[PEN-L:28319] U.S. Housing Bubble

["Seth Sandronsky" <ssandron@xxxxxxxxxxx>]

Here's my two cents on the U.S. housing bubble, mentioned at the end of the
LAT analysis that Jim D. posted below:

http://www.commondreams.org/views02/0720-08.htm

By the way, housing prices in Sacramento are skyrocketing, due in part to
the exodus of workers from the S.F. Bay Area.

Seth

It's Greedspan's Fault?
by Devine, James
21 July 2002

Title: It's Greedspan's Fault?
Even if the analysts quoted below are right, it's not entirely AG's
fault. If he stopped pumping up the stock market bubble, that would have
encouraged the very-fragile economy to sink. If he keeps the economy up
(saving LTCM, containing the Asian and Russian contagions, etc., etc.)that
encourages the stock-market bubble. Between a rock & a hard place?
JD

--------------

http://www.latimes.com/business/la-fi-greenspan21jul21.story

NEWS ANALYSIS
Fed Chief Now Blamed for Inflating Stock Bubble
By PETER G. GOSSELIN
Times Staff Writer

July 21 2002

WASHINGTON -- Americans desperately seeking to understand what happened
to their once-ballooning investments and retirement nest eggs were
offered a striking answer last week by the nation's premier economic
policymaker.

(clip)

Indeed, some analysts worry the central bank's decision to reverse
course last year, driving interest rates to a 40-year low and hold them
there to limit the market damage and cope with fallout from Sept. 11,
could be setting the stage for the next bubble, this one in housing.

Greenspan said recently he does not see a housing bubble in the works.

In the late 1990s, "an irrationally exuberant equity bubble was ...
rationalized by a Fed that embraced the new economy with open arms,"
Morgan Stanley's Roach recently wrote.

"Today's script seems hauntingly familiar."

An overly long rise in housing prices "is being legitimized as a
sustainable source of economic expansion," he said.

"From bubble to bubble, there seems to be no stopping the follies and
perils of [stock-] and debt-driven economic growth."

Copyright 2002 Los Angeles Times


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