Sunday, December 16, 2007
Greenspan on subprime, it’s the communists’ fault
Greenspan says that a period of low inflation was caused by the end of the cold war. The fairly well educated masses could produce all these cheap goods to export to us. This meant he and other central bankers could drop interest rates and create the worst housing bubble in history. His view is that there is nothing he could do to prevent this and there is now nothing central banks can do to prevent the deflation. He adds that compared to the rest of the world the US housing bubble is average, I think the UK bubble is near the top.