Thursday, May 21, 2009

Greenspan's senior moment

It looks like today Greenspan remembered that he was still PIMCO's pimp. Last week, he was talking up housing, and that the worst of the economy is behind us.

May 12 (Bloomberg) -- Former Federal Reserve Chairman Alan Greenspan said that the decline in the U.S. housing market may be bottoming and it’s “very easy to see” financial markets continuing to improve.

“We are finally beginning to see the seeds of a bottoming” in the housing industry, Greenspan said today during a conference of the National Association of Realtors in Washington. The U.S. is “at the edge of a major liquidation” in the stock of unsold properties, which may help to stabilize prices, Greenspan said.

That wouldn't help PIMCO's bond positions, so the "consultant" came to a new conclusion today, and the Maestro is now singing a different tune; albeit one aligned with the bond house.

May 21 (Bloomberg) -- Former Federal Reserve Chairman Alan Greenspan signaled that the financial crisis has yet to end even as borrowing costs tumble, warning that U.S. banks must raise “large” amounts of money.

“There is still a very large unfunded capital requirement in the commercial banking system in the United States and that’s got to be funded,” Greenspan said in an interview yesterday in Washington. He also said that “until the price of homes flattens out we still have a very serious potential mortgage crisis.”

"We're on the edge and if this thing doesn't get resolved quickly I'm worried,"

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