Didnt he say housing prices were nearing a bottom about 18-24 months ago, he didnt get that that right so why is he predicting this one......this is going to take alot longer than he thinks.... Greenspan Says U.S. Home Prices May Stabilize in 2008 (Update2) By Scott Lanman and Lily Nonomiya Enlarge Image/Details April 8 (Bloomberg) -- Former Federal Reserve Chairman Alan Greenspan said the drop in U.S. home prices will probably end ``well before'' early next year as the number of houses on the market diminishes, aiding an economic rebound. ``It will not be until early 2009 that we will get close to having eliminated most of this'' home inventory, Greenspan told a conference in Tokyo today sponsored by Deutsche Bank AG and co-hosted by Bloomberg LP. ``But it is very likely that home prices will stabilize well before that.'' Greenspan added that the extent of damage stemming from the collapse of the subprime-mortgage market won't be known for months. He described the credit crisis as the worst in 50 years, echoing the assessment of International Monetary Fund economists. ``You won't see asset markets recover until housing prices stabilize,'' said Glenn Maguire, chief Asia-Pacific economist for Societe Generale SA in Hong Kong. ``If Greenspan is correct, you'll see weakness in the economy through 2008.'' The yield on the 10-year Treasury note fell 1 basis point to 3.53 percent as of 4 p.m. in Tokyo, according to bond broker Cantor Fitzgerald LP. Greenspan's successor, Ben S. Bernanke, and other Fed officials have highlighted declining home prices as a major economic risk that may further hurt household wealth and consumer spending. `Slow, Hesitant Recovery' ``Once the markets start to stabilize, especially if the real economies don't go into a severe recession,'' then ``we can expect a recovery to begin to take place,'' Greenspan, 82, said via satellite from Washington. ``It will be slow, it will be hesitant.'' The health of the U.S. housing market is tied to broader financial markets that rely on bundling mortgages to sell as securities, Greenspan said. The median price of an existing single-family home dropped 8.7 percent in February from a year earlier, the most in four decades of record keeping, according to the Chicago-based National Association of Realtors. ``Have we reached a point where prices are stable? We cannot know that for a couple of months,'' Greenspan said. ``It looks as though we're going to get a very large rate of liquidation, but not until the second half of this year.'' Greenspan said inflation will be contained during the current slowdown before picking up as the world economy recovers. ``It's difficult to imagine any major breakout of inflation as economic slack continues to increase,'' he said. ``What we will see is gradually rising inflationary pressures that will probably be subdued during the current period of slack, but that will surely reemerge when economies pick up.'' Increasing Criticism Greenspan spoke via satellite from Bloomberg Television's studio in Washington, answering questions from Peter Hooper, chief economist at the securities unit of Deutsche Bank, which hired Greenspan as a consultant in August. Greenspan, who retired in 2006 after 18 years as the U.S. central-bank chief, has come under increasing criticism for his policies as last year's subprime-loan meltdown spread into a broader financial crisis. One recent book, ``Greenspan's Bubbles'' by money manager William Fleckenstein, argues the former Fed chief helped inflate stock and home prices. In response to the bursting of the Internet and technology bubble and the Sept. 11 terrorist attacks, Greenspan lowered the Fed's key rate in 2001 from 6.5 percent to 1.75 percent, then reduced it further in 2003 to 1 percent, a 45-year low. Left to Bernanke He left the rate there for a year before starting to raise borrowing costs in quarter-point increments, leaving it Bernanke to decide when to stop. Some Fed critics, such as Bear Stearns Cos. economist John Ryding, say rates were too low for too long, encouraging the easy credit that helped inflate a housing bubble and has now returned to burn investors. Greenspan, who published his memoir ``The Age of Turbulence'' in September, has taken to defending his legacy in newspaper articles. Yesterday, in a Financial Times piece headlined ``The Fed is blameless on the property bubble,'' Greenspan wrote that the evidence is ``very fragile'' that Fed interest-rate policy added to the U.S. bubble and that ``it is not credible that regulators would have been able to prevent the subprime debacle.'' ``I was praised for things I didn't do,'' Greenspan said in a Wall Street Journal interview published today. ``I am now being blamed for things that I didn't do.'' Greenspan said today that ``the current credit crisis is the most wrenching in the last half century and possibly more.'' Bernanke, 54, told Congress last week that the U.S. economy may contract in the first half of 2008 and for the first time acknowledged the chance of a recession. Later today, the Fed releases minutes of its March 18 interest-rate decision and any other conference calls in February and the first half of March. The Federal Open Market Committee that day lowered its benchmark rate by 0.75 percentage point to 2.25 percent, capping 3 points of cuts since September.