WASHINGTON, Sept 7, 2007 (AFP) – Former Federal Reserve chairman Alan Greenspan compares the current financial market turbulence to prior crises that have engulfed stock markets and the US economy, the Wall Street Journal said Friday. Greenspan, who stepped down as Fed chairman in January 2006, compared the present turmoil to prior crises triggered by hedge fund collapses, excessive land speculation and a bank panic, according to remarks cited by the daily.
“The behavior in what we are observing in the last seven weeks is identical in many respects to what we saw in 1998, what we saw in the stock market crash of 1987, I suspect what we saw in the land boom collapse of 1837 and certainly (the bank panic of) 1907,” Greenspan said late Thursday, according to the online report.
The Journal said Greenspan made his remarks at an event hosted by an academic journal in Washington.
The giant Long Term Capital Management hedge fund collapsed in 1998 sparking fears on Wall Street that its implosion and losses could trigger much bigger losses across Wall Street.
The former Fed chief spoke after US and global financial markets have endured weeks of volatility sparked by America’s housing downturn and rising mortgage defaults whi