The Washington Times
  • Subscribe
  • Times News Services
  • RSS
  • Mobile Headlines
  • e-edition
  • E-MAIL ALERTS
  • REGISTER
  • LOG IN
  • E-MAIL ALERTS
  • WELCOME
  • Your Profile
  • Log Out
  • Front Page Image
  • Classifieds
  • Autos
  • Real Estate
  • Jobs
  • Special Sections
  • Customer Service
  • Home
  • News
  • Opinion
  • Sports
    • NFL
    • NBA/WNBA
    • MLB
    • NHL
    • Tennis
    • Golf
    • Motorsports
    • Soccer
    • NCAA
    • Olympics
    • Outdoors
    • Other
  • Culture
    • Home & Living
    • Family & Kids
    • Fashion
    • Food
    • Travel
    • Health
    • Washington Visitors
    • Books
    • Military History
    • Life
    • Auto
    • TV Listings
    • Movie Listings
    • Death Notices
    • Entertainment
  • Themes
  • Communities
  • Shopping
    • Stores
    • Coupons
    • Daily Double
    • Promotion
    • How It Works
  • Videos
    • Two Guys
    • Birnbaum on Washington
    • Liz Glover
    • Amanda Carpenter
    • Morning Briefing
    • Documentaries
    • Joe Giganti
    • Video Game Minute
  • Podcasts
    • About Headlines
    • Audio and Radio
    • America's Morning News
  • National

    Tiger Woods injured in car accident

  • Security

    W. House praises IAEA's censures of Iran

  • Business

    Wall Street tumbles on Dubai fears

  • Local

    Private funeral Friday for Pollin

  • Politics

    Ads add heat to health care debate

  • National

    At Mall of America, it's business as usual

  • World

    Drug lords finding safe haven in Bolivia

Saturday, January 28, 2006

Greenspan's lasting legacy

Rate this story

Average 0.00
after 0 votes
Login or register to rate this story

  • Font Size -+
  • Print
  • Email
  • Comment
  • Tweet this!
  • Share
  • Article
  • Comments ()
  • Click-2-Listen
  • Videos

More Stories

  • Atlantis, crew of 7 back on Earth
  • Uninvited White House guests met Obama in line
  • iPhone lands in Korea
  • Wife aids Woods after SUV crash

By

Federal Reserve Chairman Alan Greenspan leaves office this week with a glowing legacy, having presided for 18 years over an extraordinary period of economic progress and stability in the United States.

But his sterling reputation -- he often is hailed as the best Fed chief in history -- may be tarnished by growing concerns about a bubble in housing markets on the East and West coasts that many economists believe was nurtured by the extremely low interest rates engineered by the Fed from 2000 to 2004.

Under Mr. Greenspan's stewardship, the Fed cut rates below the rate of inflation through a series of moves in response to the stock market crash of 2000, the September 11, 2001, terrorist attacks, the corporate scandals of 2002 and an emerging threat of deflation in 2003.

While the moves bolstered the economy and prevented the 2001 recession from being deep and painful, they unexpectedly spawned a unprecedented binge of buying and speculation in housing.

Home sales and prices hit records every year at an accelerating pace. By the middle of last year, when the market finally started settling down, prices had doubled or tripled in coastal cities and resort areas.

One result is that American households are saddled with record levels of debt and have driven up U.S. debt to the outside world to levels that pose dangers for the economy.John Makin, a visiting scholar at the American Enterprise Institute, said he knew Mr. Greenspan was dealing with a bubble of his own making when he saw condo prices double in Key West in one year. Units under construction in the Florida resort last year sold four times over before they were even occupied, he said.

It was the second bubble under Mr. Greenspan's tenure after the tech-stock bubble of the late 1990s.

"The current U.S. housing bubble is the result of two aspects of Fed policy," Mr. Makin said.

Fed to the rescue

One is the series of rate cuts the Fed carried out in response to various economic shocks. Between 2001 and 2003, the Fed lowered its main lending rate from 6 percent to 1 percent, before beginning to raise rates in June 2004.

123Next »

Post a comment

There are comments on this article, submit your opinion!

Commenting is disabled for this entry.
If you feel there is still something worth mentioning about this entry please contact the author or the site admin.

Ask a Question

You Report

Do you have another point of view, photos, audio, video or more information about a story?

Top Stories

Most Read

  1. EDITORIAL: Hiding evidence of global cooling
  2. Climate 'czar' says hacked e-mails don't change anything
  3. EDITORIAL: The global-cooling cover-up
  4. PRUDEN: Trouble afoot for high priests
  5. Grade-schooler unearths fossil at dinosaur park
More Top Stories »
  1. Wife aids Woods after SUV crash
  2. In tobacco-loving Virginia, bars give up the habit
  3. Climate czar rejects doctored data claims
  4. HOLMES: Behind Obama's overseas allure
  5. EDITORIAL: The duty of a nation to obey God

Most Shared

  1. EDITORIAL: The global-cooling cover-up
  2. PRUDEN: Trouble afoot for high priests
  3. EDITORIAL: Hiding evidence of global cooling
  4. Climate 'czar' says hacked e-mails don't change anything
  5. Finance mavens gloomy
More Top Stories »
  1. Fenty's approval in D.C. divided by race
  2. In tobacco-loving Virginia, bars give up the habit
  3. Drug lords finding safe haven in Bolivia
  4. EDITORIAL: The duty of a nation to obey God
  5. Global Warmists exposed

Most Commented

  1. Climate 'czar' says hacked e-mails don't change anything
  2. EDITORIAL: The global-cooling cover-up
  3. Climate czar rejects doctored data claims
  4. EDITORIAL: Hiding evidence of global cooling
  5. PRUDEN: Trouble afoot for high priests
More Top Stories »
  1. EDITORIAL: The duty of a nation to obey God
  2. Crashers probe may become criminal investigation
  3. Obama taking emissions goal to summit
  4. HOLMES: Behind Obama's overseas allure
  5. 9/11 families sharply split on civilian court trials

Listen to Washington Times Radio

  • America's Morning News

    with John McCaslin and Melanie Morgan

Blogs & Columns

  • Hot Button Blog

    RNC: Breast cancer recommendations may lead to 'rationing'

  • Belief Blog

    Evangelicals OK civil disobedience

  • Out of Context

    Foods that might kill libido

  • On the Fly

    United lifts some 'award' blocking

  • Technology

    Facebook wins round against phishing spammer

  • Redskins 360

    Hall out, Rogers will start

  • SNOBlog

    Beyond 'Woody'

Videos

Advertising Links
TWT Store
  • e-edition
  • Print Edition
  • Weekly Washington Times
TWT Affiliates
  • Middle East Times
  • Golf
  • UPI
  • Arbor Ballroom
  • Washington Times Global
  • About TWT
  • Press Room
  • F.A.Q.
  • Work for TWT
  • Advertise
  • Sponsors
  • Contact Us
  • Privacy Policy
  • Site Map

All site contents © Copyright 2009 The Washington Times, LLC.