Bloomberg News

Greenspan Says Aversion to Long-Term Risk Impeding U.S. Growth

October 26, 2011

Oct. 26 (Bloomberg) -- Former Federal Reserve Chairman Alan Greenspan said a significant reluctance to take on risk is inhibiting the U.S. recovery.

“If you look at the slope of the yield curve,” it shows “the sharpest level of forward discounting on long-term assets,” exceeding the rate in the 1930s, Greenspan said today at the Buttonwood conference in New York.

“The fundamental problem is an extraordinary aversion to taking longer-term risks,” especially in the construction of housing, he said. The share of households choosing to rent rather than own homes also underscores the risk aversion, he said.

--Editors: James L Tyson, Brendan Murray

To contact the reporter on this story: Caroline Salas Gage in New York Csalas1@bloomberg.net

To contact the editor responsible for this story: James Tyson at jtyson@bloomberg.net


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