Greenspan Warns Against Stagflation, Calls For More Aid To Homeowners

AP:

Alan Greenspan, former chairman of the Federal Reserve, suggested Sunday that a tax break or other government financial help for homeowners facing the mortgage crunch would be the best political fix for the economy.

He cautioned against meddling with home prices or interest rates to address the housing problem.

Greenspan did not specifically call for a tax cut. Instead, he called for the government to apply money to the severe housing market slump. Such a cash infusion would typically come through a tax break or a new government spending program.

Read the whole story: AP

Comments

[socalclint]

*my not 'by'. oops.

[socalclint]

Gee...when I bought by house(s) I actually had to save up the 20%. Why should we have to bail out people who couldn't afford to buy? Let the S&L's, Mtg. Co. and Banks take the hit instead of rewarding people for not doing their homework.

[Saganslegacy]

You're talking the 'eternal sin' in a capitalist society, man.

[Troubledwawa]

Two things:

1) Ummm, Alan, we are in a recession. The depression question is 50-50. Levitz just announced a nationwide going out of business sale. Other businesses are closing their doors as well around where I live. That's how I gauge it Alan. My gauge says we're on the 50 side of a possible depression.

2) What Mr. Greenspan's solution doesn't account for is people bought when the price was too high. The value is declining right now. Soon the banks will be on people to make up for the differences between their new home values, and what they mortgaged for.

When doing a comparative market analysis, a home is compared with another home of comparable sq. footage, number of bedrooms, and number of baths. These homes that are compared have to be within one mile of each other, and sold within one year.

One year Mr. Greenspan. The good prices for homes stopped in Q2 of 2007. In Q2 of 2008, all those high prices can no longer be compared with.

So what's left? Foreclosures. Which are about 30% to 50% off of the previous values. And that's where the banks will have a fit. A person is only allowed to have a mortgage that's within 125% of the value of their home at any given time.

That 125% rule Mr. Greenspan, is the one you should be looking at, Sir. Suspend it before it screws a lot of folks over.

[ForRichardorPoorer]

only 5% of the mortgages made over the past "say" seven years were to sub-prime (risky as-hell) borrowers. These were packaged up and sold off to investors who had more money than ("cents") to purchase these financial instruments. Tax-payers should not be responsible to bail out these individuals. What is the point in maintaing excellent credit, paying bills on time, if those that don't get bailed out. WTP (whats the point)

[dolphy]

Does he think that after getting us into this hole that we'll listen to him to dig a deeper hole?

[Maxbyte]

The man cannot shut up. I admit that I'd much rather have Greenspan overseeing the economy than Bernanke, but only if Bush leaves him alone and Bush can't let anything go unscrewed-up.

[ipitombi]

Isn't this hack supposed to be retired or in a nursing home somewhere in Connecticut?

[Mr.Fitz]

George "some people call you elite--I call you my base" Bush will never go for direct financial aid. We will have to wait it out at least a year until anything is done on that front.

[getoffmedz]

Now, here is a weasel worded statement. Greenspan means "mortgagees," look it up.

[AMolinaro]

I think this is clear evidence that we need to freeze interest rates and meddle with home prices, seeing as how Mr. Greenspan's radical ideological approach to running the Fed and regulating our captive-market economy is a major factor in our current troubles.

[rh654]

Before the Media continues to salivate over every utterance from Greenspan - they would the country a HUGE favor if they simply would remind us (before they lay out the latest "gold tablets" from Greenspan) of Greenspans decisions while he reigned at the Fed - and the outcomes to the US Economy of those decisions.

[tililek]

I, as one taxpayer, am tired of hearing that those of us completely uninvolved in this crap, am being asked again to pay for someone elses profits.

Why doesn't the goverment asked those that profited so nicely from the housing mess be the ones who pay for it? Or, does the thought of rich people unable to give money to someone's hopeful election opportunities again mean someone who can ill afford the stupidity of our government bail them wealthy ones out?

[jpshotwheels]

Mr. Greenspan, it seems that the 12 million dollars missing in Iraq, that was shipped from NYC to DC in a truck, then hauled over to Iraq in Military airplanes, in bundles of $400,000 each on Wooden Pallets, could have helped alot of home owners out right now. You know all that money you know nothing about, since your the head of FRB, I am sure your signature wasn't required, for the two biggest withdraws from the FRB in American history.

Seems like alot of his decisions are the cause of alot of this mess, is he feeling a little guilty now.

[themodernleader]

Our centrally controlled media is so enwrapped in broadcasting every utterance of the disgraced Mr. Greenspan because they captured unimmaginable wealth at the expense of the American citizentry through his policies.
These business monopolists intend to write the history of America that shows Chairman Greenspan as the Founder of American Economic Flowering. And it is true that the victors write the history books.
Historians from overpowering economic systems in the not to distant future will rewrite the history of the Greenspan era as the destruction of the American model of self-governance through monopolistic management, concentrated wealth and foreign dominance.