From Reuters:
Greenspan says US housing boom is over
“Former Federal Reserve Chairman Alan Greenspan said on Thursday that the “extraordinary” boom in the U.S. housing market in recent years is over.”
“”This has been quite an extraordinary boom,” Greenspan told a Bond Market Association dinner in New York. “The boom is over. I think we can safely say that with a strong degree of confidence.””
“Greenspan said there was a “high degree of froth in the system,” and that it was clear that home equity extraction and the turnover of home sales was waning.”
Greenspan needs to shut the hell up. The federal reserve is supposed to concern itself managing inflation by keeping money supply growth within targets; something he failed miserably at.
It was his incessant tinkering that has screwed up a lot of stuff. Greenspan will ultimately be recorded in the history books as the worst federal reserve chairman this nation has ever seen.
“Greenspan will ultimately be recorded in the history books as the worst federal reserve chairman this nation has ever seen.”
Basically, his main duty was to administer “medicine” to sick US markets in the form of endless interest rate reductions. I’d like to hear him finally admit that the medicine was worse than the disease, but I’m not holding my breath.
Speculators: sell now while you still can.
BoycottHousing.com
Greenspan is no longer part of the Federal Reserve. And, as a private citizen, like you and I, has the right to free speech.
It’s the role of a central bank to “tinker”, however I agree that the liquidity injected into the market by the Fed’s near zero interest rate policy has caused havoc with the housing market.
If the Fed hadn’t “tinkered”, it’s very possible that housing prices still would not have recovered from the crash in the early 90’s.
Thus, Greenspan should be looked upon as the Patron Saint of Real Estate Investors.
What The Good Greenspan Giveth, The Good Greenspan Taketh Away.
grim
Bernanke sees cooling housing market
But Fed chief says real estate could still turn in strong year, offers caution about new mortgage products, hope for new banking standards.
May 18, 2006: 2:18 PM EDT
CHICAGO, (Reuters) – It’s “pretty clear” that the housing market is cooling off but it looks poised for a soft landing given overall strength in the economy, Federal Reserve Chairman Ben Bernanke said Thursday.
“In combination with rising interest rates, affordability is becoming much more difficult and therefore as you would expect you are seeing some cooling in those markets,” Bernanke said in a question and answer session after speaking to a Chicago Fed conference on banking regulation.
more…
Real estate mogul Solomon Dwek arrested
Dwek’s woes could have wide impact
He’s a major real estate investor
Posted by the Asbury Park Press on 05/14/06
BY BOB CULLINANE
STAFF WRITER
When he was buying real estate at the Shore “with a passionate fervor,” as one observer recalled, Solomon Dwek would drive around Ocean Township in his black Lexus making deals on his mobile phone.
“He was constantly buying properties,” said Christopher P. Siciliano, an Ocean Township councilman and township Realtor. “(Real estate) agents were literally running to Solomon.”
But in the past three weeks, the buying has ceased, the fervor has died, the agents have stopped calling and the black Lexus carrying a wheeling-and-dealing Dwek is nowhere in sight.
In its place are irate investors, embarrassed community members, angry home builders and a criminal complaint that charges Dwek, 33, with defrauding PNC Bank of $22.5 million and attempting to defraud it of $50 million.
And there is also a fear that the potential financial collapse of Dwek’s multimillion-dollar real estate empire will create wide economic tremors that spread from individual homeowners to multinational banks.
Maybe if Greenspan decided not to “shut the hell up” in the year or so leading up to the tech bubble collapse then perhaps stocks wouldn’t have had so far to drop. And maybe the impact would not have been so severe.
Maybe now he sees a similar situation brewing.
Remember, mr re investor, if it wasn’t for AG and his loose credit policies, your paper gains wouldn’t be anywhere near what they are now.
Greenspan is a @$$&^%$!
This F^%() monkey has debased our currency through his reckless monetary actions. Now he has the nerve to open his big fat trap to say the boom is over?
This is the death knell of the housing market.
I’m surprised it isn’t getting more coverage. Perhaps it would have, if he had chosen to use the words “irrational exhuberance” instead of “extraordinary boom” or “froth”.
