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US Central Bank Chief Greenspan Urges Caution, Attacks Protectionism


The head of the U.S. central bank is warning Americans not to assume that recent soaring home values will continue forever.

On Friday, Federal Reserve Chairman Alan Greenspan told economists gathered at a resort in Wyoming that increased buying power fueled by higher home prices could disappear if investors turn cautious.

Huge numbers of U.S. homeowners have taken out loans against the increased value of their homes to pay for renovations and other purchases, fueling much of the recent growth in the economy.

Mr. Greenspan also warned that growing trade protectionism and bloated government budget deficits will make it more difficult for the U.S. economy to weather the kind of problems that would follow an abrupt fall in asset prices or other economic shocks.

Some information for this story provided by AP and Reuters.

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