Monday, August 18, 2008
Caroline Baum at Bloomberg has penned another Greenspan tribute column today wondering why, with the The Maestro's hand on the tiller, the U.S. financial system seemed to have a hundred-year event every few years or so.
And lookee who managed to get a few words in when the subject turned to last week's housing market bottom forecast.
No Limit to Greenspan's Once-In-A-Century EventsAs noted here the other day, the former Fed chief has mounted "a strong defense that continues to be effective on a disturbingly large percentage of the population".
Alan Greenspan has presided over more hundred-year events in the last 20 years than the rest of us do in a lifetime.
The burst tech-stock bubble exposed a rash of corporate malfeasance and accounting scandals. An ``infectious greed seemed to grip much of our business community,'' producing a ``once-in- a-generation frenzy of speculation that is now over,'' Greenspan told Congress on July 16, 2002.
Even as he was declaring an end to that generational frenzy, another one was already unfolding. Millions of condo flippers were riding ultra-low interest rates to ultra-high profits, extracting equity from their homes in the process. Now many homeowners find themselves owing more than their house is worth.
Of course, Greenspan argued against the idea of a ``bubble in home prices for the nation as a whole,'' conceding only ``signs of froth in some local markets.'' At the time, home prices were rising at a 15 percent annual rate.
Last week, Greenspan showed up on the front page of the Wall Street Journal -- just like old times -- with a forecast for a bottom in housing.
``Home prices in the U.S. are likely to start to stabilize or touch bottom sometime in the first half of 2009,'' Greenspan told the Journal.
Lest he be too clear, the master of garblements qualified his forecast, saying ``prices could continue to drift lower through 2009 and beyond.''
``It's a flexible bottom,'' said Tim Iacono, who devotes a blog to ``The Mess That Greenspan Made.''
What doesn't seem to have dawned on Greenspan or those who interview him is the thread that connects all these disparate events: Greenspan himself.
That may be changing, but it's not changing fast enough.
Paul Kasriel's closing comment summarizes this still small, but growing view:
"I'm reminded of the song by Dan Hicks & the Hot Licks,'' Kasriel said. "How Can I Miss You If You Won't Go Away?''