Greenspan says US economy has stalled

Greenspan says US economy has stalled

Alan Greenspan also said that dropping the Gulf dollar peg would ease inflation. (1)

Hence,
the Gulf Cooperation Council (GCC) foreign ministers are to meet on Saturday, March 1, to discuss continuing pegging their currencies to the dollar (2),
the next OPEC meeting being scheduled for Wednesday, March 5

See also my reactions under
�Iran central bank to receive US punishment�
http://www.bignewsnetwork.com/forum/showthread.php?p=68856

Ivo Cerckel

ENDNOTES

(1)
Greenspan: Dropping Gulf Dollar Peg Would Ease Inflation
Monday, Feb. 25, 2008
JEDDAH/ABU DHABI
http://moneynews.newsmax.com/money/archives/articles/2008/2/25/085005.cfm
Former Federal Reserve Chairman Alan Greenspan said on Monday near-record Gulf Arab inflation would fall “significantly” were the oil producers to drop their dollar pegs, in contradiction to Saudi policy.
+
Saudi and UAE central bank chiefs spoke in favour on Monday of retaining dollar pegs, while QATAR’s prime minister advocated regional currency reform to avert possible unilateral revaluations designed to curb inflation.

(2)
GCC foreign ministers council to meet Saturday
http://www.kuna.net.kw/home/Story.aspx?Language=en&DSNO=1074112
RIYADH, Feb 25 (KUNA) — The ministerial council of Gulf Cooperation Council (GCC) foreign ministers will hold their 106 meeting in the Saudi capital, Riyadh, under QATAR’s chairmanship on Saturday March 1.
In a press statement on Monday, GCC Secretary-General Abdulrahman Al-Attiyah said this meeting held much significance as it will take place after the 28th GCC Leaders Summit in Doha which included announcing the establishment of the GCC’s common market.
While saying discussions will include regional and international developments, he added that the meeting’s sidelines will include a forum between GCC foreign ministers with their Yemenite counterpart as part of supporting development projects in Yemen. (end) ay.
ayh

Greenspan: drop dollar pegs and inflation will fall

Russia quietly prepares to switch some oil trading from dollars to rubles
By Andrew E. Kramer
Published: February 25, 2008

http://www.iht.com/articles/2008/02/25/business/place.php
http://www.iht.com/articles/2008/02/25/business/place.php?page=2

SNIP from page 2
Alan Greenspan, the former Federal Reserve chairman, said Monday that high inflation in Gulf states would fall “significantly” if the oil producers drop their dollar pegs, Reuters reported from Jeddah, Saudi Arabia.
The pegs restrict the ability of governments in the Gulf to fight inflation by forcing them to shadow U.S. monetary policy at a time when the Fed is cutting rates to ward off recession, while Gulf economies are surging on a near five-fold jump in oil prices since 2002. The central bank chiefs of Saudi Arabia and the United Arab Emirates spoke Monday in favor of retaining dollar pegs, while Qatar’s prime minister advocated regional currency reform to avert possible unilateral revaluations designed to curb inflation

Greenspan doin' some back-peddlin'...
:rolleyes:
Greenspan glum on US economy
Tuesday, 26 February 2008, Federal Reserve ex-head Alan Greenspan warns that the US economy could see a deep contraction.

]
The former chairman of the US central bank Alan Greenspan has warned that US economic growth has stalled and a quick recovery is not likely. “As of right now US economic growth is at zero," he said, adding the longer it stayed this way the greater the risk of a deep recession. Wall Street giants Goldman Sachs and Merrill Lynch have both forecast that the US economy will contract in 2008.

The US Federal Reserve has said 2008 growth will be between 1.3% and 2%. The forecast, made last week, was half a percent lower than the Fed’s previous estimation. The gloomy outlook was blamed on falling house prices, reduced bank lending, turmoil in the financial markets and higher oil prices.

More gloom?

Mr Greenspan also predicted that booming oil prices, which reached a record of more than $101 last week would keep rising and that the US housing market would see more misery before the tide turned. On Monday, figures from the National Association of Realtors showed US house prices fell 4.6% to $201,100 (£106,691), while inventories rose.

This adds to the drumbeat of bad news for consumers, including higher unemployment, more expensive fuel costs and higher credit card repayment costs and raises worries about their ability to spend and prop up the world’s largest economy. Increased globalisation of trade could offset a sharp downturn in consumer spending and “facilitate the absorption of shocks in the US," Mr Greenspan said.

[url=http://news.bbc.co.uk/2/low/business/7264135.stm:
Foreign investors[/url]

Bush Says No Recession; Economists Differ...
:confused:
Bush Says US Not Headed Into a Recession
WASHINGTON Feb 28, 2008 - Bush Says Country Is Not Recession-Bound Despite Expressing Concern About Slowing Growth

]
President Bush said Thursday the country is not recession-bound and, despite expressing concern about slowing economic growth, rejected for now any additional stimulus efforts. “We acted robustly," he said. “We’ll see the effects of this pro-growth package," Bush told reporters at a White House news conference, acknowledging that some lawmakers already are talking about a second stimulus package. “Why don’t we let stimulus package 1, which seemed like a good idea at the time, have a chance to kick in?"

