Even though I play one on the Internet, I'm no economist... but it doesn't really take one to recognize that, yes, in hindsight, the Federal Reserve erred in its monetary policy in the early stages of the decade.
As an individual who made a point not to buy a home when I thought homes were incredibly overvalued I tend not to have too much sympathy for homeowners who went in over their heads. But, I partly blame the Fed for this. Egregiously low interest rates for long periods of time contributed to the housing bubble.
I find it strange that Alan Greenspan, who so clearly recognize the harm from the Internet bubble, would so consciously contribute to a housing bubble.
Greenspan now says, "Those of us who have looked to the self-interest of lending institutions to protect shareholders' equity (myself especially) are in a state of shocked disbelief." In plain language, Greenspan now says he expected the collective greed of lenders to protect the common man. Huh?
AnalysisMaybe we need psychologists running the show, because I've never heard of greedy people caring for the public good. It might also be time to rethink some economic assumptions about the utility of the unfettered marketplace.