Alam Greenspan book reveals all about the housing bubble by Nina Gotzmannova

Alan Greenspan, former Federal Reserve Board Chairman, has written a biography and begins to talk. Scheduled to be released on Monday, the inside look at the life of the second-longest serving chairman in the history of the Fed is the beginning of revealing some secrets. He admits he didn't see the danger of providing mortgages for people with questionable credit histories. The incapability of paying the mortgage and low interest rates combined with the demand of buying real estates has lead to a phenomenon known as housing bubble. Following decrease in home price let many home owners with a mortgage debt higher than the value of the home. Greenspan was criticized for this since 2001 until his retirement in 2006. In 2001 Fed cut the interest rates to their lowest level in decades. Fed probably kept the rates too low for a longer time than necessary and allowed people to uncontrolled behavior in the real estate market. In a CBS interview Greenspan acknowledges that he noticed the practices and the potential danger to economy only in late 2005. But the danger was real. In March 2007 the subprime mortgage industry collapsed and many of the lenders were bankrupted. In the same time the prices and the house sales fell dramatically. According to National Association of Realtors the sales fell down 13 percent and the prices 6 percent. However, in March 2007 was the Federal Reserve Board Chairman Ben Bernake. He had to deal with the financial crisis. By this time Alan Greenspan was retired and despite he is still considered as an influential economist, he can only say sorry now and maybe reveal more about the real estate market in his book.

related story: http://news.yahoo.com/s/ap/20070913/ap_on_bi_ge/greenspan_mortgages;_ylt=ArWjhUR4sUebA..RkSpstfSs0NUE

by Nina Gotzmannova for PocketNews (http://pocketnews.tv)

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