Alan Greenspan says “prepare for the worst”!

Alan Greenspan says the party’s over on Wall Street.

The former Federal Reserve chairman who famously warned more than two decades ago about “irrational exuberance” in the stock market doesn’t see equity prices going any higher than they are now…

❝ The former chairman also warned that the United States may be poised for a period of stagflation, “a toxic mix” when the economy suffers from high inflation and high unemployment. The last time the country experienced such an episode was in the 1970s and early 1980s.

“How long it lasts or how big it gets, it’s too soon to tell,” said Greenspan. “We’ll know it when we get on top of it.”

Hardly any economist of note expects the US to escape from the Trump swamp without a recession. How big and exactly when covers the range of every guess you might conjure up. Surely ain’t getting past Election Day 2020.

BTW, Greenspan will be a guest on Bloomberg’s coverage of the FOMC meeting, tomorrow, the 19th. I doubt Tom Keene will miss the chance to ask tough questions.

10 thoughts on “Alan Greenspan says “prepare for the worst”!

  1. Alfred E. says:

    “The Dow fell more than 350 points, a day after an unusual statement by Treasury Secretary Steven Mnuchin, who convened a series of calls on Sunday with the CEOs of the country’s biggest banks.” (CNN) https://www.cnn.com/2018/12/24/investing/stock-market-today-dow/index.html “Mnuchin said the executives assured him their banks are healthy and have “ample liquidity” to lend to consumers and businesses. “Markets continue to function properly,” he said.”
    …why is the Treasury Secretary saying everything’s okay – is the country on the brink of another financial crisis?
    “What Was Steve Mnuchin Thinking? Three Possibilities” (The Atlantic) https://www.theatlantic.com/ideas/archive/2018/12/whats-behind-steve-mnuchins-press-release/578968/
    Meanwhile: “White House Budget Director Mick Mulvaney on Sunday echoed the comments of Treasury Secretary Steven Mnuchin that Donald Trump doesn’t think the U.S. president has the authority to fire the head of the Federal Reserve.” (TIME) http://time.com/5487722/mulvaney-president-trump-federal-reserve-chairman/ “Trump has made no public comments about a Bloomberg News report late Friday that he’d discussed firing the Fed’s Jerome Powell after the latest interest rate hike by the central bank under Powell’s stewardship.”

  2. Red Queen says:

    Treasury Secretary Steven Mnuchin could be in “serious jeopardy” with President Donald Trump, CNN reported Wednesday, citing a source close to the White House. That comes after Mnuchin’s Sunday tweet saying he had convened a meeting of chief executive officers of the largest U.S. banks, which was blamed in part for the worst-ever Christmas Eve session of trading on Wall Street.
    Mnuchin’s statement was posted while he was vacationing in Mexico during the government shutdown. The banks did not independently verify Mnuchin’s characterizations of the discussion.
    In comments to reporters in the Oval Office on Christmas Day Trump praised U.S. companies and said their lower stock prices present an opportunity for investors. “I have great confidence in our companies. We have companies, the greatest in the world, and they’re doing really well. They have record kinds of numbers. So I think it’s a tremendous opportunity to buy.”
    https://www.marketwatch.com/story/trump-increasingly-frustrated-with-treasury-sec-mnuchin-cnn-2018-12-26

  3. All part of The Plan says:

    “It’s not going to be just Apple,” a weirdly gleeful Kevin Hassett, who chairs Trump’s Council of Economic Advisers, told CNN on Thursday. “There are a heck of a lot of U.S. companies that have a lot of sales in China that are basically going to be watching their earnings be downgraded” thanks to the effect of Trump’s trade war on China’s economy, he said, a point echoed by Pantheon Macroeconomics’s chief economist Ian Shepherdson, who described the situation as “awful, [with] worse to come.” But rather than follow up his dire forecast for U.S. companies with an announcement that Trump had finally been convinced his battle with Beijing is a self-defeating exercise that is hurting American interests, Hassett explained that a state of events in which the president’s policies are destroying corporate profits and dragging down the stock market is exactly where the White House wants to be. “China is feeling the blow of our tariffs,” Hassett declared, failing to mention, like his boss, that said tariffs are essentially paid by U.S. consumers. Ergo, claimed the man who wrote an entire book, published on the eve the dot-com bubble burst, that predicted the Dow would hit 36,000, “that puts a lot of pressure on China to make a deal. Their economy, for them, you might call a ‘recession.’ It’s slowing down in a way that they haven’t seen in a decade.” (Vanity Fair 1/3/19) https://www.vanityfair.com/news/2019/01/trumps-top-economic-guru-we-are-screwed

    • "Hundreds of percent" says:


      (Jan 4, 2019) “In a press conference at the White House this afternoon, U.S. President Donald Trump weighed in on Apple’s recent revenue woes, suggesting the company will “be fine” despite its downgraded Q1 2019 guidance.
      When asked about Apple’s announcement and its potential impact on the U.S. economy, Trump erroneously said that Apple has “gone up hundreds of percent” since he’s been president. “Apple was at a number that was incredible and they’re going to be fine. Apple is a great company,” Trump said. https://www.macrumors.com/2019/01/04/trump-apple-earnings-downgrade-comments/ Apple has not, of course, seen a “hundreds of percent” increase in its stock price, with the number instead at around 20 percent since Trump’s January 2017 inauguration. Trump went on to say that he’s unconcerned about Apple because its devices are made “mostly in China,” seemingly blaming that fact for Apple’s financial issues. He also once again reiterated that should Apple move its manufacturing to the United States, and suggested he’s friends with Apple CEO Tim Cook.” (pictured)

  4. Cassandra says:

    (Feb 14, 2019) U.S. retail sales recorded their biggest drop in more than nine years in December as receipts fell across the board, suggesting a sharp slowdown in economic activity at the end of 2018. https://www.reuters.com/article/us-usa-economy-retail/weakest-u-s-retail-sales-since-2009-cast-pall-over-economy-idUSKCN1Q31XG “December’s collapse in retail sales and other data showing an unexpected increase in the number of Americans filing claims for unemployment benefits last week and a second straight monthly decline in producer prices in January support the Federal Reserve’s pledge to be “patient” before raising interest rates further this year.”
    (Feb 12) A record 7 million Americans are 90 or more days behind on their auto loan payments, according to a study from the Federal Reserve Bank of New York. That number is a million higher than the total at the end of 2010, a time when unemployment rates hit 10% and “delinquency rates were at their worst” notes the Fed. http://fortune.com/2019/02/12/americans-late-on-car-payments/ See also “Can subprime auto loans crash the financial system?” (2015) http://fortune.com/2015/01/13/subprime-auto-loans/ “once a car is repossessed, the account is no longer delinquent — thus, delinquency rates fall while repossession rates skyrocket. Repossession rates must therefore also be considered.”

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