“It’s very critical that this thing reach a selling climax — if I may put it in other words, exhaust itself,” Greenspan said. “It’s only when the markets are perceived to have exhausted themselves on the downside that they turn. Trying to prevent them from going down just merely prolongs the agony.”
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Mr Greenspan is talking about market sentiment – the psychology of the housing market (actually human psychology being displayed via the markets) has changed from bullish to bearish and WILL NOT change to bullish again until the ‘selling climax’ occurs – none of the bailouts are going to change human psychology and Mr Greenspan understands this – smart money (investors) understand this too
As an alternative to ineffective bailouts related to interest rate fixing, Mr Greenspan appears to be proposing that we allow the market to tank (since it’s going to anyway) and then mail taxpayer-funded checks directly to all the FBs in America (or only the ones who are really in need? as determined by who?) – so the FB who paid $700K for a low-quality tract home that is now worth $349K gets a check for $351K
It’s all funny money anyway so what difference does it make?
