Greenspan Sees Market Rebound

I trust Alan 'The Maestro' Greenspan! He knows what he's talking about...

Oh wait.

He didn't see the tech bubble...

He helped cause the Real Estate bubble by cutting and leaving rates near 1%...

He encouraged the move into variable rate and exotic mortgages by Joe Sixpack...

He didn't see the real estate bubble...

He didn't see the credit bubble...

He didn't see the derivatives bubble...

But he can see equities rebounding.

Yech...

Greenspan Says Financial Markets May Rebound in 6 to 12 Months: "Financial markets, which have been depressed by “fear” not seen since at least the 1930s, are likely to rebound in the next six to 12 months, former Federal Reserve Chairman Alan Greenspan said in a commentary published by The Economist online.

“Markets are being suppressed by a degree of fear not experienced since the early 20th century (1907 and 1932 come to mind),” Greenspan said in the commentary. “Human nature being what it is, we can count on a market reversal, hopefully, within six months to a year.”

A stabilization in home prices, which will allow financial institutions to judge the value of collateral underlying mortgages and mortgage-backed securities, is likely in 2009 and is another “critical piece” to ending the turmoil, the former Fed chairman said.

The Treasury’s $250 billion in investments in the equity of American banks has halved the gap between the London Interbank Offered Rate and the overnight index swap rate, an indication of progress, Greenspan said.

“While helpful, the Treasury’s $250 billion goes only partway towards the levels required to support renewed lending,” he said. “Temporary public capital injections into banks” should help lead to stability and “arguably provide far more benefit per dollar than conventional fiscal stimulus.”"

I too believe we'll bounce significantly... but only to dive into abyss after.