Friday, June 13, 2008

Greenspan Says Financial Markets Show `Pronounced Turnaround'

Greenspan Says Financial Markets Show `Pronounced Turnaround'


June 13 (Bloomberg) -- U.S. financial markets, roiled by the collapse of the subprime-mortgage market, have shown a ``pronounced turnaround'' since March, former Federal Reserve Chairman Alan Greenspan said today.

The worst is over for the credit crisis, or will be soon, and there's now a ``reduced possibility'' of a deep recession, the former Fed chairman said in remarks via satellite to a conference in Mexico City. He added that he has a ``sense'' that tax rebates have helped retailers.

Greenspan's remarks echo the assessment of Fed Chairman Ben S. Bernanke this week, who said that danger of a ``substantial downturn'' in the economy had receded. Economists surveyed by Bloomberg News this month indicated a smaller likelihood of a recession compared with May.

Still, the persistent slump in the housing market is putting ``major downward pressure'' on the economy, said Greenspan, who served as Fed chairman from August 1987 to January 2006.

A government report yesterday showed that retail sales in May rose 1 percent, twice as much as economists had forecast, as consumers spent the federal tax rebates from a fiscal stimulus plan. Consumer spending grew at a 0.9 percent annual pace during the first quarter.

Greenspan said housing remains a ``critical problem'' and financial markets may not recover fully until home prices stabilize, ``perhaps by the end of the year.''

ΒLOOMBERG

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