BT: Greenspan says odds against US recession 2 to 1 (11 May 2007)

Greenspan says odds against US recession 2 to 1

SINGAPORE - Former US Federal Reserve Chairman Alan Greenspan said on Friday that the odds against a recession in the United States were now 2 to 1.

Participants of a Merrill Lynch forum in Singapore cited Greenspan as saying that global economic growth would help mitigate any slowdown in the US economy but China's trade imbalances would be hard to correct as long as it keeps the yuan artificially low.

'He said the odds against a recession were now 2 to 1,' said Spencer White of Thien Viet Securities, who participated in the conference.

The former central bank chief was speaking to a Singapore audience via a satellite link from Washington.

Mr Greenspan roiled markets in February after he said it was possible the US economy might fall into recession by the end of the year. He later said he saw a one-third chance of a recession.

Mr Greenspan's comments stand in sharp contrast with those of Ben Bernanke, the Fed's current chairman, who has downplayed the risk of a recession in the United States.

Another audience member, who declined to be identified, said Mr Greenspan spoke of the resilience of the US financial markets, which would help to soothe investor worries over a possible Chinese selldown of its vast US treasury holdings.

Mr Greenspan said that the fundamental reason for the yen carry trade -- borrowing the low-yielding currency to invest in high-yielding assets -- was the ultra-low Japanese interest rate. -- REUTERS

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