Fed Notes Release Shows They Were Clueless

[Thailandnotes]

“It’s fitting for Chairman Greenspan to leave office with the economy in such solid shape,” said Ms. Yellen. “The situation you’re handing off to your successor is a lot like a tennis racquet with a gigantic sweet spot."

http://www.nytimes.com/2012/01/13/bu...pagewanted=all

"The desperation of homebuilders was a running joke among top Federal Reserve officials during the waning phase of the housing bubble in 2006, according to transcripts released Thursday.

They laughed about the cars that builders were giving to buyers. They laughed about efforts to make empty homes look occupied. They laughed at a report that one builder said inventory was rising “through the roof.”

The officials, meeting every six weeks as the central bank’s top policy committee to discuss the health of the nation’s economy, did not seriously consider the possibility that problems in the housing market would send the nation into recession."

[Slimprofits]

Re: Fed Notes Release Shows They Were Clueless

fomc meeting:

“We think the fundamentals of the expansion going forward still look good,” Timothy F. Geithner then president of the Federal Reserve Bank of New York, told his colleagues when they gathered in Washington in December 2006.

public speech: May 2007

“Given the fundamental factors in place that should support the demand for housing, we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited,” Bernanke said.


How many worthless University degrees between the two of them?

[Prazak]

Re: Fed Notes Release Shows They Were Clueless

fomc meeting:

“We think the fundamentals of the expansion going forward still look good,” Timothy F. Geithner then president of the Federal Reserve Bank of New York, told his colleagues when they gathered in Washington in December 2006.

public speech: May 2007

“Given the fundamental factors in place that should support the demand for housing, we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited,” Bernanke said.


How many worthless University degrees between the two of them?

The Washington Post printed a similar article. I like this bit from Bernanke: In his first meeting as Fed chairman, in March 2006, Ben S. Bernanke noted the slowdown in the housing market. But he said he shared the view that “strong fundamentals support a relatively soft landing in housing,” adding: “I think we are unlikely to see growth being derailed by the housing market.”

And how's this for some empty CYA: Treasury Department spokesman Anthony Coley said: “Secretary Geithner was an early source of initiative at the Fed to reduce risk and make the financial system more resilient even before 2006.” But here's what Timmy said about risks in 2006: “The current weakness in the economy still seems principally to stem from the direct effects of the slowdown in housing on construction activity” and other factors, Geithner said in December 2006. “The softer-than-expected recent numbers don’t argue, in our view, for a substantial reassessment of the risks in the outlook.”

Experts.

[charliebrown]

Re: Fed Notes Release Shows They Were Clueless

You have to ask yourself what the consequence of speaking the truth is. Can Bernanke say, "where up s**t's creek?"
No he can't. It's not just the gvt, but your boss, a company CEO etc. They are never going to say pack up your tent and go home.

[Sutter Cane]

Re: Fed Notes Release Shows They Were Clueless

The Benank would seem to be the quintessential Upton Sinclair-style man whose job depends on his not understanding.

[don]

Re: Fed Notes Release Shows They Were Clueless

The Benank would seem to be the quintessential Upton Sinclair-style man whose job depends on his not understanding.

Where have you gone Upton . . . our nation turns it's lonely eyes to you . . . woo woo woo (we do have Taibbi)

[c1ue]

Re: Fed Notes Release Shows They Were Clueless

Why is it so surprising that the Fed and/or Fed Chairs would not say anything about a housing bubble?

We have the excellent example of all those US Secretaries of the Treasury stating that it is US policy to have a strong dollar...even as the dollar falls and falls and falls.

A big part of any of these high profile jobs is jawing.

[LorenS]

Re: Fed Notes Release Shows They Were Clueless

The "risks" in housing were building long before 2006. As a young engineer I moved to Denver in 1994. Housing there went from affordable to ridiculous in 4 years and it was mirrored by a complete collapse in lending standards. My first "consultation" with Wells Fargo in 1994 indicated I could "afford" $300 per month (extenuating circumstances, but technically correct). Not much later I was getting offers to borrow 125% of the value of a house. It doesn't take a PHd to figure out what was driving the increase in house prices and what risks those flaky lending standards carried.

The dorks at the FED are idiots, sorry to be blunt, but what else can you conclude?

When I made my first purchase in 1996, I was quite cautious and stuck to the conservative side of the 28/36 debt to income spread. When my wife and I went shopping we refused to borrow based on her extra income. If the American people had been equally particular about their debt load, house prices would have stayed reasonable and the "crisis" would never been given a chance to develop.

The "experts" missed it, the populace missed it too. At least regular folks aren't advanced degree holders in economics. The fact that more "regular" folks had a clue than trained economists you have to conclude that education in economics leads you to a lesser understanding of the topic.

[Prazak]

Re: Fed Notes Release Shows They Were Clueless

It's not surprising at all -- lying is to be expected from public officials on sensitive topics. The thought that these guys were lying about the state of the housing bubble would be reassuring. It's the suspicion that they were deluded -- that the captain and officers of the monetary ship of state were drunk on MMT kool-aid -- that is so troubling.

[Master Shake]

Re: Fed Notes Release Shows They Were Clueless

Why is it so surprising that the Fed and/or Fed Chairs would not say anything about a housing bubble?

We have the excellent example of all those US Secretaries of the Treasury stating that it is US policy to have a strong dollar...even as the dollar falls and falls and falls.

A big part of any of these high profile jobs is jawing.

But this is behind closed doors where you would expect some truth-telling.

iTulip's Will Rogers' quote is certainly apropos here.

[gwynedd1]

Re: Fed Notes Release Shows They Were Clueless

Good economics comes from people who have all the information, who can also understand the information. We seem to have lots of one or the other.

[gwynedd1]

Re: Fed Notes Release Shows They Were Clueless

They are essentially following neoclassical, monetarist policies with sprinkles of mystical Keynesian(as in lets try this too and see what happens). Why are you calling it MMT kool-aid?

[c1ue]

Re: Fed Notes Release Shows They Were Clueless

But this is behind closed doors where you would expect some truth-telling.

iTulip's Will Rogers' quote is certainly apropos here.

I don't know about that.

It is far easier to promote a line of bulls**t by consistently repeating all up and down the line, than it is to selectively repeat it.

It is a myth that most people want constructive criticism, much less entire organizations.

[Thailandnotes]

Re: Fed Notes Release Shows They Were Clueless

So, what's the real reason for a five year delay? So these guys can keep their jobs?