If Greenspan could get things so wrong, then what about us?

For the last couple of years Monitor has argued doggedly that there is no bubble in Hong Kong's property market.

Despite a series of warnings from local officials and the International Monetary Fund that property prices were becoming dangerously over-inflated, this column maintained there were few signs of the sort of credit-fuelled speculative frenzy that Hong Kong saw in the run-up to the 1997 handover.

Sure prices were rising, but Monitor argued that buyers were reacting rationally to the prevailing economic circumstances - a limited supply of new homes, low mortgage rates, and negative real returns on bank deposits - and that the market was being driven by fundamentals. There was no bubble in the usual sense of the word.

So I was disconcerted this week to learn that former Federal Reserve chairman Alan Greenspan said much the same sort of thing about the American housing market back in 2005.

In a nutshell, Greenspan argued that the illiquidity of the property market, its high transaction costs and the need for sellers to find somewhere else to live all discouraged speculative trading in houses.

Of course, we know now how wrong he was. Even as Greenspan was denying its existence, an enormous speculative bubble was indeed inflating in the US market, fuelled by low interest rates, 100 per cent mortgages and easy credit for subprime borrowers.