Matthew Yglesias watches with a kind of awe:
Matthew Yglesias: Department of Equivocation: "Being Chairman of the Federal Reserve is sort of like the reverse of being a blogger -- you need to be very, very, very careful about every word that passes through your lips lest an unintentional slip create a financial panic. Thus, Greenspan's thoughts on housing are a true classic of the genre:'
Without calling the overall national issue a bubble, it's pretty clear that it's an unsustainable underlying pattern,' Mr. Greenspan told the Economic Club of New York at the Hilton New York hotel in Midtown. Mr. Greenspan emphasized that he sees no sign of a nationwide housing bubble, but he acknowledged concerns over 'froth' in the market and pointed to a big increase in speculation in homes - particularly in second homes. As a result, he said, there are 'a lot of local bubbles' around the country.
No bubble, but many small, local bubbles. Hence an overall froth. And, presumably, a bubble here in Washington, DC, where prices have gone up a lot. From the standpoint of self-interest, this seems to me to be the best possible outcome since a decline in local home prices would be give for me as a non-homeowner who plans on sticking around town for a whle, but a nationwide collapse would have all sorts of bad spillover effects. Therefore, I choose to believe that Greenspan's called this correctly.
Via Alina Stefanescu who notes that the equivocation has thrown the nation's headline-writing industry into crisis.
I am told that in Washington, whenever someone wants to know whether they are supposed to deepen the darkness or illuminate the issue, they are likely to say, "Should I Greenspan it?"