Lots to write about today. First of all I want to congratulate Jay Thompson/Phoenix Real Estate Guy for winning the much coveted Nacho Blogger Award. This award recognizes agents for a wide array of talents and abilities. You’ll have to go to Real Estate Revealed to see why Jay won. Maybe one day, maybe, if the stars align, the stock market behaves, the housing market picks up, man walks on Mars, nuclear fusion becomes our primary source of energy, maybe, just maybe, I’ll win this too. Have mercy.
The big news today is that the Fed cuts rates. I predicted the federal funds rate would be cut by 0.25% but instead it was cut 0.5%. This means prime is now at 7.750% instead of 8.250%. So, if you have a $40,000 home equity line at prime your payment just dropped $16.68. This is big for me in my book. As a consequence of this Fed move, stocks are up.
Changing topics slightly. Growing up and through college I had a list of heroes (ask me for my list if you’re interested). Slightly below these heroes I maintain a mental list of “most admired people”. Alan Greenspan is on this list. Some of the others include: Dr. Manmohan Singh, Muhammad Yunus and Nelson Mandela. I have a few more, but these four have a special place.
That is why I’m really looking forward to reading Greenspans new book “The Age of Turbulence: Adventures in a New World“. In fact I’m going to blog about this book as I read it. I am particularly looking forward to reading his forecast for 2030. It ought to be one heck of a read. For the time being here are some interesting takes on the book from various media outlets:
On US Presidents (via CNN Money):
But when Greenspan asserts that Richard Nixon and Bill Clinton were “by far” the smartest Presidents he worked with, those two little words say quite a lot about Gerald Ford, Ronald Reagan, and a couple of guys named Bush.
Surprisingly for a self-described “lifelong Republican,” GreenÂspan was happiest as Fed chairman when Clinton was in the White House. (He also liked his time running Ford’s Council of Economic Advisors, where it was his pleasant responsibility “to shoot down harebrained fiscal policy schemes.”)
On China (via Forbes):
Political freedom, said Greenspan, “may not be needed for markets to function in the short run, but is an important safety valve for public distress about injustice and inequity.” Without that, “aggrieved people who do not have the option to vote officials out of office tend to rebel.” If Chinese leaders won’t further yield political power, he observed, “the economy remains rigid and I fear would not be able to absorb debilitating shocks as the United States did following 9/11.”
On combating inflation (USA Today):
that the Fed will have to raise rates to double-digit levels in coming years to thwart inflation.
On subprime mortgages (Wall Strest Journal):
[T]he 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.
I’ll have my own review as I read through the book.