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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: CalculatedRisk who wrote (57881)	7/17/2006 1:34:42 PM
From: ChanceIs	Respond to of 306849

>>>That is a polite way of saying he thinks Greenspan blundered.<<< That is an interesting article. Thanks for posting. I will give you my broad brush two cents worth. I think that the FED should fight bubbles. Greenspan was famous for irrational exuberance in '98 (or was in earlier - '97?). He fought that bubble with words, while at the same time supply liquidity to ward off the run on the banks from Y2K - perhaps not a bad move, but in retrospect uneeded. Crude falling to $10 in conjunction with the LTCM meltdown injected even more liquidity. The excess went into stock - for reasons I am not able to explain. It was just the stock mania. As far as I am concerned, the excess liquidity from the late '90s never went away, and remains to this day. I think that the liquidity simply moved from stocks to housing, and has created a severe and painful bubble there. I think that Bernanke has to lance it, and that he will. At the end of the day, the economy grows when capital is applied where it is most needed. I think we have more than enough housing. I think that we need cheap energy, and that is where the capital (actual or excess) should flow.