Greenspan: Bubble No Biggie

May 19, 2006 -- Former Federal Reserve Board chairman Alan Greenspan declared that the froth is finally off the housing bubble, but emphasized that he is not losing sleep over it. “The boom is over,” Greenspan told more than 900 attendees this morning at CB Richard Ellis Inc.’s annual market forecast in New York City. Much of the recent growth stemmed from home sales to investors. Although recently, despite still-high residential asking prices for houses and condominiums, those properties are drawing fewer bids than in previous years, Greenspan said. However, this turn in the market does not unduly concern him. The United Kingdom and Australia housing markets enjoyed much bigger booms than the recent U.S. market, and those markets have flattened out without significant damage to those nation’s economies. “We ought to be able to work our way through this without any problem,” Greenspan said.
Greenspan Unworried About Bursting Bubble [CPN Online]

Comments

Ha! What does he care anyway? He can just take his speech paydays and leave it all to Bernanke. Overall though, he's probably right that the boom is over - I just think he's being overly optimistic. There are many financial issues brewing nowadays and to think they'll just go away is dreaming.

Posted by: Anonymous at May 23, 2006 9:14 AM

Anon 9:14am, forgive me, but I will take anything that Alan Greenspan has to say over what you think. When were you Chairman of the Fed and for how many years? Who cares at ALL what you think?!

Posted by: Anonymous at May 23, 2006 9:23 AM

You don't have to care what I think, and I don't care what you think either - I don't, apparently unlike you, blindly accept whatever it is Alan Greenspan says. It doesn't mean that I don't have respect for him - he's a brilliant man. I just think he took off and left Bernanke with a whole lot of crap to deal with.

Posted by: Anonymous at May 23, 2006 9:28 AM

Isn't Greenspan stating the obvious?

Posted by: Ed at May 23, 2006 10:17 AM

Since when has Greenspan ever stated the obvious? "We ought to be able to work our way through the problem" may seem obvious to you and I, but to Greenspan, that sentence could have 8000 meanings.

Posted by: Anonymous at May 23, 2006 10:24 AM

"Took off"?!?!? Greenspan did not take off. He was Fed Chairman for 19 years! He served our country well!! The man is 80 yrs old, when the heck do you think he should retire?!?!?

Posted by: BrownBomber at May 23, 2006 10:25 AM

I just think Greenberg hasn't stated anything that comes as a surprise, unless, of course, you've been predicting a enormous bursting bubble. But the bubble idea has always been a product of overly-simplistic interpretations of the way markets work.

Posted by: Ed at May 23, 2006 10:33 AM

He didn't leave Bernanke in a bind, that would be GEORGE BUSH who left him/has him in a bind. Continuing to reduce taxes like he did last week has totally devastated the economy as has the trade deficit. Greenspan didn't cause the problem, the REPUBLICAN President did!

Posted by: Anonymous at May 23, 2006 10:42 AM

More excerpts from speech..

"The boom is over. I think we can safely say that with a strong degree of confidence," Greenspan told a Bond Market Association Dinner at Cipriani in Midtown on Thursday.

"It’s too early to determine what impact a slowing housing market would have on consumer spending," he added.

To Greenspan, its obvious the housing market is cooling. Where he he gets ambiguous is when he says that its too early to know how that will afffect consumer spending. Basically, Greenspan is admitting that this slowdown in housing WILL affect consumer spending. Its just a matter of when. He just needs to see 'evidence' of actual decreased consumer spending before 'going out on a limb'.

Notice who Greenspan was speaking to. It wasnt Maria BigMouth. He was talking to the Bond Market Association. The Fed is hoping for a soft landing. Slowdown in housing leading to a slowdown is spending, leading to a slowing in credit, leading to a more healthy economic envirnment. Its very important that the Bond Boys feel comfortable with whats going on. The last thing we need is these guys dumping the long bond and jacking up the long end of the curve.

Posted by: ItsAWrap at May 23, 2006 10:46 AM

What's all this about long bonds, jacking up and guys dumping? I'm confused!

Posted by: Ed at May 23, 2006 10:57 AM

Greenspan is a very smart fellow, no doubt. And aspects of his stewardship were excellent--not least working with Rubin to defuse the Asian financial crisis. But he bears rather direct responsibility for the mess we're in. I covered the Congressional hearing in 2001 when, to much surprise, he shed his defict hawk costume and endorsed Bush's tax cuts. He said that a surplus would encourage goverment to spend. What's worse, he didn't back away from this stance even as it became apparent that Bush intended to keep cutting taxes AND hike spending, and the surplus had turned into a terrible deficit ... It was an irresponsible and self serving misstep. Self serving because Bush then reappointed Greenspan ...

Posted by: Michael at May 23, 2006 5:52 PM

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May 23, 2006

Greenspan: Bubble No Biggie

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