Greenspan Sees Home Equity as Problem & Solution
Home equity is a pivotal element in national economies and in personal net worth, yet this invisible wealth has taken a back seat to stocks and hedge funds, and now look at the mess we’re in.
Home equity is also both the source of the problem and the centre of the solution for the current world crisis. Yet, it is still an indirectly addressed concern for most property owners.
Dr. Alan Greenspan, former Chairman of the US Federal Reserve, was in Toronto today to share his informed views on what’s happening and what’s next with a sold-out crowd of 2300 drawn from Bay Street and related financial quarters.
In a Q & A session, with Greenspan as the “A,” Don Drummond, Senior Vice President and Chief Economist, TD Bank Financial Group, was the “Q.” While I would have started by asking about the flack Greenspan was receiving for having set US interest rates too low for too long, that question did not appear until the end of the 50 or so minutes of dialogue. Throughout Greenspan answered without hesitation and embellishment, and spared us cute digressions. The audience hung on every word—blackberries stood a mean second.
Hearing Greenspan in person was interesting because the room was so obviously spellbound by him. “A piece of history” was a common overheard phrase. I’d liked to have learned the questions that individuals in the audience would have asked. I was surprised that, with two economists talking to a room full of financial devotees, the level of complexity was not higher. Or, maybe all of us understand more about this diabolical world mess that we realize, and the experts know less than we think they do.
Greenspan asked that the session not be taped, so here are a few recalls and scribbled quotes that may be relevant to property owner concerns. The bulk of the Q & A was included in my ongoing column “Decisions & Communities,” which will be posted after 12:00am November 19. The ideas shared here are not in any particular order since the priority will be different for each of you:
● Personal Input
Greenspan laid some of the problems faced by foreclosed property owners with the impersonalization of mortgage lending. Negotiations in times of trouble are difficult because when a mortgage has been sold in complex securities who do you sit down at the table with?
Long-term Thinking Tip: This may be a good time to open a credit union account. Build a relationship with the manager who works for members like you. After years, or perhaps a life time in banking oblivion, you’ll find it refreshing to be part of the system instead of continually frustrated by it.
● Shopping US
Canadians looking for US snowbird bargains may benefit from Greenspan’s advice to Canadian banks, intent on expansion through the purchase of discounted US properties: “What is critical is timing, and that is where all the individual skills come in.” If you want to invest in US real estate during American downturn, what skills do you contribute to the security of your investment?
● What Next?
The economic crisis arose from the private sector and, according to Greenspan, the solution lies in the public sector. He sees “financial angst” in deciding whether the target should be slowing the rate of US foreclosure or the financial sector.
Greenspan: “I think, from a macro economic point of view, it has got to be on financial institutions, but clearly anything you can do to bring foreclosure rates down is value in itself. Neither the bank, nor the borrower, benefits from foreclosure. There is a big loss which is essentially spread to both parties.”
● As of November 19, 2008: Posted at “Decisions & Communities”
Greenspan & “The Globally-Integrated Phenomenon”
“Canada is an unusual case where you have done everything right, but the degree of exposure to the rest of the world, especially your neighbor to the south, means if we don’t get it right, you’ve got a problem,” said Dr. Alan Greenspan, speaking to a Toronto audience on November 7.
FYI: Sponsors—TD Bank, Ernst & Young, Ogilvy Renault, Ceridian, Richard Ivey School of Business, Toronto Board of Trade and the CFA Society of Toronto
Home equity is also both the source of the problem and the centre of the solution for the current world crisis. Yet, it is still an indirectly addressed concern for most property owners.
Dr. Alan Greenspan, former Chairman of the US Federal Reserve, was in Toronto today to share his informed views on what’s happening and what’s next with a sold-out crowd of 2300 drawn from Bay Street and related financial quarters.
In a Q & A session, with Greenspan as the “A,” Don Drummond, Senior Vice President and Chief Economist, TD Bank Financial Group, was the “Q.” While I would have started by asking about the flack Greenspan was receiving for having set US interest rates too low for too long, that question did not appear until the end of the 50 or so minutes of dialogue. Throughout Greenspan answered without hesitation and embellishment, and spared us cute digressions. The audience hung on every word—blackberries stood a mean second.
Hearing Greenspan in person was interesting because the room was so obviously spellbound by him. “A piece of history” was a common overheard phrase. I’d liked to have learned the questions that individuals in the audience would have asked. I was surprised that, with two economists talking to a room full of financial devotees, the level of complexity was not higher. Or, maybe all of us understand more about this diabolical world mess that we realize, and the experts know less than we think they do.
Greenspan asked that the session not be taped, so here are a few recalls and scribbled quotes that may be relevant to property owner concerns. The bulk of the Q & A was included in my ongoing column “Decisions & Communities,” which will be posted after 12:00am November 19. The ideas shared here are not in any particular order since the priority will be different for each of you:
● Personal Input
Greenspan laid some of the problems faced by foreclosed property owners with the impersonalization of mortgage lending. Negotiations in times of trouble are difficult because when a mortgage has been sold in complex securities who do you sit down at the table with?
Long-term Thinking Tip: This may be a good time to open a credit union account. Build a relationship with the manager who works for members like you. After years, or perhaps a life time in banking oblivion, you’ll find it refreshing to be part of the system instead of continually frustrated by it.
● Shopping US
Canadians looking for US snowbird bargains may benefit from Greenspan’s advice to Canadian banks, intent on expansion through the purchase of discounted US properties: “What is critical is timing, and that is where all the individual skills come in.” If you want to invest in US real estate during American downturn, what skills do you contribute to the security of your investment?
● What Next?
The economic crisis arose from the private sector and, according to Greenspan, the solution lies in the public sector. He sees “financial angst” in deciding whether the target should be slowing the rate of US foreclosure or the financial sector.
Greenspan: “I think, from a macro economic point of view, it has got to be on financial institutions, but clearly anything you can do to bring foreclosure rates down is value in itself. Neither the bank, nor the borrower, benefits from foreclosure. There is a big loss which is essentially spread to both parties.”
● As of November 19, 2008: Posted at “Decisions & Communities”
Greenspan & “The Globally-Integrated Phenomenon”
“Canada is an unusual case where you have done everything right, but the degree of exposure to the rest of the world, especially your neighbor to the south, means if we don’t get it right, you’ve got a problem,” said Dr. Alan Greenspan, speaking to a Toronto audience on November 7.
FYI: Sponsors—TD Bank, Ernst & Young, Ogilvy Renault, Ceridian, Richard Ivey School of Business, Toronto Board of Trade and the CFA Society of Toronto
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