When it comes to the media blitz, not many can match the whirlwind tour currently being put on by the Former Fed Chairman Alan Greenspan. In many ways it is "The Maestro" at his finest.
From his 60 Minutes interview to his latest appearance on The Daily Show with Jon Stewart, the grandfatherly Greenspan has played the media as easily as he played his saxophone back in the old days.
I even saw him this morning at the not-so-convenient store on the current cover of Newsweek. There he was–that harmless little fuzz ball–smiling at me as I waited in a line ten deep to pick up a soda and the local rag.
It was almost as if he were mocking me for a change.
At the root of it all there was a book to be sold. That, of course, and a healthy dose of revisionist history.
Called The Age of Turbulence: Adventures in a New World, it’s the former Fed Chairman’s transparent attempt to show that he made exactly zero mistakes in his 18-year tenure as the second most powerful man in the country.
It’s the kind of tooting your own horn that would make his former bandmate Stan Getz proud.
The mainstream media, naturally, lapped up every minute of it.
Then again, they haven’t been much for the "real" facts since the days of the ink-stained wretch–especially when those facts get in the way of their predetermined stories.
But for those with a memory longer than the last fifteen minutes, it was all a little too much, especially his comments on housing.
After all, it was only a little over a year ago that Mr. Greenspan told the world this about the housing bubble: "I think the worst of this may now be over."
Boy, was he wrong.
In fact, at the time I compared his words to those of Neville Chamberlain.
You may remember them. Stepping off the plane from Munich in 1938, Chamberlain proudly proclaimed that he had secured "peace in our time" in his talks with Hitler. Only a year later, Poland was overrun by the Nazis.
Under much different circumstances this week, Greenspan changed his tune on that one.
On Monday he told the Financial Times that US homes prices are likely to fall significantly from their present levels. In fact, the former Fed Chairman went on to say he would expect "as a minimum, large single-digit" percentage declines in home prices.
He added that he would not be surprised if the decline actually turned out to be "in double digits." That’s a far cry from the worst being over. It’s more like a clanging alarm bell.
But to the surprise of no one, none of it was his fault–according to him. Evidently it was entirely rational to drop the Fed Funds rate to 1 percent and leave it there for a year simply because "The Maestro" said so.
Meanwhile, the dreadful housing market that he helped to create continues its downward spiral as sales dwindle, prices fall and foreclosures jump off the charts. It turns out that he wasn’t the smartest guy in the room after all.
According to recently released figures from RealtyTrac, the number of homes in some stage of default jumped 36 percent month-over-month in August, while delinquencies and defaults more than doubled year-over-year, to 243,947.
That has led to RealtyTrac’s latest forecast of over two million foreclosures nationwide in this year alone. And according to James Saccacio, chief executive of RealtyTrac, that’s just the beginning.
"The jump in foreclosure filings this month," says Saccacio, "might be the beginning of the next wave of increased foreclosure activity, as a large number of sub-prime adjustable rate loans are beginning to reset now."
It was Mr. Greenspan, you may remember, who went out of his way to endorse those adjustable rate loans in February of 2004.
That’s a lot pain to be felt by all those who fell into the mortgage trap–pain that wouldn’t have been remotely possible without the policies of good old Easy Al.
That’s why all of this horn blowing is something quite less than music to my ears. And I haven’t even brought up the dot-com bubble.
In fact, to me it sounds a whole lot more like a symphony of kazoos.
So sleep tight, Mr. Greenspan. The real age of turbulence has just begun.
By the Way: According to an analysis conducted by Moody’s Economy.com, US home price declines will exceed 10 percent in 86 of the 379 largest housing markets. And 290 cities will experience price drops of 1 percent or more.
Nationally, Moody’s is projecting an average price decline of 7.7 percent. That’s a jump from the 6.6 percent total price drop that the company was forecasting in June and more than twice last October’s forecast of a 3.6 percent price decrease.
The bottom in housing is nowhere in sight.
Wishing you happiness, health, and wealth,
Steve Christ, Editor
