“I think we are clearly on the edge,” of recession, Greenspan said, placing the odds at “50 percent or better,” but noting that because “business was in such extraordinary good shape before this problem hit,” the unavailability of credit hasn’t yet become a major problem for American business. “We are at stall speed in the United States, but haven’t yet seen the discontinuity that characterizes recession.”

“The break in the credit cycle began with the huge surge in sub-prime mortgage originations” which accounted for 20 percent of home sales in 2005 and 2006, and turned into a market bubble with capital gains being used to finance much consumer spending, according to Greenspan. Now, with the capital gains turning negative and the value of sub-prime securities being marked down, the situation will continue until U.S. housing prices stabilize. “We have a long way to go” before that happens, he said.

Nearly 2,000 attendees participated in presentations and seminars during the week-long CERAWeek 2008 event with many of them listening as Greenspan and Yergin discussed lessons from Greenspan’s best-selling book “The Age of Turbulence.”

Other major parts of the economic outlook reviewed by Greenspan and Yergin included:
Oil prices – High oil prices are “a burden now,” but it’s “quite remarkable” that the U.S. economy is able to do reasonably well with oil prices near historic highs. Displacing a significant part of the nine million barrels per day of gasoline and 2 ˝ mbd of diesel fuel used on American highways to electric “will have a large impact on world petroleum demand.”
Nuclear – Going forward “we are going to have to use nuclear energy.”
Climate Change – “Global warming is real, but its solution is going to be much more difficult than we’d like to admit.”
Cap on Carbon Emissions – “A mandatory cap on carbon emissions risks capping energy inputs into GDP, lowering “production and increasing unemployment.”
Technology – “There’s a presumption that we’ll solve this problem with new technologies. I wish that were true.”
Economic Inequality – “I’m a strong advocate of competitive market capitalism. It’s the only viable system through which societies can produce significant material well being. However, with its increasing required conceptual inputs and technology, income inequality has risen. We cannot have a system, no matter how powerful, that doesn’t have the support of the people.”

CERAWeek 2008 is the annual conference organized by CERA, an IHS company (NYSE:IHS), for senior management, regulators, investors and policy makers involved in all segments of the energy industry and financial community. It was recently ranked as one of the top five senior management conferences in the world.

About CERA (www.cera.com)

Cambridge Energy Research Associates (CERA), an IHS company (NYSE:IHS), is a leading advisor to energy companies, consumers, financial institutions, technology providers, and governments. CERA (www.cera.com) delivers strategic knowledge and independent analysis on energy markets, geopolitics, industry trends, and strategy. CERA is based in Cambridge, Massachusetts, and has offices in Beijing, Calgary, Houston, Mexico City, Moscow, Paris, Rio de Janeiro, San Francisco and Washington, D.C.

About IHS (www.ihs.com)

IHS (NYSE:IHS) is a leading global source of critical information and insight for customers in a broad range of industries. Our customer product and service solutions span four major areas of information: energy, product lifecycle management, environmental and security. By focusing on our customers first, we deliver data and expertise that enable innovative and successful decision-making. Customers range from governments and multinational companies to smaller companies and technical professionals in more than 180 countries. IHS has been in business since 1959 and employs more than 3,000 people in 35 locations around the world