Word: greenspan
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Dates: during 1970-1979
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Savings Outflow. In consequence, says Economist Alan Greenspan, "we are in for a massive hemorrhaging of [funds from] the thrift institutions," as depositors shift their money into higher-yielding investments. This process is known as "disintermediation," and there are some signs that it already has begun. The U.S. Savings and Loan League estimates that in April S and Ls suffered a savings outflow of $350 million, v. a net inflow of $831 million in April 1973. Ultimately, the process could bring home construction to a virtual standstill by drying up mortgage money, and could threaten the solvency of the thrift...
Though no one really expects them to go under, Greenspan fears that the Federal Reserve, working through the Federal Home Loan Bank Board, may have to step in "to prevent actual bankruptcies" by bailing out shaky S and Ls. To Otto Eckstein, the lesson of the danger is that "it is impossible for the U.S., with its present economic system, to live with double-digit inflation...
...though the economists predicted some slowing of price increases, few saw any chance of bringing the rate for the full year below 10%. Greenspan predicts that retail prices will go up 10.4% for the year, making 1974 "the first calendar year of double-digit inflation since 1947." Eckstein frankly states that he can see "nothing but disaster" this year on the inflation front. He expects the consumer price index to rise 11.1% for the year and the wholesale price index to leap an incredible 17%. For length and severity, says Eckstein, the current U.S. inflation has already become the worst...
...Greenspan projects a nearly invisible rise of two-tenths of 1 % in real output for the year. The unemployment rate has dropped slightly in the past two months, to 5%, but several of the economists view that as a statistical aberration and expect the rate to rise again to a peak...
...price of Persian Gulf crude now stands at $10.50 to $11 per bbl., nearly triple the price a year ago. Alan Greenspan, a member of TIME's Board of Economists, expects a drop of about $1 or $1.50 per bbl. by year's end. Philip Verleger Jr., an energy expert at Data Resources, Inc., would not be surprised if the price falls $2. A Nixon Administration economist looks even farther: "I calculate a $4 drop in oil from the Persian Gulf by 1976." Any of these scenarios would leave prices far enough above the pre-embargo level...