The private and public debt load root cause of deflation and economic recession – Greenspan warns
Peter Oberois
Feb. 26, 2007

The budget deficit is the biggest concern. The debt of people on their homes, cars, and credit cards – when all added up creates the recipe for the disaster.

"The American budget deficit is clearly a very significant concern for all of us that are trying to evaluate both the American economy's immediate future and that of the rest of the world," former Federal Reserve Chief said via satellite at the VeryGC Global Business Insights 2007 Conference.

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.

The problem in the economy is underemployment and lack of real entrepreneurial spirit. The fiscal incentives created in the last ten years are focused on non-productive non-innovative business enterprises. The venture capitalists, private equity firms and businesses are focused on how to show good results somehow and get an IPO going as fast as possible to get the exit required.

Large corporations have focused on increasing revenue through acquisition. They do not understand the debt load they create in acquiring a competitor for a fat premium. The focus is again on creating good results on the earning per share side instead of strategic business prudence on the long run.

The private and public debt load root cause of deflation and economic recession – Greenspan warns
Peter Oberois
The budget deficit is the biggest concern. The debt of people on their homes, cars, and credit cards – when all added up creates the recipe for the disaster.
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