Words aside, this statement is the equivalent. Yes, he is no longer with the Fed, however, hisword still carries much weight.
grim
Hopefully the right time for normal people to buy will be next year. I am not going to play the bidding war game. I hope others in my generation do the same
Greenspans actions, reactions, and comments are typical to any senior citizen: delayed.
He’s always 2 steps behind, thats why investors love him. He was too slow to realize what the heck was going on.
-Richie
Curiously silent on what comes next. I would have expected to hear the old “here’s soft landing” line. Interesting.
the boom is over is right. here’s an example of what we’ll start to see more of. this townhouse in New Providence was bought around Halloween of 2004 for $579k. they’re now selling it a year and a half later asking $645k. it’s a 2 bedroom for pete’s sake! they overpaid for it then and now they’re trying to find a greater fool to even pay more for it now. who wants to bet they don’t even get their original price paid for it?
so let’s see. $285 monthly maint, $10k a year or $800 month prop tax, $645k assume 10% down or $575k loan @6.5% = $3634 mortgage for a grand total of $4719 a month pre tax. even after writeoffs @28% tax bracket you’re still talking $3700, all to own a 2 bedroom townhouse. LOL!!!!!!!!!!!!!!!! these sellers are screwed.
MLS #2279914
Its funny as human beings we are always blaming someone for our own greed and misgivings. When the dotcom boom was in fullswing, our greed sucked us in, which was the followed by the RE boom and now the commodity boom. Greed begets greed. Thats the nature of the beast. Greenspan could have done nothing after the dotcom boom and the country would have gone into a 10 year recession. People will still blame him for not doing anything then. He tinkers with monetary policy to keep the masses in check and keep the country out of recession. When there is a boom and when you making money, you take all the credit and consider yourself as the next Bill Gates or Donald Trump. When there is a bust, lets blame Greenspan.
“Its funny as human beings we are always blaming someone for our own greed and misgivings
sorry charlie, this situation isn’t explained away as human nature. greenspan dropped rates too low for too long. the clinton administration instituted capital gains exclusion. banks got more innovative in their lending products. they all deserve blame, but if you have to point to the figurehead it would be greenspan who flooded the world with cheap dollars and we now find ourselves in the middle of a credit boom bust cycle which won’t end pretty.
Greenspan is mai nly to blame for this train wreck.
He lowered rates to ridiculous levels , looked the other way while lenders lent money to anyone that had a pulse and he recommended that home buyers use an ARM loan when rates were at the bottom.
Yes sir he has made a mess and deserves the blame. if he only backed away from his GOD like attitude of abolishing economic cycles and let markets correct the excesses we would be far better off today. Now we have a housing mess about to unwind and consumers up to their eyeballs in debt. A recipe for disaster.
I agree with Richie- Greenspan (and the Fed in general) have been delayed in reacting and making comments. At this point, them saying things are “cooling” is pretty meaningless. We all know what’s going on.
Of course, they are trying to manage a situation, and have been, in the past, overly optimistic.
BubbleTrack.blogspot.com
“He lowered rates to ridiculous levels , looked the other way while lenders lent money to anyone that had a pulse and he recommended that home buyers use an ARM loan when rates were at the bottom.”
He lowered rates so that money is supplied into the system after a capital bust. This money can be used for capital creation and innovation. He has no control over lenders and banks as this is not his reponsibility. Blame Congress and President Bush for not enforcing Fannie and Freddie for tight standards. Greenspan has long being complaining about the debt levels of Fannie and Freddie and what has congress done about it. It is all politics. Hold your representative responsible.
prices are dropping big in queens area, whitestone,bayside,astoria.
saw one house in whitestone orig lp 698k now asking 505k 20% drop and its still sitting there. cant wait until aug/sept to see where prices are
dont buy yet, hold on !!
oh, ok… Greenie “tinkered” with the money supply? Wrong! He needlessly drove interest rates down to 1%… because he panicked about deflation… then… to make matters worse… as he began to increase interest rates in february 2004, he encouraged both consumers with fixed rate mortgage to refi into ARMs and lenders to get more creative… which was a clear signal to the lending industry to give money to anyone who can fog a mirror… this made no sense whatsoever from a risk management view… ARMs are used when interest rates are at a peak… it saves you the refi expense when they drop. This was a gift to the lending industry… this poor management of risk is what really drove this real estate mania for another 1-2 years… in my opinion, it’s the reason why Ben B. and other fed governors have recently made statements about new lending guidlines.
