Alan Greenspan: U.S. running out of buffer in economy; Stocks to see significant correction.
In an interview with Bloomberg’s Betty Liu, former Federal Reserve Chair Dr. Alan Greenspan said the U.S. is “running out of buffer in economy,” “lacks fiscal resources,” and has “no way to find new revenues.”
Greenspan said equity markets will see a decline at some point after surging for the past several years,
“The stock market has recovered so sharply for so long, you have to assume somewhere along the line we will get a significant correction.”
Greenspan went on to say:
Sees near-term economic momentum continuing.
‘Key question’ is whether U.S. faces false dawn.
‘Open question’ whether inflation will surprise.
‘Concerned economy may hit ‘upside resistance.’
‘We have a lot of uncertainty out there.’
Equity premium is ‘closer to normal.’
Predicts at some point equities to have correction.
Oil market has excess capacity, slack.
Without Middle East tension oil prices would fall.
Not at point where taper will turn around.
Sees problem moving toward ‘normalized’ policy.
Fiscal policy may put status of dollar at risk.
Source: Bloomberg Television
full transcript available upon request to BBG.