Greenspan and the Bubble.doc

At the conference mr greenspan didnt say in plain

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At the conference, Mr. Greenspan didn't say in plain English that house prices are way out of line. But he never says things in plain English. What he did say, after emphasizing the recent economic importance of rising house prices, was that "this vast increase in the market value of asset claims is in part the indirect result of investors accepting lower compensation for risk. Such an increase in market value is too often viewed by market participants as structural and permanent." And he warned that "history has not dealt kindly with the aftermath of protracted periods of low-risk premiums." I believe that translates as "Beware the bursting bubble." But as recently as last October Mr. Greenspan dismissed talk of a housing bubble: "While local economies may experience significant speculative price imbalances, a national severe price distortion seems most unlikely." Wait, it gets worse. These days Mr. Greenspan expresses concern about the financial risks created by "the prevalence of interest-only loans and the introduction of more- exotic forms of adjustable-rate mortgages." But last year he encouraged families to take
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  • Fall '19
  • United States housing bubble, United States public debt, Alan Greenspan

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