I have to agree with anon 10:41.
I’m certainly no fan of Greenspan.
His only allegiance was to the banking system in general, not individual people.
The problem is that we lack leadership in this country. There must be a way (e.g. targeted tax incentives) so that capital is invested in the most productive way possible.
Instead, we consistently reward debt and speculation. The result is an increasingly unstable economy: we just came out of a market crash and now another one is looming.
For sure, there are a few people who know how to play the game and have clever accountants to exploit the loopholes. But the majority of people will be worse off.
I am so tired of people insisting that housing prices are not going to drop not in our area (NJ shore towns). They honestly believe prices will continue to rise and tell me I should buy now. I haven’t been looking at many homes recently, but the ones I see in advertised are still sky high.
Please stop with the Greenspan bashing. It is so convenient to do, and in reality extremely misplaced.
I only blame him for one thing – lack of circumspection in making ONE comment about borrowing at short-term rates. His comment was correct in that it was retrospective, not prospective. However, he should have known better and not made such a statement, because opportunists were going to spin it for profit.
Otherwise, he has been masterful. If his competence and evenhanded is not clearly apparent to you, then in my opinion, you do not recognize the scope of the Fed Chair’s job or how well he excelled at it.
chicago
chicago,
read “The Penniless Billionaires” by Shapiro and maybe you will understand why greenspan has been a complete failure.
Look at when greenspan took over as fed chief what the value of the dollar was worth vs other currencies aginst today. He has failed.
Anon:
Let’s agree to disagree.
Thank you for the rebuttal.
chicago
Greenspan is not the issue with American currency. He really did do well and controlling the economy and preventing an all out crash and market panic. We have not seen bad economic conditions in 15 years. The real truth is that if any mistake he made it was not raising the rates sooner. But alas it all comes down to the root of the problem. We have underlying economic issues.
Given the reckless economic policies of the Bush administration, and market manipulation from China it is easy to see our prediciment. It all comes down to one question where does the Money come from? Bush has spent so much money and has been borrowing this devalues our currency and the US economy. We really don’t produce anything anymore, this puts us a a tight spot because we mostly produce IP. The nations doing the production do not respect IP and thus we have the big trade gulf. This also hurts the dollar. Our economy is only worth the value we produce, right now we are comming up short fueling our growth on borrowed money.
THe biggest issue with what greenspan did is the yahoo who runs the country right now. I say this because when you try to manuever your way out of economic crisis the last thing we needed was a high spending fiscally irresponsible government. Now we will get a sustained period of economic trauma as a result.
“Greenspan is not the issue with American currency. He really did do well and controlling the economy and preventing an all out crash and market panic. We have not seen bad economic conditions in 15 years. The real truth is that if any mistake he made it was not raising the rates sooner. But alas it all comes down to the root of the problem. We have underlying economic issues.”
I disagree. We haven’t corrected the excess of past excesses. It’s bee paper overed….but there is a price to pay for this reckless monetary behavior. You cannot print and leverage your way to prosperity using paper currency forever.
Greenspan did screwup. He is the cause of the huge trade deficit. Why? Because is reckless policies produced a housing bubble and the housing ATM maching went into service. Fools were able to cash out equity out of their homes to finance a more extravagent lifestyle one that they probably couldn’t afford if restrained to their incomes. The housing bubble, the consumer indebtness, the trade deficit and the weakening dollar are all a result of this reckless monetary policy.
“Hindsight is 20-20”
the end game is the same for all fiat currencies. it’s never changed in the history of the world, so why should it change now? inflation is here and it’s only going to accelerate as it robs the labor pool of their hard earned wealth, that’s unless of course you own assets ;)
greenspan is a victim of the system as much as we all are. while he’s always been late to the party and sticks his nose into affairs not monetary policy related, IMO he’s done as fair a job as anyone could expect. where i would’ve like to of seen more attention/control is around banking innovation. the derivatives and hedge fund sectors have grown largely unregulated and to me these have large risks to the system, exactly what the Fed should be focusing on.
