{"id":1962,"date":"2007-09-23T10:10:52","date_gmt":"2007-09-23T17:10:52","guid":{"rendered":"http:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/?p=1962"},"modified":"2007-09-23T10:13:54","modified_gmt":"2007-09-23T17:13:54","slug":"is-greenspan-to-blame-for-the-housing-crisis-and-if-he-is-is-this-entirely-a-bad-thing","status":"publish","type":"post","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1962\/is-greenspan-to-blame-for-the-housing-crisis-and-if-he-is-is-this-entirely-a-bad-thing\/","title":{"rendered":"Is Greenspan to Blame for the Housing Crisis? And, if he is, is this entirely a bad thing?"},"content":{"rendered":"

The second half of a US News dyscomium on Alan Greenspan’s Fed:<\/a><\/p>\n

The global spread of capitalism has increased inflation-dampening competition throughout the world and allowed investors to accept lower yields when investing in bonds. What’s more, globalization has boosted incomes, in Asia and beyond. That has expanded the pool of savings that can flow into U.S. debt, forcing rates lower. The result, according to a 2006 paper by economist Tao Wu at the Dallas Federal Reserve Bank, is a “substantially weakened” Fed.<\/p>\n

Then again, Greenspan might want to embrace his role in all this. Just as the Internet bubble left behind Google, eBay, and 90 million miles of fiber optic cable, the credit bubble upgraded America’s aging housing infrastructure and created a host of online services—Realtor.com, Zillow—that have permanently shifted the balance of power from real-estate agents to consumers. As Australian economist and bubble-ologist Jason Potts puts it, “A bubble is good for growth because it creates a low-cost environment for experimentation.” Even if it eventually pops.<\/p><\/blockquote>\n

It’s understood that unwarranted risk results in a voluntary transfer of wealth from the badly-advised to the better-advised. In real estate, professional investors are slavering at the sidelines waiting to pick up foreclosed homes.<\/p>\n

For my own part, I find myself wondering why only a few price categories have risen substantially during what has been the ten years since the U.S. went of the Volckerized pseudo-gold-standard<\/a>. I had thought the answer was in productivity increases owing to technology, but I hadn’t considered the impact of much cheaper imported goods, especially from China.<\/p>\n

What Paul Volcker was doing, and what Greenspan was doing until 1997 or so, was surfing the price of gold as a guide for currency inflation. If the price of gold was relatively stable, then the Fed was inflating the currency at approximately the same rate that productivity was growing. Post hoc<\/i> — irrational exuberance, dot.com bomb, Enron\/Tyco\/etc., 9\/11, housing boom — the price of gold is up substantially, which argues that the money supply has increased far ahead of productivity. Except that prices for services and manufactured goods (excluding housing) have not risen accordingly. Ignoring Read more<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

The second half of a US News dyscomium on Alan Greenspan’s Fed: The global spread of capitalism has increased inflation-dampening competition throughout the world and allowed investors to accept lower yields when investing in bonds. What’s more, globalization has boosted incomes, in Asia and beyond. That has expanded the pool of savings that can flow […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_crdt_document":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[8,26,6,5],"tags":[],"class_list":{"0":"post-1962","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"hentry","6":"category-investment","7":"category-lending","8":"category-marketing","9":"category-real-estate","11":"no-featured-image"},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack-related-posts":[{"id":1932,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1932\/odysseus-medal-nominees-voting-for-the-peoples-choice-award-is-open\/","url_meta":{"origin":1962,"position":0},"title":"The Odysseus Medal: Voting for the People’s Choice Award is open","author":"Greg Swann","date":"September 16, 2007","format":false,"excerpt":"We had a ton of very strong entries this week. I had to eliminate more than half to get to a short list of twenty nominees. If you didn't make the cut, don't despair. You'll come back even stronger next week. Everything was terrific, a real treat for me going\u2026","rel":"","context":"In "Blog Carnivals"","block_context":{"text":"Blog Carnivals","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/blog-carnivals\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":18710,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/18710\/2023-housing-bubble-or-2024-real-estate-boom\/","url_meta":{"origin":1962,"position":1},"title":"2023 Housing Bubble or 2024 Real Estate Boom?","author":"Brian Brady","date":"May 15, 2022","format":false,"excerpt":"Zillow \"creates\" digital home valuations and The Fed \"creates\" digital currency so it's not like we are dealing with credible institutions BUT: The Dallas Fed is worried that housing is overvalued. Our evidence points to abnormal U.S. housing market behavior for the first time since the boom of the early\u2026","rel":"","context":"In "Real Estate"","block_context":{"text":"Real Estate","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/real-estate\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1958,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1958\/if-you-dont-have-green-use-red-fidel-castro-reads-alan-greenspan-but-not-at-full-price\/","url_meta":{"origin":1962,"position":2},"title":"If you don’t have green, use red: Fidel Castro reads Alan Greenspan, but not at full price . . .","author":"Greg Swann","date":"September 22, 2007","format":false,"excerpt":"Photo from the Drudge Report: What is Fidel Castro reading? Let's take a closer look... And like any smart senior-citizen on a fixed income... ...he bought it from a discount retailer... (Sorry about the image quality. Only on TV do photos improve when they are massively enlarged.) Technorati Tags: real\u2026","rel":"","context":"In "Marketing"","block_context":{"text":"Marketing","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/marketing\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":10073,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/10073\/why-the-housing-bubble-hit-some-areas-harder-than-others\/","url_meta":{"origin":1962,"position":3},"title":"Why the Housing Bubble hit some areas harder than others.","author":"Al Lorenz","date":"October 14, 2009","format":false,"excerpt":"I don't know if you're familiar with Randall O'Toole from the Cato Institute, but he's much better reading than Lawrence Yun.\u00a0 I was just acquainted with one of his latest works entitled How Urban Planners Caused the Housing Bubble. If you're in real estate, it is a must read.\u00a0 I\u2026","rel":"","context":"In "Carnival of Real Estate"","block_context":{"text":"Carnival of Real Estate","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/carnival-of-real-estate\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":16209,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/16209\/americans-will-downsize-and-live-multigenerationally-in-order-to-offset-the-fraud-they-know-exists-in-real-estate-until-there-is-wage-growth-and-that-could-be-years-or-decades-away-people-will-n\/","url_meta":{"origin":1962,"position":4},"title":"“Americans will downsize and live multigenerationally, in order to offset the fraud they know exists in real estate. Until there is wage growth, and that could be years or decades away, people will not trust any upward movement in real estate values.”","author":"Greg Swann","date":"September 27, 2012","format":false,"excerpt":"A searing indictment of The Bernanking System in Business Insider:Once people start to come out of negative equity, even more of them will sell and try to get out from under the cloud they are under. So, the housing bubble orchestrated by the Fed and by the hedge funds and\u2026","rel":"","context":"In "Investment"","block_context":{"text":"Investment","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/investment\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":3917,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/3917\/mortgage-market-week-in-review-6\/","url_meta":{"origin":1962,"position":5},"title":"Mortgage Market Week in Review","author":"Tom Vanderwell","date":"August 15, 2008","format":false,"excerpt":"Well, it\u2019s Friday again, and as one of the few remaining Fridays of the summer, I hope you can get out and enjoy the weekend (and hopefully the weather where you are will allow you to!) So what\u2019s been happening in the mortgage market this week? This week it\u2019s been\u2026","rel":"","context":"In "Lending"","block_context":{"text":"Lending","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/lending\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"_links":{"self":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/1962","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/comments?post=1962"}],"version-history":[{"count":0,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/1962\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/media?parent=1962"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/categories?post=1962"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/tags?post=1962"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}