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| Former Chairman of the Federal Reserve Alan Greenspan, receiving a Presidential Medal of Freedom in 2005 (Photo credit: Wikipedia) |
The Federal Reserve‘s latest data covers 2007-10 and it shows the largest losses were suffered by households with the largest concentration of wealth tied to their homes.
No mention was made of former Fed Chairman, Alan Greenspan‘s role in the housing boom and subsequent bust.
During his tenure, Greenspan was the housing market’s biggest cheerleader and his views of the housing market’s resilience encouraged risky mortgage lending.
Both mortgage lenders and Greenspan had the mistaken view that lending money to sketchy borrowers was acceptable because borrowers could always refinance or sell their homes for a profit. Mortgages to subprime lenders along with the hyper-securitization of those mortgages contributed to the ensuing global financial crisis from 2008-10. Since 2006, nationwide home prices have sunk around 33 percent and even record low borrowing rates (MBB – News) have done little to jumpstart the depressed housing market.
The Fed’s Survey of Consumer Finances also showed the median net worth for American families fell to an 18-year low of $ 77,300 in 2010 from $ 126,400 in 2007.
A decline in otherfinancial assets, including the S&P 500′s (SPY – News) 14 percent decline over the three year period of the study was a contributing but secondary factor to the loss of wealth.
Despite the fact the U.S. economy is still in the midst of the longest economic contraction since the Great Depression, mainstream economists along with the National Bureau of Economic Research (NEBR) still stubbornly deny the existence of a recession. ... Continue to read.
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