“The markets are becoming aware that the decline in U.S. housing prices is not stopping. It is at an unprecedented pace compared to the last 50 years,” Greenspan told a financial audience in the Norwegian capital.
"He said the housing bubble had burst and the market was “a good deal away” from its selling climax — a point at which sellers ultimately lower their prices to match lower bids.He said central banks should concentrate on alleviating the economic fallout from burst asset bubbles because they had few methods to prevent them and “lean against the wind.”
“There doesn’t seem to me that there is very much evidence that we can do much about them,” said Greenspan, who oversaw Fed policy during the dot-com bubble and the start of the present housing bubble.
“Irrespective if we could identify them, we could not do much to defuse them,” he said of asset bubbles.Greenspan could have pulled a Volcker (raise interest rates tremendously) which would pop the housing bubble. Not that I would support that. In retrospect, Mr. Greenspan allowed interest rates to be too low, for too long.