Greenspan expects at least 50% possibility of US recession

Berlin: The likelihood of the US economy slipping into recession is at least 50 per cent, former Federal Reserve Chairman Alan Greenspan was quoted yesterday as saying.

"I believe the probability of a recession is at least 50 per cent, but up to now there are few signs that we are already in one," Green-span said in an interview with weekly newspaper Die Zeit. "In my opinion, it will probably happen but the facts suggest we are not there yet."

Asked whether central bankers and financial policymakers could head off a US recession, Greenspan said: "Probably not. Global economic influences today are stronger than almost anything that monetary or fiscal policy can counter them with."

"Long-term real interest rates have significantly more influence on the core of the economy than decisions by national governments," he added. "And central banks have increasingly lost the ability to influence these long-term rate."

Debate

Meanwhile, an economic stimulus package worth an estimated $150 billion aimed at shoring up faltering US growth cleared the House of Representatives on Tuesday, but faced more debate in the Senate.

The bill, which came from a compromise between the White House and bipartisan leaders in the House, won approval by a margin of 385-35.

The measure calls for tax rebate cheques sent to households in an effort to stimulate consumer spending along with business tax breaks.

President George W. Bush praised House members and urged the Senate to quickly follow suit without tinkering with the bill.

But Senate leaders on Monday proposed their own version of an economic stimulus programme.