Greenspan Becomes Ornery in Old Age Giving Doom & Gloom Speeches

Greenspan says the U.S. is doing too little to repair the system

Feb. 17 (Bloomberg) — Former Federal Reserve Chairman Alan Greenspan said the U.S. may be doing too little to repair its financial system and promote an economic recovery.

President Barack Obama today signed into law a $787 billion economic stimulus package of tax cuts and increased spending. He has also pledged to use the bulk of the roughly $315 billion left in the bank bailout fund approved by Congress last October to revive the battered financial industry.

“The amount of money in both these pots may not be enough to solve the problem,” Greenspan said in an interview before a speech prepared for today to the Economic Club of New York.

“Given the Japanese experience of the 1990s, we need to assure that the repair of the financial system precedes the onset of any major fiscal stimulus,” he said.

“To stabilize the banking system and restore normal lending, additional TARP funds will be required,” he said.

“Unfortunately, the prospect of stable home prices remains many months in the future,” Greenspan said in his speech. “Many forecasters project a decline in home prices of 10 percent or more from current levels.”

“Certainly, by any historical measure, world stock prices are cheap,” Greenspan said. “But as history also counsels they could get a lot cheaper before they turn.”

“The recent rise of long-term interest rates appears to be signaling market concerns about inflationary pressures,” he said. “It could turn out to be the canary in the coal mine.”