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Hoist a beer from one of San Diego’s many fine local craft breweries, because today is National Froth Day! So says the OC Register’s Jon Lansner, who is commemorating the five-year anniversary of the day that Alan Greenspan conjured up that harmless-sounding euphemism for what was in fact a record-breaking and (eventually) economy-crushing speculative housing bubble.
Lansner’s write-up cites the full quote in question and even includes a chart.
I will acknowledge that Greenspan’s turn of the phrase is both mock-worthy and a thematically appropriate excuse to drink beer. But in fairness to The Maestro (cough), at least he acknowledged pockets of real estate overpricing, even if he vastly underestimated their scope. (For example, does the entire world count as a “pocket?”).
The current head of the Federal Reserve, in comparison, was apparently even less punched in. One Ben Bernanke issued the following proclamation on October 20, 2005 — over four months after the original Froth Day and more or less at the tippy-top of the bubble, at least here in San Diego:
“Although speculative activity has increased in some areas, at a national level these [house] price increases largely reflect strong economic fundamentals, including robust growth in jobs and incomes, low mortgage rates, steady rates of household formation, and factors that limit the expansion of housing supply in some areas.”
Ouch. This quote used to be archived at the White House Council of Economic Advisors website, but for reasons I can’t possibly imagine, it has since been removed. Fortunately a quick Googling will reveal that it is legit.
So the guy who is in charge of our entire monetary system was oblivious to history’s greatest housing bubble all the way up to its very peak. Whatever pithy name Mr. Lansner comes up with for the national holiday on October 20, I would suggest that we’ll need something stronger than beer.
— RICH TOSCANO