Apparently. That's not saying much.
Read the New York Times article: "Fed was Slow to Connect Dots on Housing Crisis" ... and weep. Turns out the Fed was even more clueless about the Housing Bubble than we thought at the time. These transcripts have become available after 5 years, so ignore everything they said they were thinking and read what they were really thinking.
Over the course of the housing bubble, I spent most of my profits on inventory and or paying down the debt. I knew that there was going to be an implosion, I knew that that implosion was going to impact the economy.
All I needed to do was look at my regular subscription comic customers and count up how many of them were employed in some aspect of the housing business to know it was trouble.
When Bear Stearns ran into trouble, I immediately pulled back on my expansion plans. I immediately assumed that the anticipated recession would soon start. (It actually pretty much began that month for me.)
According the N.Y.T.'s article, the Fed didn't think the Housing Bubble would affect the overall economy. In fact, they thought it would be GOOD for us.
If you really want to be frightened by our future, just read all the comments by Tim Geithner, (who seems to me to be Obama's Donald Rumsfeld -- a complete incompetent who keeps getting promoted.)
In fact, I'll go ahead and reproduce those comments in all their horrid glory:
"We think the fundamentals of the expansion going forward still look good." December, 2006. Timothy Geithner, President of the Federal Reserve Bank of New York.
"We just don't see troubling signs yet of collateral damage, and we are not expecting much." September, 2007.
About Alan Greenspan: "I'd like the record to show that I think you're pretty terrific, too. And thinking in terms of probabilities, I think the risk that we decide in the future that you're even better than we think is higher than the alternative."
What a mouthful of obsequious gibberish!
Our Treasury Secretary, ladies and gentlemen!
Now....don't you feel secure, just all warm and fuzzy, in our Greenspan granted, Geithner graced future?
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3 comments:
Alan Greenspan was an admirer of Ayn Rand -- not just a casual one, but a member of her inner circle in New York -- and as far as I know he has never repudiated her ideas. And he is not a stupid man. More than once I've wondered if he deliberately set out to destroy the American economy to demonstrate that only "pure capitalism" works. He couldn't have done a better job of it if that had been his intention.
"Tim Geithner, who seems to me to be Obama's Donald Rumsfeld -- a complete incompetent who keeps getting promoted."
Ditto to that.
Nice post, Dunc.
But let me say that it was probably much easier for us to see the bubble in Bend, Oregon, because we had a front row seat to the most extreme manifestation of the bubble. All sorts of clearly unsustainable things were going on.
In New York and DC the bubble was manifested as just numbers on a spreadsheet. Their house prices are high either boom or bust, and broad swaths of the country never had that much of a boom anyway.
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