Is “Speculative Fervor” the New “Irrational Exuberance?”

Greenspan’s testimony in front of Congress seemed to show additional concern, in his own cryptic and subdued way, that the housing market is too hot. I suppose the phrase “speculative fervor” will become the media’s new catch phrase in the weeks ahead.

“WASHINGTON, July 20 (Reuters) - Federal Reserve Chairman Alan Greenspan warned on Wednesday of "speculative fervor" in some regional U.S. housing markets, but said any fall in home prices was unlikely to have a broad impact on the economy.

In comments that reminded some market players of his 1996 warning of "irrational exuberance" in stocks, Greenspan said he could not rule out declines in home values even though the U.S. economy had weathered the end housing booms before without "significant" drops in the national level of prices.”

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