The Residential Real Estate Crash Index Message Board

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Strategies & Market Trends : The Residential Real Estate Crash Index

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To: Wyätt Gwyön who wrote (34625)	6/29/2005 12:23:35 PM
From: bluepearl	Read Replies (1) of 306849

In the late 90's Greenspan had a term for this with regard to the stock market. I believe he called it the "Wealth Effect". This quote from 2001 shows Greenspan's view: ************************* NAR shared its findings with the Federal Reserve Board in mid-October, in response to a meeting between the association’s leadership and Chairman Greenspan earlier this year. “At the time, Mr. Greenspan theorized that the wealth effect of homeownership was offsetting some of the losses on Wall Street in the overall economy – this survey shows Mr. Greenspan is right,” Lereah said. ************************** Funny that in the late 90's Greenspan pitched the wealth effect begin generated by the stock market as a negative that encouraged him to hike rates. Yes, perhaps the wealth effect smoothed over the stock bubble but when and how do you pull the plug on this monster.

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