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Alan Greenspan Declares "Worst Economic Crisis" He's Seen

Alan Greenspan Declares "Worst Economic Crisis" He's Seen

How's your piggy bank? That piggy's a little lean according to crystal ball-owning, former Reserve Chair, Alan Greenspan. He made an appearance on This Week with George Stephanopoulos yesterday, and forgot to bring his sunshine and puppies. He said that the current economic climate is “by far” the worst one he has ever seen. And if that wasn’t worrying enough, he added: “There’s no question that this is not resolved and it still has a way to go.”

This view does contradict an earlier statement when asked what the chances of a recession would be, the then starry-eyed optimist answered, “... I think it is less than 50 percent.” He has since changed that opinion noting on his latest appearance “...let’s recognize that this is a once-in-a-half-century, probably once-in-a-century type of event.” Probably most worrisome about that comment is that Mr. Greenspan was alive during the Great Depression. Oh.

To see Greenspan's predictions for the future,


As for specifics regarding the banking industry, the Former Reserve Chair also believes that the future will see more financial institutions fail, although could not comment on the latest victim, Lehman Brothers. Overall he did seem that the situation did mirror a natural selection process when remarking on the fate of some institutions over others: “...indeed we shouldn’t try to protect every single institution. The ordinary course of financial change has winners and losers.” Let's keep our fingers crossed for more winners.


