Friday, April 14, 2006

No Duh!

No surprise here -- now that he is no longer sitting in the big chair, Greenspan is telling it the way it is...expect asset (e.g., house) price declines in a big way:
Former Federal Reserve Chairman Alan Greenspan warned on Wednesday a global glut in liquidity would result in a fall in asset prices.

He said the market value of assets worldwide had been rising faster than nominal gross domestic product globally due to a decline in real long-term interest rates over the years and a significant fall in real equity premiums.

"A good part of this expansion is a direct function of the decline in real equity premiums," Greenspan said. "That cannot go on indefinitely."

He said asset prices would begin to fall, but did not predict when that would happen.

"I am reasonably certain that what we are looking at today is an abnormal situation," he said.
But apparently Boobus Americanus doesn't pay any attention to the news as we are hearing more and more stories about folks who still believe that they can get bubblicious prices for their POSs, are now having to reduce their asking prices after sitting on the market for months and months, and overheard muttering things to themselves like "I wish I had priced it lower from the beginning". Well Boobus, you had better act fast before the resetting of ARMageddon arrives.

10 Comments:

Anonymous Anonymous said...

Can someone out there with access to MLS tell us what has happened to inventory/days on market in Marin over the past 12 months?

--Joel

Apr 14, 2006, 11:20:00 AM  
Blogger marin_explorer said...

So Greenspan is speaking clearer now? Hmm...I wonder why? Btw, lmao on the graphic.

Apr 14, 2006, 11:30:00 AM  
Blogger fredtobik said...

The fed suggests inflation is in check, but has anyone noticed how expensive most things are? Metals are outrageous, oil as well, we all know about housing, the stock market is up but not tot he point of irrational exuberance (yet). What is cheap right now?

I sure wish Greenspan spoke english.

Apr 14, 2006, 11:34:00 AM  
Anonymous by_palladium said...

In older age, I think Greenie will be heading back to his 1960's goldbug roots. He is fully aware of what he has done and where we are.

When I read the comments on Reuters a couple of days ago, my first thought was that he was trying to pop the commodities bubble. He won't be able to do it. But he might help to take the US RE market down.

In any case, you can bet that he is still part of the apparatus.

Apr 14, 2006, 11:53:00 AM  
Anonymous rejunkie said...

If you trust the source, you can get monthly DOM data at westbayre.com. I have compiled the average DOM over the past 12 months here:

3/05 46
4/05 50
5/05 41
6/05 41
7/05 44
8/05 50
9/05 56
10/05 48
11/05 65
12/05 67
1/06 91
2/06 87

Inventory in Marin is around 1.8 months, up from 1.2 months a year ago and far lower than elsewhere in the state (just read this the other day and now I cannot find my source)

Apr 14, 2006, 12:18:00 PM  
Anonymous tom stone said...

fred,politicians are still cheap,especially local ones when you need a variance....you can find an expert witness to testify to anything for $250 per hour...and there is always two buck chuck at trader joe's if you want something that won't leave a foul taste.

Apr 14, 2006, 3:58:00 PM  
Anonymous Anonymous said...

" I sure wish Greenspan spoke english."

He does, that's why he is "Sir" Al.

Everyone knew he would do this. Ramp up the bubble, retire, and then say "Told 'ya so".

So predictable.

Apr 14, 2006, 5:38:00 PM  
Blogger Tako John said...

Has he really changed? He talked about 'froth' last year and even that was dismissed by the RE crowd. I don't really see any difference. "Sometime" could resemble Japan's 15 year decline or a more rapid drop.

Apr 14, 2006, 7:51:00 PM  
Anonymous Anonymous said...

I'm fearing this is bad for everybody.

Renters/owners/debtors...

Where do we go now?

Apr 15, 2006, 2:34:00 AM  
Blogger Marinite said...

I'm fearing this is bad for everybody.

No one will be spared I think. Other bubble areas are leading the way. Look at what is going on in San Diego. That market is often referred to as the "canary in the coal mine" as far as housing is concerned. I guess the Bay Area will follow in due course. The smart folks over at Patrick.net are predicting 'doom and gloom' in the BA will arrive in October or so. We'll see... It will be interesting to see if record unaffordability will be the norm or if it will return to historic levels. I hope so.

Apr 15, 2006, 3:21:00 PM  

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