Thursday, September 29, 2005
Greenspan/American Bankers Association
I want to address Greenspan’s recent discussion with the American Bankers Association. I touched on it a little bit in my previous ‘Middlemen’ post.
Different outlets have provided different perspectives on his comments. The AP’s Jeannine Aversa summarized his comments with this article . As you can see from the headline, Greenspan’s reassurance that most homeowners have accrued enough equity to survive a housing recession was highlighted in her summary.
It worries me a little bit because this rosy colored headline is what most Americans read. Every newspaper I read displayed this headline.
Of course Greenspan is going to shed some optimism on the situation. He never makes discouraging comments without also bringing some optimism to the conversation. I interpret this comment as little more than ‘fluff’… certainly unworthy of the headline.
Of course, there is merit behind his optimism. The portion of consumers who do not have a sufficient equity base are generally in markets where the recession will be minimal. In markets where prices may recede, homeowners do have more of a cushion.
This address to the ABA was made in the wake of the release of his comprehensive report on housing market as it relates to consumer debt. (Download Report-7.6MB)
Remember, the plan to create an economic surge by lowering rates to allow for increased consumer spending through home equity extraction is Greenspan’s brainchild. He believes in the maneuver. There is a faction of economist who do not support this method. His optimistic statements could be in defense of his strategy.
Of course, I must make a reference to the DOJ/NAR investigation…
There is probably no one who would rather see the 6% standard commission decreased more than Greenspan. It would buy his strategy more time and/or help homeowners dig themselves out of the hole that Greenspan has endorsed digging.
Rob Steiner
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