yesteryear yesteryear 9 years
personal accounts are insured by FDIC (up to $100k), investments by SIPC (up to $500k - but only $100k in cash). but the operative word here is "insured". meaning, you have to file a claim and wait 1 to 3 months to get your scrilla. i have all of my money in a local credit union - something i did years ago to remove myself from the corporate banking world that i find to be so disgusting (bank of america and wells fargo being the worst). credit unions are also insured by FDIC, plus they are small, have better interest rates, everyone knows your name, and they are co-op, nonprofit organizations. meaning, everyone who is a member is also a shareholder in the bank. i get dividend payments from my savings account every quarter!
popgoestheworld popgoestheworld 9 years
mmm, I guess there were 5 major investment banks, only two of which are left. Bear Stearns, Merrill & Lehman are toast, leaving Morgan Stanley and Goldman Sachs. Of course there are more major banks (and other investment banks). But as part of the original big 5, there is intense scrutiny (obviously) of MS and GS given the financial situation of the others. I'm leaving all my money where it is and unless you have > 200,000 in a single bank I think others can do the same.
Michelann Michelann 9 years
Another problem with taking your money out of the bank and just sitting on it is that in a real economic crisis, or depression, the dollar will lose all it's value. If you've been overseas recently, you know too well that it's already starting to lose value.
mymellowman mymellowman 9 years
Yanking your money out of the bank will decrease liquidity in the market and will further economic problems. If the banks do not have the access to the cash from their customers, it could (if people pull their money out collectively) crash banks and push us further into a recession/depression. Out of curiosity, is there a particular bank that you ladies are concerned about? I also don't understand why people are saying there are only 2 major banks left. That is grossly incorrect, even if only speaking of US Banks.
Now, forgive me, if any of my novel was incorrect, or mis-stated, as I am not a financial expert.
Le Etiana, I have the same type of question. Like, I know my bank is in trouble right now, it's in the news! Should I leave my money in the bank until they go under? I understand my money is insured by the FDIC, but does that mean I will still have access to money immediately after my bank collapses? Or, will I have to wait until they send me a check (which I'm sure will not be a fast process)? I can't wait a month for my money, I won't have the money for gas to get to and from work... Also, I agree with both arguments above. I think the false positives created when the Federal Reserve cut interest rates (over and over) has a lot to do with our financial situation now. Everytime the interest rate was cut, was right after the markets were falling. The next day after the rate was cut, the markets were stabilized. I also, believe that money hungry real estate agents and lenders hold a lot of the blame. These people pushed borrowers into their loans, because as long as they sell a home, they get the commission. It doesn't affect their commission if that loan is never repayed. They already have their money. I think a lot of first time buyers were taken advantage of. My brother just recently bought a new home, and luckily he's in good shape. But, the whole process of getting the loan was just wack! My mom told my brother when he started looking, a real estate agent won't give you a loan you can't afford. That's how it was 20 years ago. If they knew it couldn't be repayed, they weren't giving you the money. They were not going to give a loan to someone that couldn't provide proof of income...
outofhere outofhere 9 years
Okay, all I want to know is this. Should I be yanking out all my money from my local bank and putting it under my mattress?
popgoestheworld popgoestheworld 9 years
ilinac I have an account with one of the two left as well. I don't know if your situation is different than mine, but if you own stocks or funds through them, the stocks you own wouldn't go bankrupt - just the company that manages them. Like if they're managing your portfolio which includes coke and pepsi, you won't lose the money invested in coke and pepsi because you own those stocks. I'm not certain this is the case so someone please feel free to correct me. But it's helping me stay calm thinking about it in those terms...
ilanac13 ilanac13 9 years
with how fast things change, i think that he probably believed what he was saying about the chances of a recession being less than 50%. i think that we all would have bought into that a few months ago when the mortgage crisis wasn't so bad and when the federal reserve wasn't working to bail out banks and the sort. now to see what happened today, it makes EVERY scared for the safety of any of their money/retirement funds. knowing that there are 2 major banks left standing - well it's a scary thing. i have accounts with one of them, and i don't know what to do. this isn't a recession - this is far worse since it's such an uncertain time. when someone like greenspan doesn't know exactly what to say about the future or even the present - it makes everyone just a bit jittery and that's going to make the market drop even more and crisis will ensue i'm sure.
organicsugr organicsugr 9 years
I think it looks good snowbunny.
snowbunny11 snowbunny11 9 years
Oh I don't have time to read all these comments but, I believe John McCain, the economy is "fundamentally sound." Like, seriously what the hell, why wouldn't Alan Greenspan just believe McCain? Mich- I like your avatar! Torg- Mine is still red too, because apparently I don't have photoshop anymore(!?) and spent like way too much time trying to figure out how to change it in other programs.
Michelann Michelann 9 years
Haha, Torg, don't worry I'll probably change my avatar soon. I was just having some fun.
popgoestheworld popgoestheworld 9 years
I don't think organic supports them either, torg :)
True-Song True-Song 9 years
Okay, I know some people were confused by the liberal dots, but I am really having to pay attention with Organic's and Michelin's red circle logos. I honestly was just like, "Wait, Mich supports an increase in capital gains taxes...wha...?"
popgoestheworld popgoestheworld 9 years
Mich, you may be right. I admit I don't know enough about the intricacies of these current economic problems to know if letting it ride would in fact be better off for all of us. If so, then I'd be all for it. The interesting thing to me is how global in scope the problems are now. If we fail, will other markets will fail too? I also think that it's a bit much to blame this all on Bush, in the same way it's a bit much to give Clinton credit for the dot com boom.
mymellowman mymellowman 9 years
Here's a question for everyone: If the Fed hadn't bailed out Bear Sterns, do you believe that Lehman Brothers would be declaring Chapter 11 today?
mymellowman mymellowman 9 years
Mich doesn't need me as a mentor. She is quite capable of schoolin' ya'll without my help. :)
Michelann Michelann 9 years
Pop, like I was saying earlier, government intervention (ie bailing people out) is part of the reason the Great Depression lasted so long. It will only prolong a collapse and make it worse in the long run.
yesteryear yesteryear 9 years
yeah pop - your last sentence sums it up nicely. no one WANTS to do this, but the alternative is pretty grave.
popgoestheworld popgoestheworld 9 years
This is the fault of individuals and it's also a fault of banks. They were absolute idiots to write the loans they did, knowing full well they would not be paid back. Both the individuals and the banks made bad decisions, and now they're all paying for it. But, we're all going to pay for it, too. I hate the idea of bailing these idiots out. I hate the idea of a Great Depression worse though.
Michelann Michelann 9 years
Sorry YY, that one just didn't tickle my funny bone. I guess all this time spent alone in my cabin in the woods has eroded my sense of humor.
yesteryear yesteryear 9 years
michelin where is your sense of humor?? it's a well known fact that libertarians live in cabins and write out conspiracy-laden manifestos in tattered composition books... right?
MarinerMandy MarinerMandy 9 years
If you're waiting for people to behave themselves, you are going to be waiting a LONG time. I believe it was John Adams who said, "If men were angels, government would not be necessary."
Michelann Michelann 9 years
Borrowers should not agree to loans when they know they won't be able to pay if their interest rates rise. They should not take loans if they don't have a steady income. They should not agree to loans based solely on a salesperson's word that they'll be able to refinance free and clear. Furthermore, they should not take a loan with the expectation of refinancing. I could list a dozen more unethical borrowing practice. The fact is that both parties had a choice, and they both took risks. The Federal Reserve, however, did not give the banks a choice. Their artificially low interest rate made borrowers think they could afford homes they could not.
liliblu liliblu 9 years
Lenders should not loan to people they know will be unable to pay when their interest rates rise. They should not give loans to people without verifying their incomes. They should not give loans with the promise to refinance while not diclosing the prepayment penalty that will make them unable to refinance. i could list a dozen more shady practices lenders have used in the last few years.
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