Tuesday, September 27, 2005

Greenspan Says "BUBBLE!"

Is there is, or is there ain't a bubble?

Federal Reserve Chairman Alan Greenspan made a speech again today and actually used the word "bubble" in reference to the housing market. And to make it even more momentous, he said it's not the job of the fed to either identify, nor address such things. Here's an excerpt:

Relying on policymakers to perceive when speculative asset bubbles have developed and then to implement timely policies to address successfully these misalignments in asset prices is simply not realistic. As the Federal Open Market Committee (FOMC) transcripts of the mid-1990s duly note, we at the Fed were uncomfortable with a stock market that appeared as early as 1996 to disconnect from its moorings.
That's an undeniable admission by the Federal Reserve Chairman that he believes there might be a national housing bubble.

The speech, which was made to the National Association for Business Economics Annual Meeting in Chicago, is posted in its entirety at this link.

— The Boy in the Big Housing Bubble