He’s Back and He’s At It Again
Alan Greenspan draws some renewed attention with comments in the Wall Street Journal today that he expects U.S. house prices to stabilize in the first half of next year. Greenspan, a longtime critic of Fannie Mae and Freddie Mac, also summarizes his opinion of government efforts to shore up the two mortgage giants as, simply, “bad.” From Greenspan:
“They should have wiped out the shareholders, nationalized the institutions with legislation that they are to be reconstituted — with necessary taxpayer support to make them financially viable — as five or 10 individual privately held units,” which the government would eventually auction off to private investors, he said.
Greenspan’s views will be noted and debated throughout the day by the business press on cable and in the blogosphere. But, as usual, The Big Picture puts it all in perspective. In a post entitled “Greenspan Calls a Housing Bottom (Again), TBP analyzes Greenspan’s housing prognostication skills this way:
Recall Greenspan’s first Real Estate bottom calling attempt came in late 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.” (Greenspan Says `Worst’ May Be Past in U.S. Housing) He repeated the calls many times since then. Most recently, in April 2008, when he said “the drop in U.S. home prices will probably end well before’ early next year as the number of houses on the market diminishes, aiding an economic rebound.” Wow, that’s three strike in just one swing: Inventory remains high, home prices continue to fall, and we are still waiting for the economic rebound.>
The WSJ article goes on to note that Greenspan remains busy defending his tenure at the Federal Reserve over criticism that his unwillingness to regulate the markets led to much of the subprime mess. He’s even including a new chapter in the paperback version of his book that comes out next month, arguing his side of the story.
The spin continues.