Alan Greenspan was
reported as saying:
US house prices are likely to fall significantly from their present levels, Alan Greenspan has told the Financial Times, admitting that there was a bubble in the US housing market... the decline in house prices “is going to be larger than most people expect”.
It's a good thing we are immune and special and not in a bubble, at least according to the experts. That way we get to continue living in a crushingly unaffordable market while the rest of the state becomes a comfortable place to live.
17 comments:
Greenspan is losing credibility faster than OJ Simpson...
Every time he opens his mouth and tries to rationalize why he helped fuel the biggest bubble in US history to the benefit of his banking and hedge fund buds, people start to question his competency and integrity.
I am still ABSOLUTELY AMAZED AND BEWILDERED that the Fed still (STILL !!!) does not know how to determine inflation or what is really behind this country's consumer spending habits.
History will show, or should show, that under Sir Alan's misguided, self-serving and greedy hand, the Fed lowered interest rates and carried out an incredible inflationary monetary policy during a period of hyper inflation. I've got three words for your Alan and BB, "it's housing stupid!"
Oh, by the way, all this Greenspan in the news BS (like tonight's 60 minute piece) is nothing more than a platform to help him sell his next book. It has nothing to do with much of anything else, and certainly has nothign to do with helping the average middle income American.
He is kissing BB's backside because he knows that BB knows how much he really screwed up during his excessive tenure at the Fed.
I love how Greenspan makes these comments to the FT, so there's less chance of them reaching J6P in their entirety. He's probably very scared that he's going to be blamed for the economy going down in flames as a result of this bubble.
Marinite..
Would be interested to find out if your readership is increasing over the past, say, 12 months or so. I’ll try and write you later and ask in the email..
I would hope so, and would like to engage on ideas to help increase your readership because this medium is very much needed to help continue countering all the BS perpetrated by the RE machine and it's posy of puppets in the media.
Maybe worth an email to Ben on some of his lessons learned. (I've never posted on his blog by the way, just this one which is my plan..)
Ben does a nice job covering the market as a whole and gives California lots of ink for obvious reasons.. Marin, however, is like California's Midway Island or Iwo Jima as one of the last strongholds of the Imperial RE machine. Us bloggers, of course, would be playing the role of the US Navy and Marines in this important war to reclaim our homes, lives and communities.
Okay, a bit melodramatic I’ll grant you, but this ongoing debate on housing has all the elements of a war minus the guns, bullets and bombs. I see nothing wrong with increasing our recruits to improve our attack on the enemy.
Matthew, I think one of the reasons Marin residents are SO, SO deep in denial is the extent (dollar wise) to which they've hitched themselves to RE.
If you're a young couple in your first home, there's more at stake if you paid $800K in San Anselmo versus $400K in Vallejo. Same thing for folks looking to retire....the house in Marin may be the difference between a comfortable retirement and having to continue working PT.
I know the manager of one of the banks in San Anselmo. She said she was always stunned at customers coming in for HELOC's, that these folks basically had nothing saved and were taking on more debt...that she always tried to get them to start a savings plan...$100 or $200 a month, anything....and no luck.
What a douchebag. The father of the greatest asset bubble of all time now says "tough luck" to those who inherit his mess.
I watched the 60 Minutes interview with Greenspan....to me, it was like Toto pulling back the curtain....for anyone watching, he flat out called the bubble a bubble, and I didn't believe him for 2 seconds that he didn't "get" Subprime until late '05/'06, especially after his wife pointed out his "breakfast reading" of incredibly detailed government & think tank reports about anything & everything economic. I think Bush & Co. were desperate to do anything to minimize recession after 9/11 and the dot.com disaster..I think he knew full well what was happening...and I don't think it was by accident that the banking industry got the personal bankruptcy laws changed 2 years ago.
Then, CNBC had a global round table talk and it was all about our mortgage mess...bottom line, investors /holders of these CDO's don't care (and shouldn't) about bailing out American FB's. Not their aisle.
