He Just Can't Stop Talking

This CBS MarketWatch report tells of former Fed Chief Alan Greenspan once again making news, this time before an audience in Calgary, Alberta, Canada.

Apparently a recent tick up in mortgage applications has led the maestro to conclude that "the worst may well be over" for the housing market.

Greenspan was referring to an Oct. 4 report from the Mortgage Bankers Association which showed that mortgage applications rose a seasonally-adjusted 11.9% for the week ending Sept. 29, the largest increase in more than a year.

Refinancing applications were up 17.5% from the week before and accounted for almost 47% of all U.S. mortgage applications, their highest share since February 2005. See full story.

Greenspan, speaking at a conference in Calgary, saw this "flattening out" of mortgage activity compared to the steep declines seen in recent months as a good sign, according to a story published Friday by Bloomberg News.

Mortgage refinancings have been a boon to U.S. economic growth during the last five years as homeowners used home equity they've cashed out to finance other spending.

But as mortgage rates rose to five-year highs this year, refinancing activity has ebbed, new home sales have dropped and existing-home price appreciation has stalled in many formerly hot housing markets.

Greenspan's remarks come as current Fed bankers and other economists try to figure out how much the current housing slowdown will hurt the economy.

For what he gets paid, he's got to say something.

Calculated Risk whipped out this chart to better judge the comment against the numbers and he was not much impressed with the conclusion drawn.

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Here's this week's cartoon from The Economist:


Quite the caricature (try spelling that without looking it up - an "h" wants desperately to be squeezed in there between the first "c" and the first "a").