Interesting piece interview with Alan Greenspan in today’s Wall Street Journal by Greg Ip. Two things (yes — only two!) struck me as particularly interesting.
The first had to deal with Greenspan’s reaction to criticism of his low-rate policy by Stanford University economist John Taylor, who believed rates were too low for too long. According to the interview:
If the Fed’s policies were to blame, the housing bubble would have been mostly limited to the U..S. Yet, he argued, many other countries had housing bubbles, too. A better culprit, he suggested, was the glut of savings globally. Savers were competing to make loans, keeping long-term interest rates low in many countries, and fueling housing demand.”
Or maybe, just maybe, the sloppy and widespread use of mortgage-backed securities wasn’t limited to the U.S.
Adjustable-rate mortgages were the cheapest way they could finance home purchases. but if they were not available, home purchases arguably would have been financed with fixed-rate mortgages. There’s no evidence of which I’m aware that says that price would be importantly less if adjustable-rate mortgages had been less.
Proof that Greenspeak lives on.