Alan Greenspan, previously Chairman of the Federal Reserve and now best-selling writer, is out shilling his book to anyone who will listen.
This week, he’s in Japan talking to Japanese businessmen.
What’s he think about the state of the world economy?
Former U.S. Federal Reserve Chairman Alan Greenspan told Tokyo businessmen that the most important global financial issue is reducing the excess home inventory in the United States.
“The critical issue on the whole subprime, and by extension, the international financial system, rests very narrowly on getting rid of probably 200,000-300,000 excess units in inventory,” he said, speaking via video conference.
Thanks for identifying the problem, Greenspan, you old man, now who’s going to suggest a way to fix it?
“[The] Fed cannot afford to let homes go down by 10 to 15 percent like we saw in Japan,” Bill Gross, chief investment officer of Pacific Investment Management Co., said on CNBC Television. “We’ve only begun to see the pain from the standpoint of the home owner in terms of those monthly payments. Defaults and delinquencies will increase as we extend throughout 2007 and then into 2008.”
Gross expects the Fed to cut the federal funds short-term rate to 3.5 percent, which implies that the 30-year mortgage rates will come down to 5 percent to 5.5 percent.
Oh, okay. Thanks for that.
Mr Bernanke, the ball is in your court.
More: Greenspan: High U.S. Housing Inventory Key Global Issue – Dow Jones, by way of Realtor.org
Also: Could Mortgage Rates Drop to 5 Percent? – Reuters News, by way of Realtor.org
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