Florida Virtual Houses

Why Do We Listen to this Man?

August 1st, 2008

Former Fed Chief Alan Greenspan sent the stock market into a tailspin this week after declaring home prices were "nowhere near the bottom." Just a month ago Greenspan said: "The worst is over in the financial crisis or will be very soon."

Keep in mind that this is also the guy who, during the mid-point of the housing bubble in 2004, declared: "American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional fixed-rate mortgage." That one sentence gave blessing to the wave of toxic mortgages the world is digging itself out from under today.

I have my own emperor has no clothes story about Greenspan. In 1994 I attended a private briefing with the then Fed Chairman. I asked him what he thought of Mexico's then booming economy. He said in his own obtuse way that Mexico was in great shape and had a very bright future. The very next week the peso collapsed in an entirely federal reserve driven/monetary policy failure. Greenspan & Co. were forced to come rescue the country.

So much for oracles.

Entry Filed under: News