Bush’s view of the economy was decidedly rosier than that of many economists, who say the country is nearing recession territory or may already be there. “I’m concerned about the economy," he said. “I don’t think we’re headed to recession. But no question, we’re in a slowdown." The centerpiece of government efforts to brace the wobbly economy is a package Congress passed and Bush signed last month. It will rush rebates ranging from $300 to $1,200 to millions of people and give tax incentives to businesses.

On one issue particularly worrisome to American consumers, there are indications that paying $4 for a gallon of gasoline is not out of the question once the summer driving season arrives. Asked about that, Bush said “That’s interesting. I hadn’t heard that. ... I know it’s high now." Bush also telegraphed optimism about the U.S. dollar, which has been declining in value. “I believe that our economy has got the fundamentals in place for us to ... grow and continue growing, more robustly hopefully than we’re growing now," he said. “So we’re still for a strong dollar."

More [url:
http://abcnews.go.com/Politics/wireStory?id=4361751[/url]

See also:

Oil Doubles in Year Amid Weak Dollar
Feb. 28, 2008 - Oil Doubles Price in a Year; Oil Closes at $102.59 a Barrel Thanks in Part to the Falling Dollar

]
Crude prices rebounded Thursday, shooting up more than $2 a barrel to another new record as a falling dollar and the prospect of lower interest rates attracted fresh money to the oil market. A pair of dismal economic reports Thursday drew more money into the oil market, as did Federal Reserve Chairman Ben Bernanke’s comments that the economy is not immediately threatened with stagflation, a combination of economic weakness and rising inflation. The Commerce Department said gross domestic product grew at only a 0.6 percent rate in the fourth quarter, below estimates and at only a fraction of the previous quarter’s growth rate, while the Labor Department said applications for unemployment benefits rose by 19,000 last week, more than expected.

Rather than viewing such news as bad for oil demand, investors chose to see it as confirmation of their beliefs that the Fed will continue cutting interest rates to try to shore up the U.S. economy. Interest rate cuts tend to weaken the dollar, and crude futures offer a hedge against a falling dollar. Also, oil futures bought and sold in dollars are more attractive to foreign investors when the greenback is falling. “I really think that this is oil being viewed as ... a financial instrument," said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago.

Light, sweet crude for April delivery rose $2.95 to settle at a record $102.59 a barrel on the New York Mercantile Exchange. Prices continued rising after the Nymex closed, setting a new trading record of $102.97. Crude prices are within the range of inflation-adjusted highs set in early 1980. A $38 barrel of oil then would be worth $97 to $104 or more today, depending on the how the adjustment is calculated. A direct comparison with daily Nymex prices is difficult because historical data, gathered before the crude futures contract was created in 1983, are based on average monthly prices posted by oil producers.

[url=http://abcnews.go.com/Business/Economy/story?id=4361309&page=1:
MORE[/url]

Buffett Speaks: U.S. Is in a Recession...
:eek:
Buffett: US Essentially in Recession
Mar 3, 2008 - Buffett Says US Economy Essentially in a Recession, Expects Rough Ride for Insurers in 2008

]
Billionaire Warren Buffett said Monday that the U.S. economy is essentially in a recession even if it hasn’t met the technical definition of one yet. Buffett said in an interview with cable network CNBC the reports he gets from the retail businesses his holding company owns show a significant slowdown in purchases. The chairman and CEO of Omaha-based Berkshire Hathaway Inc. said millions of people have also lost equity in their homes because home prices have dropped.“I would say, by any commonsense definition, we are in a recession," Buffett said on CNBC.But Buffett said it’s not clear how far the recession will go because that is difficult to predict.

The technical definition of a recession most economists use is two consecutive quarters of negative growth in the nation’s gross domestic product. On Thursday, the Commerce Department reported that the gross domestic product increased at a low 0.6 percent pace in the quarter that ended Dec. 31. In the July-September quarter, the economy grew at a brisk 4.9 percent. Gross domestic product measures the value of all goods and services produced in the United States and is the best barometer of the country’s economic health. A survey released last week by the National Association for Business Economics showed that 45 percent of economists are predicting a recession in 2008.

But Buffett said the U.S. economy will be fine in the long run. “Over time, my children are going to live better than I do, although they don’t believe it," Buffett said. Buffett’s appearance on television came on the heels of his annual letter to shareholders, which he released Friday along with Berkshire’s 2007 financial report. In the letter, Buffett predicted that the insurance industry will see lower underwriting profit margins in 2008 because premium prices are down, and the industry’s luck will certainly change.

More [url:
http://abcnews.go.com/Business/Economy/wireStory?id=4377284[/url]