Greenspan faults Democrats on trade, sees slowdown

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WASHINGTON, Sep 23 (Reuters) Former Federal Reserve Chairman Alan Greenspan today faulted Democrats, including presidential candidate Sen. Hillary Clinton, for moving away from former President Bill Clinton's embrace of globalization.

''They're taking positions, which he as president veered away from,'' Greenspan said on NBC's ''Meet the Press,'' speaking about Democrats and a possible White House under Hillary Clinton, who polls show as the Democrats' front-runner.

Asked how Democrats today were different from the party Bill Clinton led, Greenspan responded; ''The whole area of trade ... is a very critical issue, because it's not only the issue of trade.

''It refers to the globalization, and how one views what is the driving force in this world, which creates prosperity.'' Greenspan has been making extensive public appearances to promote his memoir, ''The Age of Turbulence,'' which was published last week. The book has drawn attention for its criticism of the fiscal policies of President George W Bush.

Speaking about the US economy, Greenspan renewed his assessment that there is a somewhat less than 50 per cent chance of a recession.

''We're heading towards a slowdown.'' he said. ''Whether that actually leads to a recession is dependent on things we can't forecast at this moment ... But there is no question that we've got significant pressure on home prices.'' The National Association of Realtors estimated earlier this month that the national median sales price for proponed homes should drop 1.7 per cent this year, while the median new-home price should fall 2.2 per cent.

In a separate interview, he said further declines in US house prices are likely to pare back consumer spending, a significant driver of economic growth.

''This will inevitably leave its traces in consumption because a big part of private spending is financed not from income but from assets bought on credit,'' Greenspan said in Germany's Frankfurter Allgemeine Sonntagszeitung newspaper.

In his memoir, Greenspan praises former President Clinton for erasing the federal budget deficit and for pursuing trade liberalization. In an interview last week, Greenspan called Clinton ''the best Republican president we've had in a while.'' Greenspan said on ''Meet the Press'' today that he is uncertain whether an administration headed by Hillary Clinton would bear the same centrist stamp as the former president.

The former Fed chair, who describes himself as a ''libertarian Republican,'' has said he believes the Democratic Party's recent skepticism about trade is a move in the wrong direction.

Democratic-elected officials have this year said they detect a souring of many Americans on globalization. Fast-track trade authority legislation that would have smoothed the way for international trade agreements died in Congress earlier this year.

''The globalization issue is one that is menacing to many,'' House of Representatives Speaker Nancy Pelosi, a California Democrat, has said.

REUTERS AB RN2346

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