The Ignorant Investor

According to today's Wall Street Journal:

Federal Reserve Chairman Alan Greenspan, drawing on new research he has personally supervised, said American consumers have become enormously dependent on borrowing against their homes to fuel their spending, and that a rise in mortgage rates could trigger a spending pullback.

Mr. Greenspan's new data show that borrowing against home values added a stunning $600 billion to consumers' spending power last year, equivalent to 7% of personal disposable income -- compared with 3% in 2000 and 1% in 1994.

Keep in mind, this is coming from the guy who was advocating adjustable rate loans at a time when a fixed-rate 30-year mortgage rates were are their lowest in decades. And who is only now pointing out the danger in a trend that started a couple of years ago. It's classic Greenspan. Do everything in your power to create a bubble, then vaguely warn that something bad just might come of it when it's too late.

We will be better off when this man is gone. Unless his replacement is even more of a blithe, politically-motivated cheerleader. The odds of which happening are, given who will be appointing him, somewhere in the range of 99-1.