[lbo-talk] looking back

[Seth Ackerman]

Doug Henwood wrote:
> With Fannie Mae and Freddie Mac on the verge of some sort of major 
> government bailout, it's nice to recall what Alan Greenspan said four 
> years ago:
>
> <http://www.federalreserve.gov/boarddocs/speeches/2004/200405062/default.htm> 
>
>
> "But a destabilizing contraction in nationwide house prices does not 
> seem the most probable outcome. Indeed, nominal house prices in the 
> aggregate have rarely fallen and certainly not by very much."
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And this, from Dean Baker in September 2002:
http://www.cepr.net/err/october_7_02.htm


> While both articles note several potential sources of trouble for the 
> U.S. economy, neither mentions the housing bubble. If housing prices 
> fall back in line with the overall rate price level, as they have 
> always done in the past, it will eliminate more than $2 trillion in 
> paper wealth and considerably worsen the recession. The collapse of 
> the housing bubble will also jeopardize the survival of Fannie Mae and 
> Freddie Mac and numerous other financial institutions.