Greenspan policies `may lead to crash'
Monday 27 December 1999
The booming US financial markets face a double threat from an over-heating economy and an unsustainable balance of payments deficit, warned Professor Tim Congdon, of city analysts Lombard Street Research.
The professor, one of the "Wise Men" who advised the then Chancellor Kenneth Clarke, said there was a danger of a Wall Street crash if investors stopped buying American assets. "Sooner or later international investors will refuse to buy [US] assets on a sufficient scale and the longer the current account deficit keeps on widening, the worse the adjustment when it eventually comes," he said. "Mr Greenspan is still being lionised ... but he and his colleagues have mismanaged the boom of the late 1990s. If Mr Greenspan does not take action soon, international investors will have to do it for him."
The Fed signalled last week that it plans to raise rates early in the New Year. The speculation intensified days later after official figures revised third quarter growth to 5.7 per cent from an already meteoric 5.5 per cent.
In a paper published today, Professor Congdon accused US policymakers of "complacency" for not acting sooner when they realised the recovery in domestic and Asian markets was stronger than expected. He said low interest rates had only been justifiable when the US was acting as "consumer of last resort" while the rest of the globe was close to recession.
- 1 Labour rallies behind Flint as deputy leader to offset a Corbyn win
- 2 Katie Hopkins reveals fear she will die during brain surgery to cure epilepsy
- 3 The difference between a psychopath and a sociopath
- 4 Dutch King Willem-Alexander declares the end of the welfare state
- 5 'Cool kids' can go on to become losers in later life, study finds
Katie Hopkins reveals fear she will die during brain surgery to cure epilepsy
Labour rallies behind Flint as deputy leader to offset a Corbyn win
Kim Jong-un is awarded global statesmanship prize by Indonesia
Dutch King Willem-Alexander declares the end of the welfare state
Calais crisis: Migrants that have made it to the UK reveal how Britain has matched their expectations
Yvette Cooper: Our choice is years of Tory rule under Jeremy Corbyn – or a return to a Labour government
Is Britain really full up? Are migrants taking our jobs? Leading academic answers the most common anti-immigration claims
Calais Migrant Crisis: Deputy Mayor of Calais labels Cameron's use of 'swarm' as 'racist' and 'ignorant'
While we fixate on Calais, the Home Office is quietly deporting dozens of migrants on 'ghost flights'
Calais crisis: The seven claims made about the migrants - and the reality
Calais crisis: For desperate migrants it is 'England or death' as they brave dogs, riot police and speeding trains
iJobs Money & Business
£30000 - £35000 per annum: Recruitment Genius: This is an exciting opportunity...
£13000 - £15000 per annum: Recruitment Genius: Are you passionate about custom...
£22000 - £25000 per annum: Recruitment Genius: Main purpose: Under the directi...
£35000 - £37000 per annum + benefits : Ashdown Group: Contracts Manager - City...