Tuesday, November 18, 2008

Alan Greenspan

Say whatever you want about Alan Greenspan as a Fed chief. I don't blame Greenspan entirely for this mess, but he definitely played a role and he is no Maestro in my opinion.

This is about Alan Greenspan, economist. This is what the Maestro said in the past about the housing market:

October 19, 2004

Overall, while local economies may experience significant speculative price imbalances, a national severe price distortion seems most unlikely in the United States, given its size and diversity.
June 9, 2005

Although we certainly cannot rule out home price declines, especially in some local markets, these declines, were they to occur, likely would not have substantial macroeconomic implications. Nationwide banking and widespread securitization of mortgages make it less likely that financial intermediation would be impaired than was the case in prior episodes of regional house price corrections.

October 6, 2006:

"I suspect that we are coming to the end of this downtrend, as applications for new mortgages, the most important series, have flattened out. I don't know, but I think the worst of this may well be over."

April 2008:
It will not be until early 2009 that we will get close to having eliminated most of this'' home inventory, Greenspan told a conference in Tokyo today sponsored by Deutsche Bank AG and co-hosted by Bloomberg LP. "But it is very likely that home prices will stabilize well before that.''

November 2008:
U.S. home prices and stock prices are critical, he noted. Housing values might have another 5 to 10 percent to decline before they bottom, which could come sometime in the first half of next year, he said.
I guess a broken clock is always right twice a day...Eventually, he will be right and expect him to take full credit for a "great call".

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