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Looks like the market that is going to drop is the Stock Market rather than the Housing Market. Business is not investing.
"Greenspan noted that most American homeowners have considerable equity built up in their homes, so that it would take a substantial crash in prices to trigger a significant rise in foreclosures.
The bigger worry for policymakers is the global savings glut and its evil twin, the dearth of investment.
Contrary to supply-side theory, a huge infusion of cash into U.S. corporations in the past few years has not led to a large increase in investment. It appears that it was not high taxes that restrained investment in the future, but executives' uncertainty about the prospects for a decent rate of return.
The same uncertainty holds true globally.
Oil producers are floating on cash, but have not stepped up investments in their domestic industries. China and Japan are saving, but the savings are going into U.S. Treasurys, not factories and schools. Investment in Europe is "tepid," in the chairman's words.
Global savings are being siphoned into U.S. real estate.
Overproduction is the specter haunting the world now. Greenspan doesn't know the answer, but at least he's asking the questions."
Rex Nutting is Washington bureau chief of MarketWatch.
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