Alan Greenspan now says that the U.S. could face a mild recession. Mild? He may be blinded by all the millions of dollars he is earning on his new book. Reuters quotes him as saying, "When home prices stabilize that would mark the end of the credit crisis." Greenspan seems to think housing prices could stabilize before 2009.

He has obviously not bought or sold a home recently. Data from the real estate industry show that prices are still dropping in most cities and states. The housing downturn may be prolonged by the fact that each foreclosure tends to drive down the value of homes near the house being auctioned by the bank. No wonder, since these properties often go for cents on a dollar.

Many industry experts expect that as more subprime ARMs reset this summer default rates will actually go higher. Although the Administration and Congress have talked about a comprehensive national plan to help homeowners, the only legislation is too narrow to stanch most problems for people who cannot make house payments.

Perhaps the largest issue of all is that most homeowners cannot get refinancing or new mortgages. Banks are taking in cheap money from the Fed, but are using it to improve balance sheets instead of passing it on to consumers in the form of lower interest rates.

Greenspan may be rich, but he is also crazy.

Douglas A. McIntyre is an editor at 247wallst.com and the author of the Ten Stocks Under $10 newsletter.