Former Fed chief says a healing housing market will aid the credit crisis
updated 1:06 p.m. ET, Fri., Oct. 10, 2008
NEW YORK - Former Federal Reserve chairman Alan Greenspan said the U.S. housing market will begin to recover in the first half of 2009, according to an article he wrote for Emerging Markets magazine published on Friday.
Greenspan wrote that the recent slowing in the rate of decline in U.S. home prices is the first positive note in the year-long trauma and that eventually, frozen credit markets will thaw "as frightened investors take tentative steps toward reengagement with risk."
"More conclusive signs of pending home price stability are likely to become visible in the first half of 2009," he wrote.
Once the housing market finds it footing, markets will be able to tackle the core issues of the credit crisis.
But a big question remains, he said: "How much overall deleveraging is going to be required to induce global investors to again become committed holders, at modest interest rates, of the liabilities of the world's financial intermediaries?"