Greenspan Denies Causing the Housing Bubble — New York Real Estate

Greenspan Denies Causing the Housing Bubble

by John Tayeb on March 22, 2010

Alan Greenspan

Former Federal Reserve Chair Alan Greenspan, whose policies have been blamed for the economic meltdown of 2008, will present a paper at the Brookings Institution today saying that the low interest rates during his tenure didn’t cause the housing bubble.

“To my knowledge, that lowering of the federal funds rate nearly a decade ago was not considered a key factor in the housing bubble,” he wrote in a preliminary copy of the presentation.

“The global house price bubble was a consequence of lower interest rates, but it was long term interest rates that galvanized home asset prices, not the overnight rates of central banks,” Greenspan continued.

What did cause the bubble, Greenspan argued, is the explosive growth of developing economies in Asia and other parts of the world.

Source: (03/18/2010)

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