Mister, We Could Use A Man Like ...

Paul Volcker again. But first, let me turn my attention to his successor (though the inclusion of the word, "success" in that title is grossly misleading).

Greenspan recently said that US home prices will likely stabilize "well before" the end of this year, and that inventories will correct by "early 2009."

Wait - isn't this the guy who inflated the housing bubble in the first place, by holding the Fed funds target at a too-low level for too long? And in recent statements, he's said that's not what created the bubble? Meaning he's either dodging blame, or so disconnected from economic reality as to be rendered irrelevant?

Do we really want to place any more faith in what Alan Greenspan has to say about housing than we already have?

The housing inventory glut has worsened recently, not gotten better. It took us almost three years to get from the long-term average of months' supply of homes for sale to the present level of more than two times that average. We will not work that off by early 2009. And prices will not stabilize until we have.

Now, as for Dr. Volcker, he recently spoke at the Harvard Club, and correctly pointed out the cause of the current financial crisis in the US (that is increasingly being exported throughout the globe):

"Financial crises do not happen in a vacuum and the current US banking debacle is linked to imbalances in an economy that favored spending at the expense of saving. You can't go on forever spending more than you're producing. You have to rely on unorthodox finance to sustain it. There's a fascination with a lot of risk management tools that this situation has demonstrably proved false."

I have nothing to add. But if one of the three Presidential candidates were to sign a binding agreement to appoint Paul Volcker as Fed Chair on inauguration day, they'd have my vote, I don't care who the candidate is.