Greenspan does it again

August 14, 2008: 7:10 AM EDT
NEW YORK (CNNMoney.com) -- Alan Greenspan, former chairman of the Federal Reserve, projects that housing prices could bottom out in 2009 - or maybe later - according to a news report.
"Home prices in the U.S. are likely to start to stabilize or touch bottom sometime in the first half of 2009, " said Greenspan to The Wall Street Journal.
But he also added that "prices could continue to drift lower through 2009 and beyond," according to the newspaper.

In my post dated 17th March 2008, this is what I had to say

The US Fed is blamed by many for taking no action to prvent the crisis. It is interesting to read the comments of Alan Greenspan, the former Fed Chairman, as gathered by Paul Krugman, a columnist with the New York Times

What Greenspan said: “The current financial crisis in the US is likely to be judged in retrospect as the most wrenching since the end of the second world war. It will end eventually when home prices stabilise and with them the value of equity in homes supporting troubled mortgage securities.Home price stabilisation will restore much-needed clarity to the marketplace because losses will be realised rather than prospective. The major source of contagion will be removed. Financial institutions will then recapitalise or go out of business. Trust in the solvency of remaining counterparties will be gradually restored and issuance of loans and securities will slowly return to normal.”

What Keynes said: In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past the ocean is flat again.