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Subprime Greenspan ALAN GREENSPAN IS AS INTERESTING NOW AS WHEN HE RAN THE FED. He has a bestseller, “The Age of Turbulence,” and he’s widely quoted on the economy—in easily grasped language, too, unlike the cryptic speak of his chairman days. As the man who kept the rein on inflation during an era of unprecedented prosperity, Greenspan deserves the popularity. But the subprime debacle has prompted some criticism of his legacy, and fairly so. The same low interest rates that spurred economic expansion also encouraged the easy money that led to mad mortgages. Greenspan did not use his regulatory powers or his bully pulpit to rein in the “irrational exuberance” in the housing industry. In analyzing the subprime meltdown, author Greenspan is unapologetic: “I was aware that the loosening of mortgage credit terms for subprime borrowers increased financial risk, and that subsidized homeownership initiatives distort market outcomes. But I believed then, as now, that the benefits of broadened home ownership are worth the risk. Protection of property rights, so critical to a market economy, requires a critical mass of owners to sustain political support.” It’s an astonishing endorsement of social engineering from a self-proclaimed “lifelong libertarian Republican”—good intentions over sound economics, idealism over common sense. Predictions (Tongue in Cheek) for 2008 • With home values plummeting, the Orange County Business Council declares “mission accomplished” on one of its major initiatives—affordable housing. • A new reality show, “Orange County CEO,” features contestants who take turns running St. John Knits. • Negotiations among a philanthropist, conservationists and federal prosecutors produce a unique plea bargain: The Nick Nicholas Wildlife Refuge. • In a turnabout from its failed plan to put housing in the Anaheim Resort, SunCal lines up council support for a controversial theme park in Laguna Woods. • With the Great Park beset by turmoil and low on cash, an alternative plan emerges: Agran International Airport. • With nobody else left, John Moorlach calls on himself to resign. Rick Reiff
Copyright, Orange County Business Journal. |
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Previous Commentary:
Mar. 26, 2007 — Chicago Tops SoCal Again Mar. 12, 2007 — Here We Go Again Feb. 26, 2007 — Housing Prices Jan. 15, 2007 — American Original Jan. 8, 2007 — Predictions 2007 Nov. 20, 2006 — Milton; Nancy Nov. 13, 2006 — A Thumpin’ Aug. 28, 2006 — NOTEBOOK - Eternal City June 12, 2006 — Good Guys Won May. 29, 2006 — Moorlach and Street May. 29, 2006 — Clueless Mar. 27, 2006 — Guilty Pleasure Feb. 13, 2006 — Angels Aftermath Jan. 9, 2006 — Market Science Jan. 2, 2006 — PREDICTIONS Dec. 19, 2005 — SEASON'S GREETINGS Dec. 12, 2005 — Congress, Immigration Dec. 5, 2005 — Back to El Toro, Ahead to El Tunnel Nov. 14, 2005 — Business as Usual Sept. 12, 2005 — 'Tweeners Sept. 5, 2005 — Fire and Water Aug. 8, 2005 — Steroids; Let It Out Aug. 1, 2005 — CAFTA Passes July 25, 2005 — EE AS July 11, 2005 — Memo from EE RR to E ML June 27, 2005 — No, General June 20, 2005 — Confession May 16, 2005 — Fluor May 9, 2005 — Skeptical; Brrr May 2, 2005 — Los Angeles de Mexico Mar. 21, 2005 — Cave-in; Errant Shot; Coming Up Mar. 14, 2005 — Air Crash Jan. 10, 2005 — Angels Angles Jan. 3, 2005 — 2005 Predictions CLASSIC ARCHIVED COMMENTARY: Dec. 31, 2007 — Greenspan and the Subprime Crash Aug. 28, 2006 — A Visit to Rome Mar. 27, 2006 — The Real Housewives of Orange County May 16, 2005 — Fluor Moves Out Dec. 12, 2005 — John Campbell and Chris Cox Feb. 17, 2003 — Opposing the Invasion of Iraq |