And if prices would be allowed to fall back in line with incomes, we wouldn't need exotic financing, which is what got us into the mess in the first place. You either sacrifice the the current crop of FB's, or you prevent everyone else from buying responsibly in the future.
Not a difficult choice to me -);
Lisa,
I missed the Greenspan interview (sorry, Red Sox - Yanks and Patriots - Chargers). Thanks for update and perspective..
Given what is at stake in signing up for a 30 year mortgage for the numbers we are talking about, I'd like to see some of that bail out money put to better use.
Much like the time allotted for the minority party to discuss the same issues and offer a counter-point after the President’s State of the Union address by the President, there should be a similar message sent out on the airwaves across this country to counter the NAR’s BS and hype.
Every time the NAR spouts out that "now is a great time to buy because interest rates are low".. or "buy now before rates climb too high" or all their other BS propaganda, it's time for the other side to have their say.. In fact, the NAR's monopoly on the media and the RE message is a big part of this problem. They prey (heavily) on the ignorance (and fear) of the US consumer.
Take some of that bail out money and create a bunch of commercials that reflect what has really transpired in the lending/credit markets and with historic home prices vs wages etc. Then play those commercials at half time during a football game or whenever. Now, that would be an effective use of bail out money and the Fed probably wouldn’t need to touch rates as it would serve to help remove all the NAR’s hot air.
Lisa..
noted your point about the round table discussion on the mortgage mess vs what they really should be talking about which is housing prices.. I couldn't agree with you more.. They are discussing the symptom, not the problem. Of course, I'm sure most of those round table pontificators have a stake in avoiding the real story themselves..
What we need is a bunch of young, brash reporters and economists who still have to live with mom and dad or still have to rent to tell the real story here.
correction.. "choose" to live with mom or dad or rent..
to me, it was like Toto pulling back the curtain....
Perfect. I was at a loss for a graphic on this one. You saved it.
I watched the interview.
Mr. G seemed to be saying that he did everything right.
He had no clue about fraud in the mortgage industry until 2005... or 2006.
Even with this knowledge, he says nothing could have been done about it.
Yikes, shouldn't he have had some inside info?
Couldn't he intervene in some way?
Lesley Stahl actually called it a "housing bubble."
Thanks to Marinite, Matthew and Lisa for the great input.
Y'all have got me fired up!
Outstanding visual.
Marinite..
I beg to differ on Santa Barbara being like Marin or SF for that matter.. That market will implode with great distinction much sooner than SF or Marin because there is no real economic engine to keep it afloat.
Here in Marin, SF and Santa Clara, there is still SF (gov't, finance etc) and high tech to hold back the air a bit longer in this bubble. What's holding it up in Santa Barbara?
I've been there... several times.. nice place .. well, sort of.. beaches have oil soaked in the sand from all the offshore platforms 3 miles off the coast.. The University is great, but that will not sustain housing as this thing unwinds. What else do they have really except for real estate?
Nope, I'm sticking with Marin (and SF perhaps) being our Iwo Jima..
As always Marinite, great graphic on this latest thread.. man, you have a knack and talent for that stuff..
I think in terms of the dispersal of wealth and the extent of their luxary market, a comparison to Marin is a fair one.
Greenspan was never the hero he was put out to be nor is he as much the "douchebag" wc claims now. The fed's role is to maintain full employment and control inflation (however they define it). On that score, greenspan did ok and averted a few global meltdowns in the interim. Except for the examples the media loves to use, few home buyers were forced into becoming FB's, so buyer beware on that one. Just like you can't put all the blame on credit card companies once consumers realize they can't pay their visas.
Oh, and in Santa Barbara, the oil on the beaches has been naturally occuring for centuries. It's only because it's so easily accessible that the rigs showed up a few decades ago.
rabid
OT, but the Marin Heat Index graphs are updated as of 9/15/2007. It's a guilty pleasure to just page through those suckers and see the lines plumbing new lows.
So sad.
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