Am I the only one who thinks it unseemly for the guy who left the steering wheel just before the ship hit the iceberg to criticize his successor so publicly?
Well, we know that the chairman's sense of timing was impeccable, if a tad suspicious. But there has been nothing gentle about Greenspan's "retirement." Unlike past Presidents who do a pretty good job of not criticizing their successors, regardless of their party affiliation, Greenspan has not been able to restrain himself regarding current Fed policy. His latest salvo, the other day, savaged his former organization for throwing a lifeline to Fannie Mae and Freddie Mac.
Most of us are not qualified to understand economic theory and the Fed's decisions in all their exquisite complexities. (Although could any of us have done a worse job of managing Fannie and Freddie?). But am I the only one who thinks it unseemly for the guy who left the steering wheel just before the ship hit the iceberg to criticize his successor so publicly?
If nothing else, Mr. Greenspan is a master of timing. And bitter though he may be about being out of the "arena," his predictions about the economy
There is a lot of unsold inventory in the southeast at discounts to both past and future prices.
"Home prices in the U.S. are likely to start to stabilize or touch bottom sometime in the first half of 2009," Greenspan told the Wall Street Journal. He qualified his opinion a bit, adding that "prices could continue to drift lower through 2009 and beyond."
He has not been wrong often, and his prognostication is worth listening to, maybe even acting on, even if it bumps against the logic of increasing foreclosures and joblessness rates and falling home prices. I don't have the economic charts in front of me, and I wouldn't know what to do with them if I did, but I do have 61 years of being part of the baby boomer generation, and here is my take:
Many baby boomers have deferred selling their primary homes despite deep desires to move to the next phase of their lives in a new, more relaxed environment (say, a golf community). They remember when their homes were worth so much more just five years ago. They have built a psychological barrier for themselves, one that says, "I worked hard for this home and I am not going to sell it for less than it is worth." Only a few cold-hearted financial executives among us can reconcile that our houses are worth what someone will pay for them, not what we think they are worth.
But baby boomers want what they want when they want it - remember, I speak with some personal authority here. And if Mr. Greenspan is right about stabilizing prices, next year or maybe the year after, baby boomer owners of many of these homes will look at the modest increase in their house value and the psychological barriers will come down. We will pat ourselves on the back for having waited out the crisis, we will take a percentage point or two more than we think we could have gotten a year earlier, and off we will go. This is more about ego than it is about money, especially for those who have owned their homes for a decade or more. They are way ahead of the game.
If Greenspan's first instinct is correct, and if my little pop psychology is as well, then it is likely prices in the southeast will move up as quickly, probably quicker, than elsewhere. Seacoast and mountains, what most boomers have dreamed about for years, are abundant in this part of the country, and there is a lot of unsold inventory priced at a discount to past and future prices. For a certain period of time, boomers with the stomach to take just a little less than their primary homes are worth will have the pick of the litter at some nice prices.
If I am wrong, blame Greenspan. He will blame Bernanke anyway.
