patrick.net

skibum :

Agree that many FBs didn't know what this Greenspan thing is and even if they knew had any ability to decipher his particular dialect.

But if he was saying that publicly. I don't know what his actions/words were in private. But evidence indicates that he was either ineffective in combating the lending practices, or he chose not to interfere. That amounts at the least to tacit support. His public speech amounts to encouragement.

And this was not rocket science. So many journalists and bloggers were able to see it. People in high places should be held to higher standard. Else there is no hope for a society. We have apologizers of politicians, CEOs, Fed chairman ... you name it. It may not be intentional spin, but still a spin.

“Bay Area house prices won’t fall much because the median is going to keep them up.”

Sounds to me as if the writer never lived here during the other Busts of early 70s or early 80s or the early 90s....
OK! you werent around then so i forgive you ... but when it drops
as it dropped before regardless of the so called medians... you will learn..

“Bay Area house prices won’t fall much because the median is going to keep them up.”

The fact that this idjit's clients didn't turn around and walk -- no, bolt -- out the door as soon as he said that gives me the shivers. Makes me think that there are a lot more greater fools (with means, no less) out there than I thought.
Sigh.

No city or zip numbers from DQ so we are left to mine the press release for nuggets.
Foreclosure resales accounted for 4.8 percent of August's sales activity, up from 4.5 percent in July, and up from 1.2 percent in August of last year. Foreclosure resales do not yet have a regional effect on prices.
So from these three datapoints, looks like foreclosure resales have been increasing 0.3 percent per month since last year -- this on a sales base that has been decreasing. I wonder at what point it will be determined that foreclosures are having a "material impact". Just for reference, SoCal is at 8.8 percent.

"Bay Area house prices won’t fall much because the median is going to keep them up.”

It just shows that the NAR test should incorporate high school level math for its realtors. Did they even finish high school equivalency?

“Bay Area house prices won’t fall much because the median is going to keep them up.”

The ditz could have continued with "And you know, half the houses are currrently selling for prices ABOVE the median!"

That'll close the sale.

WASHINGTON, Sept. 17 (Xinhua) -- U.S. President George W. Bush was surprised by former Federal Reserve Chairman Alan Greenspan who in his new book criticized the Bush administration harshly, White House press secretary Dana Perino said Monday.

"The president was a bit surprised by some of the criticism in the book," she said.

In the 500-page book, "The Age of Turbulence: Adventures in a New World," Greenspan accuses the administration and the Republican-controlled Congress of abandoning their party's principles on spending and deficits, according to The New York Times on Friday.

The former U.S. central bank chief describes the administration as so captive to its own political operation that it paid little attention to fiscal discipline.

"My biggest frustration remained the president's unwillingness to wield his veto against out-of-control spending," Greenspan wrote in the memoir.

Defending Bush's fiscal policies, Perino said that veto threats from the president were enough to keep spending from spiraling too high.

Under Bush, government spending for the fight against terrorism increased, and Perino said the Bush administration does not need to apologize for acting on behalf of "the safety and security of the American people."

Greenspan also alleges in his book that "the Iraq war is largely about oil."

But Perino said that Greenspan has since "acknowledged that oil was not the president's motive for our engagement in Iraq."

Greenspan, 81, was chief of the Federal Reserve from August 1987 until January 2006. He was the second-longest serving chairman in the Fed's 93-year history.

>> In the 500-page book, “The Age of Turbulence: Adventures in a New World,”

Looks like a Harry Potter fairy tell ... sigh ...

In the 500-page book, “The Age of Turbulence: Adventures in a New World,” Greenspan accuses the administration...

You know, in a world with any sort of class, any semblance of a code of gentlemanly honor, respectable authors would refrain from mouthing off to create a controversy to coincide with the book's release.

One would expect men with academic and scholarly reputations (or at least a pretense of the same) would be above such tawdry shenanigans to promote a book. It makes me feel mildly icky to be a contemporary in such times.

SP

“My biggest frustration remained the president’s unwillingness to wield his veto against out-of-control spending,” Greenspan wrote in the memoir.

i suspected as much, but this confirms it. greenspan really is an idiot of the first order. blind objectivist douchebag. he makes it sound like the spending was coming from congress and bush was merely tolerating it. everyone knows congress was bush's bitch. cheney was telling bush "deficits don't matter," and then strong arming every gop lapdog into voting to cut taxes on mega-rich dead people while handing out taxpayer money in the form of corporate subsides and hooker/drug money for ted haggard and the gay-bashing/man-mounting religious right (never mind bush's war). if there is even a smidgen of justice left in this world bush (and his enablers) will get full blame for the coming economic disaster. hopefully he already gets the blame for his other disasters. worst president ever. forever, i suspect.

