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re: Why do the talking heads keep mentioning the 150% run up in the last 4 years
Posted on 8/9/13 at 1:52 pm to Doc Fenton
Posted on 8/9/13 at 1:52 pm to Doc Fenton
quote:
The link you gave was an article about fin-reg issues, and I don't like the Fed even being involved with all that nonsense anyway.
It spoke about the broader issues. I thought his comment about "undervaluing risk" and admission of a "partial" mistake was a de facto admission he contributed to the problem. You can disagree, but the broader issues were discussed in the article as well.
Anyway, Doc - you're a super smart guy, smarter than me on real estate, for sure, but to pretend that Greenspan's model, which sustained too low interest rates for too long a period of time didn't contribute to the bubble, collapse and many of our fundamental problems today (what's the passbook savings account rate today, 1/10 or 1/8 of a percent? Why is that?) is probably a little not seeing the forest for the trees.
This post was edited on 8/9/13 at 1:53 pm
Posted on 8/9/13 at 1:59 pm to Ace Midnight
The real estate bubble had already started in 1996 or 1997 though, so whatever mistakes Greenspan made around 2003 are largely irrelevant. No matter what he did, he couldn't have stopped the inevitable. That's always been my point.
It's not like Greenspan was some super dove on interest rates and inflation. Far from it. He produced much lower inflation rates than Volcker, and he did try to tamper down expectations and prick asset bubbles more than once. He was just constrained by the situation he found himself in. A different person in his shoes might have done things slightly different at the margins, but in the grand scheme of things, it would have made little difference. For all the hyped up "maestro" talk, in reality Greenspan was a lot more ineffectual and lacking in genuine economic influence than people make him out to have been.
At least that's my story.
P.S. -- And I don't know shite about real estate in particular. To me it's just part of a larger picture of monetary policy that I'm interested in, and so I look to it for signs of bigger macroeconomic trends that might be occurring.
It's not like Greenspan was some super dove on interest rates and inflation. Far from it. He produced much lower inflation rates than Volcker, and he did try to tamper down expectations and prick asset bubbles more than once. He was just constrained by the situation he found himself in. A different person in his shoes might have done things slightly different at the margins, but in the grand scheme of things, it would have made little difference. For all the hyped up "maestro" talk, in reality Greenspan was a lot more ineffectual and lacking in genuine economic influence than people make him out to have been.
At least that's my story.
P.S. -- And I don't know shite about real estate in particular. To me it's just part of a larger picture of monetary policy that I'm interested in, and so I look to it for signs of bigger macroeconomic trends that might be occurring.
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