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If we could find the spark that led to an unsustainable construction orgy, then perhaps we could prevent it from happening again. But alas, it shall remain a mystery.
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March 22, 2012
Bernanke Tells Students Fed Not Responsible For Housing Bubble
"Some have argued that the Fed's low interest rate monetary policy in the early 2000s contributed to the housing bubble, which in turn was a trigger of the crisis," Bernanke said today in the second of four lectures on the history of the Fed that he plans to deliver at George Washington University, according to slides of his presentation.
I would also argue that the Fed is irresponsible ("not responsible") for the housing bubble.
See Also:
Sarcasm Disclaimer
Source Data:
St. Louis Fed: Construction Spending / Wages
St. Louis Fed: Effective Federal Funds Rate
6 comments:
I would also argue that the Fed wasn't the only one irresponsible though. Sigh.
http://research.stlouisfed.org/fred2/graph/?g=bhl
shows how Fed interest policy got the ball rolling, but the real story is http://research.stlouisfed.org/fred2/series/M3 I suspect.
So much new money out there, looking for yield.
http://research.stlouisfed.org/fred2/series/HHMSDODNS
and finding a home. The liar loans and negative-am stuff -- ie. suicide lending -- were the prime drivers of the bubble.
The rate drops got prices moving up again in 2002-2003, but the 2004-2005 appreciation was through outright fraud and bubble mania chasing prices up.
Prices actually peaked 2H05, what followed then was the smart money leaving the market at the top.
Stag,
As usual, great charts. I'll just mention that construction spending only tells a part of the story. Credit creation to buy existing homes (rather than new homes) was a key driver of the bubble too.
The Grenanke Feds have been an epic fail. Not an accident imo. The Fed looked the other way just as their handlers on Wall St. demanded.
Advocates of thieves!
So much new money out there, looking for yield.
Thank the Fed for that, too.
The Fed also played a big role as regulator so the irresponsible lending, liars on both sides of the loans, could not have happened without the Fed giving a wink and a nod at the fraud.
When you add the near zero interest rates with the failed regulation, the Fed wins as most irresponsible party.
If I was also irresponsible, I might say things like F*** the Fed, F*** the banks, and F*** the whole system. If I was irresponsible.
Mr Slippery (& all),
If I was also irresponsible, I might say things like F*** the Fed, F*** the banks, and F*** the whole system. If I was irresponsible.
Flip the Fed!
Flip the banks!
Flip the whole system!
There, I said it. Somebody had to!
We just want to be sure to have big buckets set up beforehand to catch any loot that falls out, lol. ;)
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