Adam Shell
USA Today
NEW YORK — In his first public comments as a private citizen since leaving the Federal Reserve in January, former chairman Alan Greenspan said Thursday that the housing “boom is over” but did not share his views on hot issues such as inflation, interest rates or Fed policy.
“This has been quite an extraordinary (housing) boom,” Greenspan said during a Bond Market Association dinner in New York. “The boom is over. I think we can safely say that with a strong degree of confidence.”
However, he said, there is “no evidence that home prices will collapse.” While he did not rule out price declines in “frothy” markets, he said it is too early to determine what impact a slowing housing market would have on consumer spending.
Greenspan, 80, also said he is not in favor of regulating the hedge fund industry, that the Medicare entitlement program is going to be much tougher to fix than Social Security, and that resilient consumers have weathered the increases in gasoline prices relatively well so far.
“One way or another, Social Security will be resolved,” he said. “The real fiscal problem is Medicare,” adding that the U.S. has already committed itself to more Medicare benefits than it can provide.
Greenspan’s 181/2-year tenure at the Fed ended on Jan. 31, when Ben Bernanke replaced him as chairman.
Wall Street was keenly interested in hearing Greenspan’s thoughts on economic and monetary issues but received no clues from him as to whether the Fed will raise its target for short-term interest rates again at its June meeting.
The Bond Market Association would not disclose how much Greenspan received for his speech.
Also Thursday, Bernanke said it “seems pretty clear now that the U.S. housing market is cooling.”
Bernanke, who did not comment on interest-rate policy, made his remarks after a speech on banking in Chicago.
The Fed chair said the central bank’s assessment at this point “is that this looks to be a very orderly and moderate” cool-down.
Another Fed official, Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, suggested the central bank was less likely to pause from its campaign of interest-rate increases after Wednesday’s report showing higher-than-expected consumer inflation.
“The inflation outlook is at the borderline of acceptable and perhaps moving beyond,” Lacker told reporters in Norfolk, Va., according to Bloomberg News.
Also Thursday, St. Louis Federal Reserve President William Poole said expectations in financial markets for the course of U.S. interest rates appeared on track, given economic data available.