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Housing market worst may be over: Greenspan
October 9, 2006; 2:20 PM
The U.S. housing market appears to be emerging from its recent travails and the "worst may well be over," former Federal Reserve Chairman Alan Greenspan was quoted as saying on Friday.
"I suspect that we are coming to the end of this downtrend, as applications for new mortgages, the most important series, have flattened out," Greenspan said at an event in Calgary, Canada, sponsored by BMO Financial Group, according to a transcript BMO made available.
"There is a good chance of coming out of this in good shape, but average housing prices are likely to be down this year relative to 2005. I don't know, but I think the worst of this may well be over," he added.
AntiSpin: Then his stupid advice in April 2004 that we all go out and get ARMs was sound after all. Maybe that will keep the speaking fees up over $100K a pop for a while longer.
Now that Big Al is no longer wearing the robe, he is quickly losing the aura of the High Priest of Global Central Banking, and the political money that attaches to any good geek-politician who survives the role for 18 years. His opinions will be interpreted in a clear light-as a man's–and he will fade into obscurity. Only time will tell if my prediction from January 1999–when he was at the height of his glory and such statements were heresy–will come true or not: "Greenspan may not go down in history as a hero."
October 9, 2006; 2:20 PM
The U.S. housing market appears to be emerging from its recent travails and the "worst may well be over," former Federal Reserve Chairman Alan Greenspan was quoted as saying on Friday.
"I suspect that we are coming to the end of this downtrend, as applications for new mortgages, the most important series, have flattened out," Greenspan said at an event in Calgary, Canada, sponsored by BMO Financial Group, according to a transcript BMO made available.
"There is a good chance of coming out of this in good shape, but average housing prices are likely to be down this year relative to 2005. I don't know, but I think the worst of this may well be over," he added.
AntiSpin: Then his stupid advice in April 2004 that we all go out and get ARMs was sound after all. Maybe that will keep the speaking fees up over $100K a pop for a while longer.
Greenspan, the former Fed chief's comments suggest a more sanguine view of the U.S. housing market than that offered by current Fed chairman Ben Bernanke, who said last week that the housing market was currently undergoing a "substantial correction."
The new guy is trying to create some distance from his predecessor. Time will tell if Ben can be bought and paid for by Wall Street and Washington the way Big Al was.
Some bond market participants in London said on Monday that Greenspan's remarks helped drive bond prices down further and yields higher, and obscured concerns surrounding the news that North Korea said it safely and successfully conducted an underground nuclear test over the weekend.
Looks like more than a few bond traders pine for Big Al. "Oh, woe is me! What is Ben going to do? We miss ya, Al. You were such a good geek, and Ben's such a nerd!"The new guy is trying to create some distance from his predecessor. Time will tell if Ben can be bought and paid for by Wall Street and Washington the way Big Al was.
Some bond market participants in London said on Monday that Greenspan's remarks helped drive bond prices down further and yields higher, and obscured concerns surrounding the news that North Korea said it safely and successfully conducted an underground nuclear test over the weekend.
Greenspan said the fall of communism, not sharp interest rate cuts by the Fed, was behind the housing boom in the early part of the decade. Cheap labor flooding into the West after the fall of the Berlin Wall had a disinflationary effect, causing bond yields to fall and house values to rise, he said.
Bwah, ha-ha. Ha ha! On another topic, the former Fed chair said that China is unlikely to quickly adopt a flexible exchange rate regime as it transitions to a market economy from a centrally planned one.
Many economists and policy-makers believe China keeps the value of its yuan currency low to make Chinese exports cheaper on world markets, fueling export-led growth but contributing to China's large trade surplus with the United States.
"The greatest fear of the central government of China is insurrection and so they refuse to revalue their currency in the hopes of continued surging job growth," Greenspan said.
Duh.Many economists and policy-makers believe China keeps the value of its yuan currency low to make Chinese exports cheaper on world markets, fueling export-led growth but contributing to China's large trade surplus with the United States.
"The greatest fear of the central government of China is insurrection and so they refuse to revalue their currency in the hopes of continued surging job growth," Greenspan said.
Now that Big Al is no longer wearing the robe, he is quickly losing the aura of the High Priest of Global Central Banking, and the political money that attaches to any good geek-politician who survives the role for 18 years. His opinions will be interpreted in a clear light-as a man's–and he will fade into obscurity. Only time will tell if my prediction from January 1999–when he was at the height of his glory and such statements were heresy–will come true or not: "Greenspan may not go down in history as a hero."
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