Greenspan, Fed: "Menace To Society"

When discussing the housing bubble many have compared this market with the stock mania of the late 1990s. So it is instructive to review how the powers that be were dealing with that bubble while it was building.

Mr. Bill Fleckenstein has done just that at the MSN web site. He went through the Federal Reserve meeting in December 1999, which was just released. Its a great read and he wrapped it up well.

"What I'd like to know is, given not just Alan Greenspan's record but also what he says in public (and what we can now see he says behind the public's back), how can this menace to society have any credibility whatsoever? (R)ead through these minutes just to get a flavor for how completely untrustworthy and shallow these people are."

And think about this statement from Greenspan the next time he says there is no collapse looming. From the 1999 transcript,"Owners’ equivalent rent is going to start to accelerate unless I misread how asset prices interact with consumer prices. The reason is that the ratio of owners’ equivalent rent to the value of housing has been going down continuously, and the implicit rate of return that that is suggesting cannot credibly be expected to continue." Well it has continued, so he knows this is a bubble.