Quote:
Originally Posted by NICKG
greespan says it will be the worst since WW2..I honestly hope not, but Greenspan is generally right.
people here don't talk recession, they are mumbling depression..i would hate to see what they think by you Len..Michigan is in the throes of a depression now
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Alan "There is no Housing Bubble" Greenspan is "generally right"?!?! C'mon dude, this thing is in no small way attributable to his own flat-out WRONG-ness and decisions to slash the prime rate back in 2002-2003.
My impression is that he was trying to keep his boss (GWB) out of political trouble approaching an election as we were in a recession post-9/11 with huge job losses and terrible consumer confidence. So A.G. slashed the rates in order to stoke up the fire under the one sector that seemed to be clinging to life, housing (actually it's my opinion that housing is a lagging indicator and just hadn't gotten around to falling into the dumper like everything else by the time the effect of the rate cuts kicked in). In either case, it was a deliberate attempt to get the overall economy at least "good enough" for GWB to not get pounded in the upcoming '04 election.
Anyway, the rates got slashed and predictably, everyone made a run for the easy money. It liquified the markets and suddenly everyone with a pulse could get a half-million dollar loan backed only by their $8-an-hour job at Taco Bell. I simply have to believe that educated people knew it was an unsustainable period of insanity and deliberately tried to "time the market" (most got it wrong) and that uneducated people really believed that the days of double-digit appreciation would go on forever. Either way, everyone ignored the obvious - that this was turning into a big-ass whoppin' huge bubble, even bigger than the dot-com one from a few years earlier.
A.G. is a smart guy, but I think some of the blame for the current mess lies squarely on his shoulders. When he made his famous "there is no housing bubble" statement, I'm not sure if he was deliberately lying in order to continue "stoking the market" in order to prevent a relapse into the post-9/11 recession or whether he actually believed it. Given that he's an extremely experienced, educated guy, I have to believe it was deliberate misinformation intended to serve the wishes of his political boss - GWB.
Don't mean this to sound like another Bush-bashing thread, but let's face it, if the guy can get a man with the credibility of Colin Powell to stand up in front of the U.N. and lie his ass off in order to get an endorsement of war in Iraq, getting Greenspan to use his clout to stimulate the economy was probably a simple matter.