Was Greenspan justified in cutting the Fed Interest Rate that much?

Greenspan's main defense is that the long-term interest rates were falling in the early 2000s due to "global factors beyond his control". But even if the decline in long rates were beyond his control, did he have to cut the fed funds rate that much - an interest rate he did control - and hold it at the low level for that long (see Chart below)?

Starting in 2001, Greenspan held the fed funds rate below the y-o-y percent change in the median price of an existing single-family home, holding it below house-price appreciation through 2005 (see Chart below). Thus, the real fed rate in terms of house-price appreciation was negative from 2001 through 2005, bringing to a record low real fed funds rate of minus 9.6% in 2005. Never since late 1970s had the Fed allowed fed rate to consistently trade below the rate of house-price appreciation.

Interestingly, mortgage borrowers are not restricted to 15- or 30-year fixed rate loans. If shorter maturity rates are attractive, they can opt for those adjustable rate loans Greenspan was actually pushing for in 2004. Chart below shows that mortgage borrowers did increasingly opted for adjustable rate mortgages (ARM) because Greenspan held down short-term interest rates.

Although bond yields do move in somewhat different directions than the fed rates, they still are affected by it. That is, if the Fed sends a strong signal to the markets that it intends to slash the level of the federal rate and hold it at a low level for an extended period of time, these fed funds rate expectations will be factored into the level of bond yields - not 100 %, but not 0% either. So, Greenspan's argument that he had no control over bond yields is not entirely correct!