Friday, August 1, 2008

Greenspan: a fool for the ages

Greenspan in 2005:

A national bubble is unlikely because the U.S. real estate market is composed of individual regions with different pricing trends, making a collapse that damages the overall economy unlikely, Greenspan said. Home purchases and sales also have high transaction costs, making it hard to speculate, and most people buy homes to live in, he said.

There is ``considerable unlikelihood of a major decline'' in prices because that's ``very rare'' in the U.S., Greenspan said.

``Even if there are declines in prices, the significant run- up to date has so increased equity in homes that only those who have purchased just before prices literally go down are going to have problems,'' he said.

Greenspan in 2008:
The former chairman of the Federal Reserve, Alan Greenspan, said falling home prices in America are "nowhere near the bottom" and the resulting market turmoil isn't showing signs of abating.

It's amazing that anybody listens to this fool. His policies of bailing out the banks after the Internet bubble crash were the single biggest contributor to creating the housing bubble. It's not just Greenspan that is at fault though. The entire system is broken and always will be as long as a private banking cartel sets the cost of money (interest rates) instead of letting the free market do it. Things can only get worse from here with Bernanke in charge who was a very influential figure in the banking system during the times of these disastrous policies.

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