Posted on 09/21/2007 5:28:58 PM PDT by GodGunsGuts
House prices to drop much lower: Greenspan
Fri Sep 21, 2007
VIENNA (Reuters) - A big overhang of property will bring U.S. house prices down further, but it is too early to say if the economy will plunge into recession, former Federal Reserve chief Alan Greenspan was quoted as saying on Friday.
Greenspan said in an interview with Austrian magazine Format that low interest rates in the past 15 years were to blame for the house price bubble, but that central banks were powerless when they tried to bring it under control.
"It's a difficult situation, there is an enormous overhang on the real estate market," Greenspan was quoted as saying. "Many buildings which just have been finished can't be sold ..."
"So far, prices have dropped only slightly. But it was enough to cause alarm around the world," he said. "Prices are going to fall much lower yet."
"However, it is too early to answer the question about a recession. We simply don't know yet. It depends on how flexibly the economy can react," he said.
Greenspan said deregulation and the introduction of market economies in the former Communist bloc after the Berlin Wall fell in 1989 had caused a global boom and a worldwide reduction of interest rates, which both helped fuel the property bubble.
"There is no doubt about the fact that low interest rates for long-term government bonds have caused the real estate bubble in the United States," he said.
"The Federal Reserve began a series of interest rate increases in 2004. We were hoping to bring the speculative excesses in the real estate sector under control. We failed. We tried it again in 2005. Failure," he said.
"Nobody could do anything about it, neither us nor the European Central Bank. We were powerless," he said.
If house prices are going to drop that much, most owners can petition for lower taxes, especially in a state like California, where the tax is based on the purchase price. That will decline the revenue that the asshats in Sacramento are spending on any crazy thing they can think of. Couldn’t happen to a nicer bunch of morons, IMO.
Balancing a future budget in Sacramento will be a bear of a job.
It is or course an act. He knows what’s coming, and he knows what it will do to his “legacy.” He’s belatedly trying to “get out in front” to minimize the damage. Indeed, I think I read somewhere that he wrote a paper on how credit and housing could be utilized to drive consumer spending. If I find it (assuming it’s true) I’ll be sure to forward it to you—GGG
Get ready for your equity to skyrocket!
Pray for W and Our Troops
Especially in a “bear” market!
The current financial crisis was caused by greedy walstreet traders.
Answer, he blew his job and is rewriting his legacy by blaming Bush and anyone else.
Right now there is a lot of anti-Bush folks out there, so he is going for the easy mark.
He’s a pinhead though and should shut up.
What part of RETIRED don't they understand? When it's my time to retire, I won't care about what goes on at work.
I think the boy’s delirious.
Delirious about the housing market, or delirious about stating the obvious too late to do any good?
Wonderful, anyone want to buy a home just outside of Indianapolis.....I am selling mine....
Greenspan must be related to Bill Clinton. Neither one will go away no matter how much you wish for it.
Friday, September 21, 2007
Now, clearly, out of control
"The man is now clearly out of control, perhaps headed for some kind of subprime meltdown of his own - former Fed chief Alan Greenspan makes some even more astonishing remarks in this story from Reuters."
Greenspan is being paid as a consultant by PIMCO (see Bill Gross) to get investors to invest in bonds and bond funds.
Stop already. It's hard enough to turn a dollar as it is, don't make it harder by giving out the secret.
I learned during the last recession from a real estate mogul. I mentioned how difficult it was and how much money people had lost. He just looked at me and said it had just been a huge transfer of assets and some people had just made a ton of money. Of course some people had sadly lost but others bought property for .20 on the dollar or less. We're not there yet.
No we are not. I’m not talking about real estate when it comes to making money in good times and bad. Real estate won’t be at true bargain basement prices for another several years or more. I’m talking about learning how to make money in a bear market, which most people (unfortunately) are psychologically unprepared to do.
“The Federal Reserve began a series of interest rate increases in 2004. We were hoping to bring the speculative excesses in the real estate sector under control. We failed. We tried it again in 2005. Failure.”
Hasn’t he said previously that it is best not to burst bubbles but to deal with the after-effects?
Now he admits they were trying to prick the irrational exuberance in the housing market.
Yes he is. And there are VERY sound economic reasons for his career change, don’t you think?
Yes, I don’t even need to read the article to know it’s correct. What people need to do now is prepare themselves just as Greenspan has. Have you noticed his new choice of careers???
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