The Jeddah Corniche by the Red Sea - Jeddah, the Saudi Arabian commercial capital, has historically been the port city for the Holy City of Makkah, located to the south.

The former chairman of the US Federal Reserve Alan Greenspan, has warned that US economic growth has stalled and a quick recovery is not likely.  Meanwhile, Bill Gross, manager of the world's biggest bond fund PIMCO, says that until recently, US and therefore global demand has been driven by the ability to lower interest rates and extend credit to an increasing majority of Americans. Gross says that because demand in the form of consumption has been artificially and fictitiously stimulated in recent years by financial engineering run amuck, there is a legitimate question as to whether its black hole imploding destructiveness can be totally countered with another dose of lower yields and deficit spending packages.

"As of right now US economic growth is at zero," Greenspan said on Monday, at an investment conference in Jeddah, Saudi Arabia's Red Sea commercial capital. "We are at stall speed."

The US Federal Reserve said last week that 2008 growth will be between 1.3% and 2%.

Greenspan also forecast that booming oil prices, which hit a record of more than $101 last week would keep rising and that the US housing market would worsen before the tide turned.

On Monday, the National Association of Realtors reported that sales of existing US houses in January, were 23.4% below the January 2007 level.

Increased globalisation of trade could offset a sharp downturn in consumer spending and "facilitate the absorption of shocks in the US," Greenspan said.

In a separate speech at an investment conference in the Gulf state of Abu Dhabi, Greenspan said US resistance to Gulf or Asian government-backed investors would be "counter-productive" and will result in all parties being "losers".

Dangers of a déjà vu trek to 1% short rates

Bill Gross, PIMCO Managing Director, said overnight, that Australian government debt is more attractive than Treasuries because US Federal Reserve policy makers are failing to tackle inflation.

``US citizens, the Federal Reserve and policy makers, certainly in an election year, are unwilling to accept their medicine,'' Gross told a meeting in Sydney via a live broadcast from Newport Beach, California-based Pacific Investment Management Co.'s (PIMCO) head office. ``They're unwilling to endure the pain'' of raising interest rates.

In his monthly Investment Newsletter for February, Gross says that the US needs a "demand-based" fiscal package alright, but a $300-$500 billion permanent one, in addition to the proposed temporary stimulus package, "as the system of modern day levered shadow finance slows to a crawl or even contracts at the edges, its ability to systemically fertilize economic growth must be called into question. But government writing checks for American consumers which then flow to foreign central banks is not the permanent solution; it only makes sense in the short-term as a life preserver. To provide a stable recovery path, government spending needs to fill the gap – not consumption. Public works programs, badly needed infrastructure repairs, as well as spending on research and development projects should form the heart of our path to recovery. Assistance for homeowners? That too – figure out a fiscal/regulatory way to stop the slide in housing prices and foreclosures but please – no traffic jams at the Wal-Mart checkout counter in 2009 and beyond."