The Greenspan Precision: "A 42.35 Percent Chance"

Alan Greenspan was up to his usual tricks at the World Business Forum in New York this morning. He garnered a few laughs, imparted plenty of wisdom, and lulled a few of the 5,000 executives in attendance to sleep during his 75-minute talk.

Perhaps the biggest laugh came not because of Greenspan's clever wit, but because of a technical glitch. About 15 minutes into his talk, the moderator asked the question that everyone asks the former Federal Reserve chairman these days: What are the chances of a recession?

Greenspan reminded us that he put the likelihood of recession at about a third earlier this year, but he's revised his forecast. "I put the chance of recession in the next six to nine months at --."

As if on cue, his microphone cut out.

The audience laughed, but Greenspan seemed initially unaware of the technical failure, and he continued speaking. When the moderator interrupted him to tell him his words were no longer being broadcast, Greenspan quipped, "What, you don't like that spread?"

He told the audience he was recently asked to clarify his forecast, to which he responded that he believes there is a 42.35 percent chance the U.S. economy will fall into recession.

In general, Greenspan believes the worst is not yet behind us, because the fallout from the housing market and the credit crisis has not yet been fully felt by consumers. As housing prices continue to fall, people will be forced to cut back on their spending. The rate of economic growth will continue to slow into the first quarter of next year, he predicts.

Greenspan, who has been making the rounds in recent weeks to promote his memoir, didn't deliver much in the way of news. The territory has been well trodden of late: The coming fiscal problems from the aging baby boomers, the waning significance of central banks around the globe, the inability to forecast human behavior, the remarkable growth of China, and of course, the smart lessons from Ayn Rand.

by Megan Barnett