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To: stockfiend who wrote (840)	5/23/2007 6:00:46 PM
From: SouthFloridaGuy	Respond to of 1718

MADRID (Reuters) - Former U.S. Federal Reserve Chairman Alan Greenspan said on Wednesday he feared a "dramatic contraction" in Chinese stocks but said the global economy may be able to shrug off a drop in asset prices. ADVERTISEMENT Addressing a meeting in Madrid via teleconference, Greenspan said the recent boom in Chinese stocks could not last. "It is clearly unsustainable," he said "There's going to be a dramatic contraction at some point." Greenspan also said a correction could cause problems for Chinese personal wealth. Some analysts have speculated that the Chinese government could be tempted to dip into its reserves to bail out any stung investors and avoid social unrest. Greenspan, who stood down as Fed governor last year, said cheap Chinese imports were one of the elements stoking world growth, along with Eastern European workers and the knock-on effects on lower inflation and rates. "In the last five years, the world as a whole is a growing faster than at any time in the world's history," he said. "It can't last and it won't last because it's a one-shot adjustment." Greenspan said asset prices around the world could fall but that the economy may escape unscathed if it were flexible enough to absorb asset price shocks. "We will get major declines in certain levels but it need not feed back significantly to levels of employment or the real economy," he said. Earlier this month, Greenspan reiterated that he believed there was a one-third chance the U.S. economy, the world's largest, would slip into recession this year. On Wednesday, he said the United States had no problem financing its current account deficit. "I am ... not particularly concerned about the current account deficit per se. I think that is essentially a market force," he said, adding that the budget deficit worried him more. Asked about oil prices, which rose strongly last year and were around $70 a barrel on Wednesday, Greenspan said: "The problem of crude oil is not that we're peaking or running out of oil, we're not, the problem of oil is access." He saw difficulties ahead for world energy markets over coming years if geopolitical issues continued to plague major suppliers and investment remained at insufficient levels.

To: stockfiend who wrote (840)	5/23/2007 10:51:27 PM
From: John Vosilla	Respond to of 1718

'This discussion was about the effect of inflation and/or perception of inflation on corporate and government debt and how it moves the market' Sorry mistook what you guys were actually talking about. No doubt credit and inflation risk premiums for debt are quite low across the board and asset values stretched to higher multiples to cash flow as a result.. I guess if you listen to enough suits at the controls in DC and on Wall Street you would think we were in a low inflation environment. Obviously most that control vast sums of money have bought into that mantra and thus risk premiums are non existent...