The Rat Bastard Speaks: Greenspan Warns Of Likely U.S. Recession

* Cause greatest bubble in recorded human history - check

* Deny you did that - check

* Tell everyone that housing crash has ended - check

* Warn today of a recession but don't say your stupidity was the cause - check

* Go home and admire your Presidential Medal of Freedom - check

Former U.S. Federal Reserve Chairman Alan Greenspan warned Monday that the American economy might slip into recession by year's end.

He said the U.S. economy has been expanding since 2001 and that there are signs the current economic cycle is coming to an end.

"When you get this far away from a recession invariably forces build up for the next recession, and indeed we are beginning to see that sign," Greenspan said via satellite link to a business conference in Hong Kong. "For example in the U.S., profit margins ... have begun to stabilize, which is an early sign we are in the later stages of a cycle."

"While, yes, it is possible we can get a recession in the latter months of 2007, most forecasters are not making that judgment and indeed are projecting forward into 2008 ... with some slowdown," he said.

Greenspan said that while it would be "very precarious" to try to forecast that far into the future, he could not rule out the possibility of a recession late this year.

"We are now well into the contraction period and so far we have not had any major, significant spillover effects on the American economy from the contraction in housing," he said.

Money supply, liquidity, asset bubbles, consumer spending, and the mother of all crashes to come

Man, next you'll hear Bernanke admit that the Fed pumped up money supply and liquidity in order to create a massive housing bubble, which was used to drive consumer spending so as to placate and confuse an American population who had lost their manufacturing base and world competitive position.

But I wouldn't count on it.

Here's the Bank of England last week though, in a stunning admission on their housing bubble cause and effect. What they didn't touch on (yet) is that all asset bubbles deflate, all financial manias die, and all periods of low risk premiums reverse.

Sometimes harshly.

"Investors are likely to take advantage of this ample liquidity and the associated easy credit to purchase other assets, driving risk premiums down and asset prices up," the BoE told parliament’s Treasury Committee on Feb 20th.

"In due course, those higher asset prices may be expected to feed through into higher demand for goods and prices, putting upward pressure on the general price level," the BoE concluded.