Stagflation Jitters Sink Stocks

Greenspan: 50-50 chance of recession
By Jonas Oransky,  Newser Staff
Posted Dec 17, 2007 3:29 PM CST
Fed Cuts Interest Rate For Third Time   (Getty Images (by Event) Individuals)
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(Newser) – The markets resumed last week’s downward spiral today, with the Dow diving 172.65 to 13,167.20 despite typically buoying news of major deals. The Nasdaq slid 61.28 to 2,574.46 and the S&P closed at 1,445.90, down 22.05. Alan Greenspan said he foresees a 50-50 chance of recession and warned of stagflation, the Journal reports.

Said one concerned strategist, “The Fed is neutered. The market is left in this helpless position.” The bad news on the day was a warning from Moody’s that subprime losses might lead to lowered bond-insurer credit ratings. Meanwhile, several big deals were revealed, including a $1.4 billion cash infusion from Goldman Sachs for real estate developer Related Cos.