Greenspan predicts trouble
Former federal reserve chairman Alan Greenspan can’t stop saying ‘boo’ to the boom. Today he warned of the potential for a big drop in the Chinese stock market and fallout for the global economy.
Addressing a meeting in Madrid via teleconference, Greenspan said the recent boom in Chinese stocks could not last.“It is clearly unsustainable,” he said “There’s going to be a dramatic contraction at some point.”
…“In the last five years, the world as a whole is a growing faster than at any time in the world’s history,” he said. “It can’t last and it won’t last because it’s a one-shot adjustment.”
Greenspan said asset prices around the world could fall but that the economy may escape unscathed if it were flexible enough to absorb asset price shocks.
“We will get major declines in certain levels but it need not feed back significantly to levels of employment or the real economy,” he said.
Earlier this month, Greenspan reiterated that he believed there was a one-third chance the U.S. economy, the world’s largest, would slip into recession this year.
Jeez, maybe they should call the guy ‘gloomspan’ his announcement today gave some investors jitters and knocked the North American market back a bit. Just to be safe I’m going to buy some local real estate because I hear prices can never go down there.
May 25th, 2007 at 11:39 am
I don't think we see such price drop in the North West area. In fact, it has been up every month since the start of the year.
May 25th, 2007 at 2:47 am
The builders upped the ante and dropped the incentives for straight discounts.Obviously because the incentives were no longer working, and I would think that's because there just wasn't anyone left to buy at the old nominal prices (subprime meltdown, credit crunch).But this sends a signal to the sellers that the jig is truly up. We'll see how many try to rush to the exits while they still have some equity to take away from the sale.
May 24th, 2007 at 7:55 pm
"And down 11.1% since last month, which is the largest month to month drop in new home prices ever recorded."Me thinks that the drop had already occured over the past years but it was masked by "incentives". The builders upped the ante and dropped the incentives for straight discounts. Thus for all practical purposes, prices didn't just drop 11%. But it does shine light on how shenanigans such as incentives can skew price data. I think many people (myself at least) had already discounted the impact of incentives.
May 24th, 2007 at 7:50 pm
pope,CNN has the story along with just about everyone else. Keep in mind this is new home prices, not resale or overall home prices. Down 10.9% YOY, the biggest drop since 1970. And down 11.1% since last month, which is the largest month to month drop in new home prices ever recorded. I would expect resale home prices to be stickier, but if the home builders keep discounting they'll force all prices down eventually.
May 24th, 2007 at 10:54 am
beta: I think you nailed it.dave: 11.1% in one month?! do you have a link?
May 24th, 2007 at 7:42 am
Not China, but… New home prices in the US are down 11.1% over March of this year. That's a heck of a one month drop.
May 24th, 2007 at 5:10 am
It used to be illegal under the Constitution for Americans to accept titles.Article 1, Section 9:No Title of Nobility shall be granted by the United States: And no Person holding any Office of Profit or Trust under them, shall, without the Consent of the Congress, accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince or foreign State.Guess Bubbles was off the hook when he retired.
May 23rd, 2007 at 10:57 pm
"Just goes to show that things are different now. It used to be illegal under the Constitution for Americans to accept titles."Well, under Canadian law, it didn't work out that well for Conrad Black. He had to renounce his Canadian citizenship to become a "Lord" in England. We've been watching the fallout/drama around that too.Means squat. Rightfully so.
May 23rd, 2007 at 8:23 pm
"He didn't become "Sir" for nothing."Just goes to show that things are different now. It used to be illegal under the Constitution for Americans to accept titles. The idea behind that was to keep lawyers in check with their "Esquire" distinctions.
May 23rd, 2007 at 7:57 pm
Why anybody still listens to that slithery creature is anybody's guess.He didn't become "Sir" for nothing.There was a thread on another blog, discussing Redspam; and a couple guys were piping up about what a superlative economist he is…totally praise-worthy.Other people, that had a couple of neurons to rub together, knew better.The Bubble-Meister is like a rat leaving a sinking ship, but he still trots around, smirking, telling everyone…told ya' so.What a drac.
May 23rd, 2007 at 6:54 pm
Greenspan is like an arsonist who calls the fire department afterward to establish his alibi.
May 23rd, 2007 at 5:25 pm
Does Greenspan have any credibility?My theory is that when Greenspan was in his first year of Econ, he might have theorized out loud in class that creating an everlasting economic boom could be achieved by simply printing money.His prof ridiculed him, and his peers laughed at him in the presence of a babe he had lusted.He became a recluse for years, and vowed someday that his theory would be imposed on the free world.The rest is history.