“Given the reckless economic policies of the Bush administration…”
People who make such comments conveniently have zero recollection of the US economy of October 2001 — while 140+ acres of the nation’s financial district lay in ruin, the stock market was shut down for the first time in history, thousands of lives and trillions of dollars were lost, and it was less than a year after the dot-com implosion.
“Bush has spent so much money and has been borrowing this devalues our currency and the US economy…”
How much would a ‘Nuclear 9-11’ cost? Do you complain that FDR spent money during World War II?
“We really don’t produce anything anymore, this puts us a a tight spot because we mostly produce IP. The nations doing the production do not respect IP and thus we have the big trade gulf.”
Well, guess who renewed China’s “Most Favored Nation” trade status? Not boogeyman Bush:
http://cnn.com/ALLPOLITICS/1998/06/03/china.trade
Let’s have more facts and objectivity, and less partisan nonsense.
First lets establish something, Greenspan exacerbated the problem. He used cheap money to keep the economy afloat. I will contend the money was too cheap for too long. Eventually we will pay the price for fueling our economy with borrowed money. But on the other hand what would have happened had the Greenspan fairy not have come? Higher unemployment? Recession? What were the options? Realistically besides crazy housing and the begining of some inflation. Things are pretty good right now, not unemployed, making money. Now thats not to say we will not pay the price in the future, now with the economy heating and inflation looking to be a concern, we will have to tighten our belts and take the hit. It has happened before it will happen again. The point I was making is that as of now we really have little to complain about and Greenspan’s policies have generally been alright. I am not crazy about dropping dollars from the sky to stave off sustained recession, it didn’t work in the 70’s won’t work now either.
Unrealtor, it is not partisan. I am just going to ask one question would you run a company with the Bush economic policy. It is my firm belief that large sustained debts from our government will bring recession and inflation especially when exacerbated by low interest rates. I understand the economic impact of 9/11, it was huge but think of it like a one time expense, in real economic terms it was a pinprick not a knife to the heart. The economy in NYC with slight intervention would have repaired itself. Also I decry Bush, I don’t say anyone else is any better, but he really needs to pressure the Chinese more, it was the same garbage when Japan, and other east asian nations were playing games. The FDR situation is slightly different we were attacked, Germany was an aggressive nation with a highly developed military and a plan for world domination. Hussein, not a terrorist, kind of crazy, pretty evil, a bad person, despot….yes to all of the above. But a threat….ha make me laugh, the main couldn’t attack a municipal police force with his weak army and he had no WMDs. I have no issues with spending money to hunt terrorists, just do it efficiently. Also don’t cut taxes when there is a lot of spending to be done, let the fed control the money supply. Additionally tighten efficiency in government, we need smarter government less spending, smarter spending. When the federal budget shrinks 5% than give me my damn tax cut. You cannot have your cake and eat it too.
We don’t need an enemy with “a highly developed military” to pose a threat, we need an enemy with ONE nuke in a shipping container sailing up the Hudson River.
People were warning about Saddam’s nukes and WMD long before Bush took office:
http://freedomagenda.com/iraq/wmd_quotes.html
And 9-11 was NOT a “a one time expense” it was a window into what will happen next, when these lunatics get their hands on a nuke. As I asked earlier, how much would a ‘Nuclear 9-11’ cost?
At least during the Cold War, the Soviets were held at bay with the prospect of retaliation; today we don’t have that luxury.
And in 1963 JFK warned the Soviets:
“It shall be the policy of this nation to regard any nuclear missile launched from Cuba against any nation in the Western Hemisphere as an attack by the Soviet Union on the United States, requiring a full retaliatory response upon the Soviet Union.”
http://fordham.edu/halsall/mod/1962kennedy-cuba.html
Why would JFK threaten the Soviets with annihilation if Cuba attacked “any nation in the Western Hemisphere”?
Why did FDR invade Africa when the Japanese attacked America?
I’m amazed that many people cannot think strategically, and also base their ‘reality’ on either a selective memory, or a lack of factual information.
The stakes are much higher today, and 9-11 was not a one-off event that we need to forget about. These lunatics are planning the next one, and the second they get a nuke, they’ll use it.
As for govt waste, that’s been happening in the US since day one.
I don’t see many politicians calling for spending cuts, so if there’s blame to go around, it’s certianly not on a single person.