Here is the Greenspan Report (.pdf) upon which this article is based: http://online.wsj.com/public/resources/documents/report-fed2007.pdf Home Equity Hangover Posted on Apr 24th, 2007 http://usmarket.seekingalpha.com/article/33331 Tim Iacono submits: Yesterday's report on mortgage equity withdrawal from the team of former Federal Reserve Chairman Alan Greenspan and Fed economist James Kennedy make the words of Warren Buffet even more meaningful today than they were a few years ago. The Oracle of Omaha once said something like, "Give me a trillion dollars and I'll show you a good time too!" and though he wasn't referring to home equity withdrawal at the time, the sentiment surely applies. Bloomberg reports that between 2001 and 2005, have been "tapping their equity" to the tune of a cool $1 trillion a year "took out an average of $1 trillion in cash from home equity". Today's paper is a follow-up to research by Greenspan and Kennedy in 2005 that showed that extraction of home equity accounted for about four-fifths of the increase in mortgage debt. That paper was Greenspan's first since 1996. Including repayment of non-mortgage debt, such as credit card loans, the cash financed 2.9 percent of consumer spending from 2001-05 compared with 1.1 percent from 1991-2000, the authors said. Since Greenspan, 81, retired from the Fed in January 2006, he has been giving paid talks to investor and industry groups and writing a book, "The Age of Turbulence,'' set for release in September. In February and March, Greenspan roiled financial markets with predictions of a possible U.S. recession this year, placing a "one-third probability'' of such an occurrence. With today's research paper on the phenomenon of "equity extraction,'' though, the former Fed chief is trying to steer clear of any controversy. Some critics say Greenspan held interest rates too low for too long after the 2001 recession, helping inflate home-price bubbles around the country that are now popping and threatening to torpedo the economic expansion. Too low for too long? Preposterous! There are a couple of charts in the report that is supposed to be available at the Federal Reserve's website but it looks like you'll have to search around to find it. This link (.pdf) will get you a copy from what appears to be a public area of the Wall Street Journal Online. The first chart shows how quickly home prices have risen in the last few years and, more importantly, the ominous flattening of the "housing wealth curve" in 2006. Remember, the trick here is to keep real estate prices going up faster than real estate debt - once that dynamic reverses, then, well ... that's what's happening now. Amid the sharp increases in total real estate value in recent years, people own a smaller and smaller share of their homes - surprise! There's a bit more data in this report that may make for a few more interesting charts, specifically, how all that extracted money has been spent - stay tuned.