In his prepared answer to the accusations made in Greenspan's book, President Bush said that, "We recognized that, despite our suspicions, it was very difficult to definitively identify a spending bubble until after the fact". He also claimed that "I didn't get it", while acknowledging that deficit levels may have seemed as elevated more than what could be deemed as necessary under normal circumstances by many economists.

“Bay Area house prices won’t fall much because the median is going to keep them up.”

Step one ... pick up Sat edition of San Jose Mercury
Step two flip to the Real Estate pages
Step three read that only one third of homes are getting above asking
and two thirds are selling below asking.
Step four repeat each weekend step 1 to 3.

or watch on Dqnews.com as mediam prices are declining ...

http://www.dqnews.com/ZIPSJMN.shtm

Did anyone else see the way-too-long Greenspan interview/book commercial on CNBC? It was all Maria B. interviewing the wrinkled lizard-man. It was a bit sickening to see Maria fawning over him like some schoolgirl with a crush on her teacher. She more than once said (to paraphrase), "you held the most important finance position in the world. You were steering our nation's economy during some historic events. So much power! OOOHHH!"

Maria sadly moved one notch down in my book after this fluff piece.

Kiyosaki is one step ahead of Greenspan. He is not going through the CYA routine, he has jumped in to "I told you so" mode.

http://finance.yahoo.com/expert/article/richricher/45300

WASHINGTON, Sept. 17

But Perino said that Greenspan has since “acknowledged that oil was not the president’s motive for our engagement in Iraq.”

Oh, so they did threaten to torture or kill him or his family or ruin his family members' businesses for generations to come after all...

You guys love to complain about Greenspan but you have him to thank for the fact that none of you under 40 have ever had to live through a real recession ever in your entire working career. And even the one in 1989 was mild by historical standards. Sure he made some mistakes, but wait until unemployment is 10% and unemployment amongst the under 30 set is 20%. Then you will appreciate him some more, I suspect.

Though I think that we won't see that kind of thing soon, we will see it in our lifetime, if the FCB stop supporting our deficit spending. Probably not this year though.

There was a recession in the 80s, with interest rates up to 17% etc around the world. The Australian Treasurer said it was 'the recession we had to have'. Now they just tweak the GDP figures to hide recession periods as defined.

Anyhow, to say Greenspan has averted recession and we are all so lucky the vagaries of capitalistic societies haven't killed us yet is like saying there's a 'good' demon in charge of the temperature control in hell who doesn't like to turn it too high...

www.shadowstats.com

e.g.

Overstated GDP growth has meant that the 1990 and 2001
recessions were much more severe than recognized, and that lesser
downturns in 1986 and 1995 were more or less missed entirely.

http://www.shadowstats.com/cgi-bin/sgs/article/id=344

Jimbo,

I've always felt it was far more important for investors (and consumers) to be able to recognize the early warning signs of recessions and have plans in place to contend with them. A recession has different implications for each of us. Being able to customize our responses to them, is a basic survival skill. Taking away the "R" word (or "masking" it as DS implies) takes away the need for those basic skill sets.

Oh and btw, (don't tell HARM AG has always been there for him!)

You guys love to complain about Greenspan but you have him to thank for the fact that none of you under 40 have ever had to live through a real recession ever in your entire working career.

@Jimbo,

First, you make an assumption that recessions are necessarily bad things. Sure, that's true for the individuals who suffer financially. However, many would argue that recessions are unavoidable, natural components of the normal business cycle. They are needed to clean out the excesses of high-growth periods. One could argue that the LACK of a real "serious" recession during the AG years was artificial and only serves to destabilize the economy into a higher likelihood of either a serious recession or depression down the road.

Take the current situation. If Bernanke forgets about inflation risk and re-inflates assets, its likely the "true" fall down the road will be that much more severe.

Also, on your other point, as I think you yourself pointed out, the tech recession post dot-con was certainly a recession for the Bay Area that many people suffered through.

Stuck,
"We have apologizers of politicians, CEOs, Fed chairman … you name it. It may not be intentional spin, but still a spin."

I wondered when it would be written that I am an apoligist of Greenspan. :)
I am not. Something worth noting on his now famous speech about ARMs is that once how he was misinterpretted was made clear to him he gave another speech clarfying his statement. THAT speech was not carried widely by the media. So, the media's cheerleading of the housing boom certainly has its part to play.
In the end, I feel history will not really deal with Mr Greenspan at all. Volcker was hated for years but now is respected. Whomever is the Fed chief when Medicare either goes bankrupt or has its benefits radically changed will raise to the level of historical significane.

