Greenspan sees house price bottom in 2009: report

Reuters
Thursday, Aug 14, 2008

Former Federal Reserve Chairman Alan Greenspan predicts U.S. house prices will begin to stabilize in the first half of next year, even as he faulted the government’s rescue of mortgage market giants Fannie Mae and Freddie Mac, the Wall Street Journal reported on Thursday.

“They should have wiped out the shareholders, nationalized the institutions with legislation that they are to be reconstituted… as five or 10 individual privately held units,” which the government would eventually auction off to private investors, Greenspan said in an interview with the Journal.

In a high-profile rescue orchestrated in mid-July, the federal government offered to buttress Freddie and Fannie, the two largest providers of U.S. home mortgage funding, with billions of dollars of capital if the companies were on the verge of collapse.

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Greenspan acknowledged that a government backstop for the shareholder-owned government-sponsored enterprises, or GSEs, was unavoidable, the paper said.

Not only are the they crucial to the ailing mortgage market now, but the Fed-financed takeover of investment bank Bear Stearns Cos also made government backing of Fannie and Freddie debt “inevitable,” he said.

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2 Responses to “Greenspan sees house price bottom in 2009: report”

1. Pomahob Says:
   August 14th, 2008 at 11:46 am

   Greenspan is a lying ass. The financial woes he helped create have not even started yet…

   ¨There is more bad news coming down the pike, news of such magnitude that no amount of ordinary manipulation is liable to conceal it.

   For one thing, roughly $400 billion in ARMs (adjustable rate mortgages) have or will reset between March and October of this year. Assuming 3 to 6 months for strapped debtors to actually hit the wall with their payments, a huge wave of defaults is about to strike, continuing through March 2009 – just in time for the next huge wave of resets, in option ARMs.

   Option ARMs are loans with the option to pay even less than just the interest on the loan monthly, increasing the loan balance until the loan reaches a certain amount (typically 110% to 125% of the original loan balance), when it resets. The $800 billion credit line recently opened to Fannie Mae and Freddie Mac may be not only tapped but tapped out, at taxpayer expense. The underlying problem is little discussed but impossible to repair – a one quadrillion dollar derivatives scheme that is now imploding. Banks everywhere are facing massive writeoffs, putting the whole banking system on the brink of collapse. Only public bailouts will save it, but they could bankrupt the nation.¨

   Quoted from Ellen Brown – Wag the Dog: How to Conceal Massive Economic Collapse

   http://globalresearch.ca/index.....p;aid=9828

2. Iain Says:
   February 2nd, 2009 at 7:39 pm

   Very interesting article, as are some of your other posts. I have bookmarked for for future visits, keep up the good work