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American Central Bank Chairman for the first time signals housing bubble and imminent collapse of Real Estate
The astronomical prices in real estate are not health for any economy. Anything that goes up like that will eventually come sown sharply. Alan Greenspan, Federal Reserve chairman, warned that movements of stocks, bonds and house prices are having a far greater impact on US and global growth than in the past. That is not healthy. The US economy is growing based on not real growth but manifestation of the escalated asset prices.
The rise in stock, bond and house prices and the sharp jump in household wealth relative to income had been a very important development, he said, contributing to the low savings rate and the rise in household debt.
“Our forecasts and hence policy are becoming increasingly driven by asset price changes,” he said, adding that growing protectionist pressures in the US and fiscal indiscipline threatened to reduce the economy's flexibility, making adjustment to shocks and imbalances more painful.
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