The nerve

17 September 2007 By Edward Hadas

According to his memoirs, the former Fed chief was too busy being oracular to notice the US mortgage market bubble. That omission will cost the US economy dearly. But Greenspan now gets headlines and book sales for predicting house price falls.

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Alan Greenspan has been giving interviews to promote his newly published autobiography, The Age of Turbulence: Adventures in a New World. The former chairman of the US Federal Reserve Board told the Financial Times that the coming decline in average house prices in the US would be larger than most people expect, possible in double digits.

Greenspan defended the central bank's role in the bubble to the New York Times: ''I believed then, as now, that the benefits of broadened home ownership are worth the risk. Protection of property rights, so critical to a market economy, requires a critical mass of owners to sustain political support.''

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