Recent US stock market decline typical of a recovery: Alan Greenspan

Recent US stock market decline typical of a recovery; sees a lot of inherent instability in the euro system: Alan Greenspan

The recent US stock market decline is typical of a recovery, said the former Federal Reserve Chairman, Alan Greenspan in an exclusive interview to CNBC-TV18.

After a weak start on disappointing economic data, US markets closed off its lows yesterday amid some short-covering. Terming the financial crisis as extraordinary and virulent, Greenspan said, “What we are looking at is an invisible wall,
which we have run into here. This essentially is a typical pause that occurs in an economic recovery. I will grant you that this is not a normal economic recovery. We have just come out of what I believe is the most extraordinary and virulent global financial crisis that the world has ever seen.”

He stated that the markets don’t move with economy. “The stocks markets is not merely an indicator, it is a cause of economic recovery. It is not paper profits, but the capital gains themselves have very significant economic consequences. Stocks prices are leading indicators and that means that at turning points, by definition, they don’t move with the rest of the economy.”

He sees a lot of inherent instability in the euro system. “The best way of thinking about that is to recognise that when you

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