GREENSPAN’S PREDICTION.

GREENSPAN’S PREDICTION. Alan Greenspan is reported to have said that there is a 33% chance of a recession this year. People have noted that Greenspan when he was Chairman of the Federal Reserve had been famous for cryptic utterances that did not have precision. As I have said before, I am in favor of probabilistic predictions. Now that Greenspan is in private life, perhaps it is natural for him to speak in probabilistic terms. What is striking is his reasoning. Greenspan is famous for the large number of economic variables he follows and consults in forming his opinions. He seems to say that the principal reason for his prediction is that we are in the sixth year of a recovery and that imbalances can emerge as a result–an argument that somebody much less sophisticated might come up with.