Sunday, August 28, 2005

Greenspan Warns of Irrational Real Estate Exuberance

A stock, er, housing bubble? Not really a surprise.
This is the end
My only friend, the end
Of our elaborate plans, the end
Of everything that stands, the end
No safety or surprise, the end
--The Doors

via NY Times.
Greenspan Says Housing Boom Is Nearly Over

Published: August 28, 2005
JACKSON HOLE, Wyo., Aug. 27 - Looking forward to the time after he steps down as chairman of the Federal Reserve, Alan Greenspan predicted here on Saturday that the nation's frenzied housing boom - and the consumer spending that it has spurred - is near an end.

In a generally sanguine outlook at a Fed symposium here this weekend, Mr. Greenspan said both the excesses of the housing market and the nation's unprecedented dependence on foreign borrowing were likely to correct themselves through the normal function of market forces.

Two years ago, I was in London for a bit, and noticed that even the most ghetto of the ghetto suburbs (Sutton and Brixton) had housing prices that were completely off the hook. A ghetto townhouse for $600,000 CDN? No thanks.

The gigs up and if the cheap cash disappears and foreign buyers of US bonds give up on the dollar, we may be in for some currency turbulence. Interesting times...for currency geeks.

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