is the odds are less than 50-50 that we're heading to a recession, but there is no question we've got significant pressure on home prices, which I expect to move down quite considerably lower," he said.
"And that will curtail the net housing wealth of the American household, and history tells us that causes some weakness. It's too soon to call this one really."
Greenspan's memoirs lay out explosive charges such as that President George W. Bush was driven to overthrow Iraqi leader Saddam Hussein in a large part by a lust for Iraq's oil.
He also accuses Bush of abandoning the Republican party's traditional fiscal restraint through failing to veto "out-of-control" spending by Congress.
On the oil question, Greenspan told NBC that his concern was rather that Saddam was trying to seize control of the entire region and could use the resultant wealth to acquire a nuclear weapon.
"Having him out of power was critical to me," whether by an internal coup or by war, he said.
Greenspan defended his own conduct in arguing for the record tax cuts promoted by Bush after the president took office in 2001, despite now castigating the Republican over fiscal responsibility.
"I could give you a long list of things on which I have strong views. Nothing happened. So all of a sudden I become this powerful force in moving policy," he said.
In 2001, Greenspan said, he was afraid that the United States was on course to eliminate its national debt, which would have left "huge holdings of private assets by federal government and for reasons I explain in the book, that is a very bad idea."
When Bush went back to Congress for further multi-billion-dollar tax cuts, Greenspan said that he still supported them despite the US budget by then having slipped into deficit.
But he said he stressed to members of Congress that they would have to cut their spending to match the tax cuts.
"I did change my view. It wasn't in 2007. It was a lot earlier than that."
Greenspan denied that he bore partial responsibility for the imploding US housing bubble by keeping interest rates too low when he oversaw the Fed.
"With the whole housing boom, we're dealing with a world problem. In fact our housing boom is less than the average. This clearly calls for a global explanation, not just an individual explanation," he said. - AFP /ls
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