But back to the basics of this Blog - actionable information about housing. I maitain that the Fed will lower rates by years end to 4.5%, then a late 70s era style of massive rate hikes to combat huge inflation will begin in earnest by late 2008. A strong cash position in '09 and beyond will give people a chance to buy much more reasonably priced homes. By '11 we may see the best buying opportunities. Given the factors stay the same. For my part, I keep wondering when technology will solve the Bay Area housing problem by allowing the virtual office. I have been wondering this for over a decade. Sigh.

Jimbo Says:
You guys love to complain about Greenspan but you have him to thank for the fact that none of you under 40 have ever had to live through a real recession ever in your entire working career.

I have lived through two - the early 90's recession and the short one following the dot-com bust. In the Bay Area, that period _was_ a significant recession.

I don't see recessions as necessarily bad - it is a little bitch-slap of reality in the face of complacency. It forces businesses (and people) to be adaptable and productive, and shakes out speculators and unproductive remoras from the system. Not letting this happen is a bad thing.

I would not complain if it was part of the Fed's charter to let mild recessions happen once every five years. Put a basic social safety net in place to catch the people involved so they don't have to go begging, and aggressively let bad businesses die. Unfortunately, we seem to be doing exactly the opposite of this.

SP

First, you make an assumption that recessions are necessarily bad things.

One of my lib/democrat-type friends thinks that recessions are bad and that not only should the government avert recessions, they should step in and keep stock prices up.

I don’t see recessions as necessarily bad - it is a little bitch-slap of reality in the face of complacency.

Liquidate labor, liquidate stocks, liquidate farmers.
-- Andrew Mellon

What needs to happen needs to happen. Delaying the inevitable is not necessarily wise. If we really slip into a depression, we just need another war.

Duke :

Sorry if my responses were harsh. There is more to despise in Greenspan than that infamous speech. We can debate endlessly about the actual motivation of that speech or the "clarification" speech. But "Greenspan put", bailouts, liquidity injections etc is there for all of us to see.

During the late 90s leading to the dot com boom I saw people deifying Greenspan, Abby Joseph Cohen, Cramer etc. My tolerance level for these people is especially low. Greenspan refused to accept the existence of the bubble. Then he created another one. Without learning any lesson from not so distant past. And refused to accept existence of that bubble either.

Now he is pathetically trying to rewrite history. And I do believe that history will not forgive him. The same people who were thanking him for creating a housing ATM will blame him for their misery. My views won't matter.

Put a basic social safety net in place to catch the people involved so they don’t have to go begging, and aggressively let bad businesses die.

If we let the market work its way, poor people will be disincentivized from procreation. Over time, poverty will be eliminated.

Again, we have the opposite.

Logic dictates that we end all means-based welfare programs.

I couldnt find a job in 1989. That was a major depression for me. I wondered why I went to college.

Oil is the reason we are in the Middle East. The Chinese are doing the samething in other areas. And arguably it is the best reason to go to war. Certainly more meritorious than saving Hawaii for rich Asians to vacation to. We sufferred 550k casualties in WW2 so that Russia could extend its Communist Empire. Is that a better reason that pursuing oil reserves?

And arguably it is the best reason to go to war.

I agree!

We sufferred 550k casualties in WW2 so that Russia could extend its Communist Empire. Is that a better reason that pursuing oil reserves?

Now, there is a much better peace-keeping tool. Mutual Assured Destruction.

It is not just about pursuing oil reserves. It is also about securing oil reserves.

I just wish that the war was managed slightly better.

The only just cause of war is the pursuit of resources.

StuckinBA,

Like many here, I've dedicated altogether too much of my life trying to read between the lines? The way that I understood "that infamous speech" was;

"Look, we all know the 2 year cap gain exemption is quite possibly the most generous table scraps we've EVER allowed to fall off the table. So let's quit pretending Joe and Jane Sixpack have ANY interest in building up long term equity in their primary "ATM" and have totally bought into the "buy to flip model". Housing consumers should take advantage of the even LOWER rates ARM's offer b/c we all know full well you'll be dumping it long before they've built up any paid in equity anyway! It's "The New American Way!"

Or... was that just me reading too much into it?

Salk

Sorry, you need to read up on your history, WW2 was not just about Hawaii and extending Russias empire.

