Until this very alarmist in its comments on the economic situation of USA and the seriousness of the financial crisis, former President of the Federal Reserve (Fed), Alan Greenspan, showed a certain optimism in an interview published Thursday, August 14 by the Wall Street Journal.
"The property prices in the USA will probably start to stabilize or bottom in the first half of 2009," says Greenspan, whose remarks are very streamed by the business and financial. The end of the decline of property prices is "a sine qua non for the outcome of the current global financial crisis," advance the one who ran for nineteen years, the U.S. central bank.
The U.S. business daily said that the crystal ball of Mr. Greenspan has not always worked perfectly. In October 2004, and he said that "a severe decline in the property market was unlikely the USA, given its size and diversity." Eight months later, Mr. Greenspan explained that "if housing prices were to fall back, it would not have substantial macroeconomic consequences." Finally, in October 2006, nine months after leaving the Fed, he felt that "the worst of the decline in the housing market is probably past." Since then, prices have dropped by 19%.
In addition, referring to the governmental solutions to save the two giants of the U.S. mortgage refinancing Fannie Mae and Freddie Mac, sealed by the collapse of subprimes, Mr. Greenspan judge that they are "bad". "The authorities should have ignored the shareholders and nationalize institutions with the appropriate legislation splitting into five or ten units (...) supported by taxpayers need to be financially viable," Mr. Greenspan suggests.
Injuries to the deterioration of the real estate market and the collapse of their share price, Freddie Mac and Fannie Mae have known in early July, serious difficulties, resulting in a hurry to develop a plan Rescue, which allows the Treasury to buy shares of both organizations and their grant massive loans.