Beggars, Horses, Wishes

From Yahoo! Finance, we have the master-baiter himself talking up the market: Greenspan: Subprime Spillover Unlikely.

The troubles plaguing lenders of risky mortgages are not likely to spill over into the broader economy unless housing prices see another substantial dip, former Federal Reserve chairman Alan Greenspan said Thursday.

Greenspan said that as home prices dipped, "subprime borrowers have not been able to build up enough equity."

If home prices drop in a year, he predicted that could cause the problems to "spill over into other areas."

However, Greenspan said that if home prices "would go up 10 percent, the subprime mortgage problem would disappear."

Right! And if my house were a helicopter, I would be able to fly around in my underwear.

There are so many things wrong with this, it's hard to know where to begin.

The problem with subprime isn't that house prices are flat. It's that buyers bought more house than they could ever pay back.

So how does the house going up 10% change anything?

The only way I can think of is they pull out the difference (as a HELOC loan,) use that to pay the mortgage payments. However, that only delays the inevitable because they couldn't afford the freakin' thing in the first place!

This is so disingenuous I'm surprised that no one calls him on it.