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Posted By: Todd Schultz

From Mortgage Daily News in '04

The Chairman, in a series of speeches delivered last week, stated that neither record high oil prices or soaring consumer debt should be of undue concern to the financial markets, nor is the inflated housing market a bubble that is about to burst, destroying the equity of millions of American families.

Greenspan famously commented on the "irrational exuberance and unduly escalating stock prices" in 1996. However, he seems comfortable with a housing market where values have risen nearly 40% in the last three years as interest rates dropped to historic lows. In some demographic hot spots such as Las Vegas, Boston, and Washington, D.C. prices have risen even higher - as much as 70% - in the same period.

Greenspan stated that the sheer size of the U.S. housing market provides some insulation from a rapid drop in prices and that Americans seemed to be handling their mortgage and other debt well.

According to Reuters News Agency, many economists disagree with the Chairman's assessment, calling him a "cheerleader" or complaining, in the words of one bond strategist that "There just doesn't seem to be that much that worries him."