Alan Greenspan Expects Growth AND 10+% Unemployment

Former Federal Reserve Chairman Alan Greenspan gave his predictions on the economy and unemployment: He thinks the economy will grow 3% in the third quarter (which is more than he previously thought)—and that unemployment will break through 10% and be there for a while.

On This Week with George Stephanopoulos, Mr. Irrational Exuberance said the latest job numbers (revealing 9.8% unemployment) were "pretty awful" and was most alarmed by the large of number of the long term unemployed: "The reason that is a problem, obviously, other than the obvious personal difficulties that families have in such a context, is that the economy loses skills. And people who are out of work for very protracted periods of time, lose their skills eventually...Remember that what makes an economy great is a combination of the capital assets of the economy and the people who run it. And if you erode the human skills that are involved there, there is a real and in one sense an irretrievable loss."

He also thinks a second stimulus isn't necessary (apparently doing too much might be bad!) and that health care reform won't add to the deficit but "revenue neutral is not adequate." And flashback: A year ago, Greenspan admitted he was wrong to think the markets could regulate themselves.