It’s a little short on details, but Greenspan is right on what it takes for the credit markets to recover:
A recovery in global credit markets will depend on stabilization in U.S. home prices and a massive reduction in housing inventory, former Federal Reserve Chairman Alan Greenspan told Deutsche Bank AG clients on Wednesday.
"The sooner we can get home prices in the United States stabilized, the sooner we will resolve all questions," Greenspan said.
No word from Reuters on how he would make that happen, however. You also have to love the disingenuous comments by the father of not one, but two, speculative bubbles:
Greenspan, the U.S. Fed chairman from 1987 until 2006, also blamed the credit crisis on a "general underpricing of risk" and a "breakdown" of how assets are valued after the U.S. housing bubble burst, sparking broader concerns about credit markets last year.
The breakdown in how assets were valued happened BEFORE the housing bubble burst– not after. That’s how bubbles end up bursting.
You would think with all of Alan AKA "Frothy" Greenspan’s experience in this department, he would have understood the bubble birth/burst cycle by now.