I personally have know people who lived with the horror of Dunkirk, I dread to think what it was like for those in the concentration camps!

salk Says:
We sufferred 550k casualties in WW2 so that Russia could extend its Communist Empire.

That was the (unintended) consequence of the war, not the reason for American participation. The US joined the war to support the English, and to prevent German consolidation of power in Europe. It is arguable that the war on the Russian front actually reduced the number of allied (US/UK) casualties in the west. So that 550K number could have been a lot higher.

SP

Also, without that WW2, things will be a lot different now. I doubt even air travel would be popular/affordable.

I think this talk from Greenspan about interest rates needing to go into the double digits is no more than just candy to bring confidence to the dollar which is doomed anyway. I think Ben and Alan are on a tag team; Ben wants to cuts rates as Alan baffles everyone with bull$hit with false hope that the dollar will eventually rally. It's funny how this information gets out just before an expected rate cut.

Did Bush appoint Bernanke? I'm surprise he didnt appoint MLM guru Kiyosaki instead. That wouldnt surprise me at all. So many clowns and cronies surrounding bush (remember harriet myers?)

salk,

I'm going to guess that you didn't wonder much about history while in college. Your claims about Americans dying to make Hawaii safe for rich Asians and USSR expansion is particularly prepostrous.

1. Wouldn't Hawaii be even more welcoming if the Japanese were in control and spoke Japanese (and everyone in East Asia spoke Japanese because they're members of Imperial Japan's Co-Prosperity Sphere)?

2. Most successful Communist movements, especially in Asia and Latin America, was nationalistic in nature. USSR's "empire" was sufficiently unwieldy to distract it from America for a good chunk of the cold war and ultimately brought its downfall in the Afghan war.

Actually, the core of both WWI and WWII was largely about empire - between the first wave empires of Great Britain/France/Benelux and the second wave empire wannabes Germany/Japan. The heavy tolls on both sides created a power vacuum that was filled by the US and USSR. US and USSR, barred from direct confrontation due to the insanity of MAD, fought limited wars in Korea, Vietnam and Afganistan...and suffered mightily for it.

There is an important takeaway from this: modern empires should avoid armed conflicts, even regional conflicts, as much as possible. Any such conflict is likely to weaken its position domestically and internationally, conveniently creating a power vacuum for...if we're lucky then the EU/Japan/Korea; if we're unlucky then Russia/China/India.

Most people on this blog are interested in the Fortress and nearby areas. I like to play a lot more attention to the Fringe, as I consider it a sneak preview - to a certain extent.

So this morning's bit on KCBS about Mountain House caught my attention. For those not in BA, this is a completely new town built near Tracy. Seems like it is becoming a foreclosure city. The reporter pointed out the irony of the street names like "Prosperity". Vacant houses and brown lawns and all that stuff. One guy commented that the foreclosures and short sales are not really selling. The reason ? Builders are still building and offering discounts of 100K.

A person I know first hand had booked a house there. About 2 years ago. A brand new, huge house less than 600K. Suddenly he got cold feet and surrendered his deposit. I was quite surprised, as the conventional wisdom even then was "BA and everything around it is special". I don't know what research he did. Maybe he discovered a blog or two. But I commented to my wife that he paid a small price and saved himself from making a huge mistake. She didn't believe me then. I am sure the guy is feeling much better now.

600K in Mountain House didn't seem that bad then, because similar houses even in Los Banos had similar range, Tracy was 700K and Dublin was 800K. Now all these prices seem ridiculous. A lot changed in last few months. But this is also how the wave retreats. Since you can get a house for 400K in Mountain House, you won't pay 700K in Tracy and 800K in Dublin. And so on.

There is an important takeaway from this: modern empires should avoid armed conflicts, even regional conflicts, as much as possible.

I thought modern empires should facilitate other people's conflicts as much as possible. ;)

Peter P,

Possibly the case in theory, but likely to yield unpredictable blowback in real life. See also modern histories of Russia, Iran, Iraq and Afghanistan.

"It is arguable that the war on the Russian front actually reduced the number of allied (US/UK) casualties in the west."

The Red Army kept 190 German divisions occupied that would have been free to fight elsewhere. The Red Army also took casualties in the range of 100,000 dead per week for about 4 years, while killing about 7 million or so Germans (and it wasn't the "winter" that defeated the Germans, as the Germans were at the outskirts of Moscow for three years. German defeat came from the 360 Red Army divisions that the Soviets were able to put together after retreating, scorching the earth, and regrouping after the surprise German invasion). Yes, I'd say the Soviet efforts in their Great Patriotic War saved a few Anglo/American lives.