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To: orkrious who wrote (180525)	7/16/2002 9:49:33 PM
From: maceng2	Read Replies (2) \| Respond to of 436258

US recovery on track, says Greenspan Alan Greenspan: Accounting scandals nearly over US Federal Reserve chairman Alan Greenspan has told the Senate that the US economy is set to recover despite recent stock market volatility. "The fundamentals are in place for a return to sustained healthy growth," Mr Greenspan told the Senate Banking Committee. Mr Greenspan added that a recent wave of accounting scandals that has swept through corporate America, triggering a slump in global share prices, is nearly over. "With profitable opportunities for malfeasance markedly diminished, far fewer questionable practices are likely to be initiated in the immediate future," he said during his twice-yearly speech to the Senate Banking Committee. Mr Greenspan's remarks come as gloomy investor sentiment on Wall Street is weighing heavily on equity markets worldwide. Stockmarket jitters US and European share prices were lower on Tuesday, extending sharp losses over the past two weeks. An infectious greed appeared to grip much of our business community Alan Greenspan The rush to sell shares reflects concerns over the reliability of corporate financial statements following revelations that energy trader Enron and telephone company Worldcom may have deliberately exaggerated their earnings. Mr Greenspan blamed the accounting scandals on the stock market boom of the late 1990s, which led to an "outsized increase in opportunities for avarice". "An infectious greed seemed to grip much of our business community," he told the committee. The Fed chairman recommended "very stiff penalties" for corporate bosses who mislead investors over their company's financial position. "Fraud and deception are thefts of property," he said. Soothing words There are growing fears that the latest stock market slide, now in its second week, could derail the global economy's stop-start recovery from last year's downturn. The slump in US stocks has weakened the dollar against other currencies, with the euro climbing to parity against the greenback for the first time in over two years on Monday. Mr Greenspan provided some reassurance, saying that the US economy had "held up remarkably well" to the stock market slump, thanks in part to strong consumer spending. He added that the economic recovery is likely to be gradual, hinting that the US Federal Reserve may keep interest rates on hold at their current 40-year low of 1.75% until there is firmer evidence of a turnaround. The Fed on Tuesday revised its 2002 US growth forecast to 3.5 - 3.75%, up from its previous forecast of 2.5 - 3%. Investor gloom Shareholders hope that Mr Greenspan's speech will revive confidence in stock markets. The main US stock market indexes edged slightly higher while Mr Greenspan was speaking, but remained firmly in negative territory. Mr Greenspan's speeches have triggered sharp share price rallies in the past, but there are signs that investor gloom may be more difficult to dispel on this occasion A speech from US President George Bush aimed partly at reassuring the markets had little effect on Monday. news.bbc.co.uk