As Alan Greenspan steps down as Chariman of the Federal Reserve today, ominous news comes from The Economist regarding Greenspan's setting of monetary policy. The magazine notes that Greenspan triggered two of the greatest bubbles in history, the dotcom bubble of the 1990s and the real estate one the magazine warns is about to pop.
Greenspan's actions have created a domino effect through which American consumers could borrow against the rising, potentially artificial value of their homes to buy plush hot tubs and $5,000 barbecue pits. In this way, Americans have been able to literally consume more than they earn.
Bottom line here is... save more, spend less. Good advice anytime, no matter who's in charge.
3 comments:
Well said!
Cube for Fed Chairman! :)
I second the nomination!
You make a good point. I think the reality home makeover shows fuel it too, because American's allow themselves to become brainwashed into thinking they need to upgrade to granite countertops, restaurant grade stoves and custom baths.
Funny picture, btw.
Pop! That! Bubble!
Home prices in my neighborhood (where I still rent...*sigh*...) are THREE TIMES what they were when I moved into my apartment six years ago. Bleah.
Go Bernanke!
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