"When European real interest rates fall to our levels, their currencies will follow"
I concur in part that the Dollar isn't going to drop as much as some expect, due to other major economies being in as much trouble as the US.
I don't think that European rates will drop as low as US rates. Greenspan is aware that he is creating/lengthening asset bubbles thru low rates, and he believes it is an acceptable price to pay to try to help the economy.
The Europeans take the view that they shouldn't allow asset bubbles to be created. The central banks see their role to be maintaining price stability, and that is what they try to do. In fact BOE reently said they would have liked to have cut rates recently, but didn't because the feared the undesirable effects of further fueling the high real estate prices.
They seem to realise what Greenspan is missing: even though house prices are not included in usual calculations of inflation, housing costs are a major part of people's lives.
In Europe, mortgage rates float. So buying an expensive house while rates are low can easily lead to financial ruin should rates go up in five/ten years' time.
