Monday, March 02, 2009

Greenspan 2004: Your house will cover your personal debt

I randomly found my grumpy notes on this whistling-past-the-graveyard gem from Sage Alan in February 2004, and thought it was well worth posting:

The finances of American households are in generally good shape even though consumers have increased their debt and bankruptcy filings have surged, the Federal Reserve chairman, Alan Greenspan, said yesterday.

In a speech to the Credit Union National Association in Washington, Mr. Greenspan said that an extended period of low interest rates and extra cash from mortgage refinancing had given borrowers flexibility to better manage their debts...

Consumer debt reached a record $2 trillion in December, according to the most recent figures from the Federal Reserve. That includes credit cards and car loans, but not mortgages...

[Greenspan] said that American households own more than $14 trillion in real estate assets and that mortgage refinancing and the rise in home values have helped to bolster consumer spending in economic hard times as well as better periods.

"Over the past two years, " he said, "significant increases in the value of real estate assets have, for some households, mitigated stock market losses and supported consumption."

Boy, he sure got that one right, didn't he?

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