Last week, Former Federal Reserve Chairman Alan Greenspan’s comment that the United States was headed for a recession sent markets tumbling and Federal Reserve Chairman Ben Bernanke scrambling to assure investors the economy was strong.
It appears as if the maestro is not yet willing to relinquish his baton. Last Monday, Greenspan — known as “maestro” because of his mastery of international and domestic markets — made the bearish comments to investors at a business conference in China. The next day, the Dow Jones industrial average finished down 416 points — or 3.3 percent — at 12,216.24, its worst one day loss since 2001.
This prediction and the sharp Dow losses had Bernanke — who just two weeks ago told lawmakers the economy was strong — back on Capitol Hill to assure that a recession was not on the horizon. On Monday, other federal reserve officials in Washington reiterated Bernanke’s comments, saying growth expectations has not substantively changed. Greenspan backed off his original comments later in the week, saying a recession was possible, not probable. And while analysts believe his original statements were not the only factors in the drop — Asian markets plunged Tuesday morning — they didn’t help investor confidence.
“I think we’ll still need some time to figure out the current market weaknesses,” Farr, Miller and Washington President Michael Farr said. “Greenspan, [stock losses in] China, worries about what’s going on globally, especially in the currency market” all contributed to recent losses.
