MARIA: WELL, YOU'VE SPOKE BEEN CHINA AND THE FANTASTIC GROWTH THAT WE'RE SEEING THERE. IS THERE A NEGATIVE TO THAT FOR THE UNITED STATES IN ANY WAY? I MEAN, YOU KNOW, I MEAN IS THE MOVE IN THE STOCK MARKET THERE BASED ON REAL FUNDAMENTALS? DO YOU THINK THE GROWTH CAN SUSTAIN AT THESE LEVELS?

GREENSPAN: WELL, I WOULD CERTAINLY SAY THAT THE SHANGHAI AT SHENZHEN MARKETS ARE NOT SUSTAINABLE VERY LONG, BUT I THINK THE CRUCIAL ISSUE IS THAT WITH DEVELOPING COUNTRIES MOVING SO RAPIDLY, AND SO MUCH OF WORLD ECONOMIC ACTIVITY DEPENDING ON THEM, WHAT WE'RE FINDING IN THE UNITED STATES, FOR EXAMPLE, IS UP TO A THIRD OF OUR EARNINGS ARE COMING FROM ABROAD. NOW, TO BE SURE, HALF OF THAT IS EUROPE, BUT AN INCREASING PART IS IN THE DEVELOPING NATIONS AND SO THAT THE U.S. STOCK MARKET IS NOT TIED TO THE AMERICAN SCENE SO MUCH AS IT USED TO BE.

MARIA: RIGHT, BECAUSE IT REALLY IS A GLOBAL STORY HERE. WELL, WHAT ABOUT THE U.S.? I MEAN, WE'RE REALLY TALKING ABOUT A MATURE MARKET HERE, RIGHT, MR. CHAIRMAN? I MEAN, AT SOME POINT, DON'T YOUHAVE TO BELIEVE THAT WE'RE PROBABLY SEEING THE BEST GROWTH LEVELS THAT WE'RE GOING TO SEE FOR A LITTLE WHILE RELATIVE TO INTERNATIONAL MARKETS?

GREENSPAN: WELL, I THINK WE'RE DOING THAT NOW. IT'S FAIRLY APPARENT THAT EVEN THOUGH THE CREDIT CRUNCH IS EASING, IT'S RESIDUAL AND ITS IMPACT, FOR EXAMPLE, ON LIBOR AND OTHER MAJOR RATES IS GOING TO SLOW THIS ECONOMY DOWN TO A CERTAIN EXTENT, AND INDEED, YOU CAN SEE IT, NOT IN THE THIRD QUARTER DATA, BUT ALMOST CERTAINLY GOING TO SEE IT IN THE COMING QUARTER, BUT AS YET, THE ODDS OF A RECESSION ARE STILL LESS THAN 50/50.

MARIA: SO, IT'S FAIR TO SAY THEN THAT WE MAY VERY WELL NOT HAVE SEEN THE WORST THEN IN TERMS OF THE IMPACT OF THE CREDIT TIGHTNESS BECAUSE IT SOUNDS LIKE WHAT YOU'RE SAYING IS WE'RE GOING TO CONTINUE TO SEE THE RESIDUAL, RESIDUE OF THAT IN THE FOURTH QUARTER?

GREENSPAN: OH, I THINK AND INTO THE FIRST QUARTER AS WELL. THIS IS A SHOCK TO THE SYSTEM. AND WE'RE ALSO OBSERVING OTHER PHENOMENA WHICH SUGGESTS THAT INNOVATION IS SLOWING DOWN INITIALLY, WHICH I RAISE IN MY BOOK, AND THAT'S NOT A LONGER TERM ISSUE, BUT IT'S A SHORTER TERM ISSUE, BUT ENOUGH TO SLOW DOWN CAPITAL INVESTMENT IN THE SHORT RUN AND CREATE SOME DAMPENING IN THE ECONOMIC GROWTH RATES IN THE UNITED STATES.