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Article Last Updated: 09/01/2005 07:08:26 AM
ALAN GREENSPAN renewed a warning recently about the sizzling housing market, saying home prices may fall, slowing consumer spending, a chief ingredient for the economy's good health. A day earlier, he cautioned the public against thinking the value of homes and other investments will only go higher. If house prices fell suddenly or if interest rates rose quickly, it could clobber homeowners and lenders. Rising prices have helped make many people feel wealthier and thus more inclined to spend.
In July 2001, Paul McCulley, an economist at Pimco, the giant bond fund, predicted that the Federal Reserve would simply replace one bubble with another.
"There is room," he wrote, "for the Fed to create a bubble in housing prices, if necessary, to sustain American hedonism." If housing enters a post-bubble slump, what's left? One reason for the real estate boom is that people begin to have faith in their money.
The American dollars are no longer green and growing. They have turned to ashes. They only look green if you think that gray is green when green has really turned to gray. But it only exists if you believe it exists, the "greenback," or the American dollar. It's like this Green Pig is the god of America; it is America's idol that is worshipped. It is all in the imagination.
Ted Rudow III,MA