Replies

No. My point is that Greenspan's is a theorist's view of the situation: houses are like grain, and the prices will stabilize because investors will buy and hold vacant residential properties. Mine is a practical view (I inspect such properties for a living): vacant residential property is a *very* perishable commodity, subject to rapid deterioration and and vandalism.

Greenspan's comment is an example of a "ivy tower" conservative's point of view just as divorced as any pointy-headed liberal's from the actual behavior of actual human beings, and this a kind of mistake he's made a career of making. It's why for example he was unable to foresee that the ordinary operation of self-interest and greed would lead politicians, lenders and borrowers into the trap of making and accepting loans they could not reasonably be expected to be repaid on the assumption that a greater fool would soon take the appreciated property off their hands. And why for years - when was obvious even such much less sophisticated observers as myself - he persisted in maintaining that there was no bubble, and that if markets were valuing property at two and three and four times the historic normal ratio of purchase price to potential rental income, then those valuations must be correct.

Greenspan is lost in theory... a theory which includes self-deluded denial of an unpleasant fact of which we are now being reminded: the ultimate function of prudent regulation is not to protect the stupid, the ill-informed or the spendthrift from themselves, it's to protect the intelligent, the well-informed and prudent from such people and their personal follies.

You, and I, and everyone else would who engaged in intelligent self-restraint and economic rectitude are now going to be paying the price to cleanup the results of Mr. Greenspan's ideological distaste for common sense regulation.