Friday, Mar 30, 2007
Ben Bernanke in the poop?
Bloomberg: Fed Risks Moral Hazard as Housing Market Melts: Mark Gilbert
The hangover from that borrowing binge is beginning to hurt. Evidence is building that the U.S. economy is slowing sufficiently to warrant a soothing reduction in interest rates from the Federal Reserve. That poses an interesting dilemma for Fed Chairman Ben Bernanke.
Cut too soon, and he will stand accused of ignoring inflation in an attempt to rescue the housing market. Leave it too late, and he risks tainting his second anniversary at the helm of the world's biggest economy by overseeing a recession.
Posted by rich @ 10:54 AM (169 views) Add Comment
13 Comments
- If you do not have an admin password leave the password field blank.
- If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
- Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
- Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
- Please adhere to the Guidelines
1. Adam said...
At least they are being honest about it in the US, eventually.
2. tyrellcorporation said...
Yes they may slash IRs to save the wider economy but if the fall in house prices has gained a momentum, the chase will be on to head off a recession. It all sounds like crisis management to me and a classic boom-bust cycle. Also how will the Dollar fare if the money markets sniff some panic at the Fed? This is about to get very interesting especially if expensive oil keeps the inflation level brimming along and a weakening Dollar imports inflation as the Yanks struggle to buy more expensive 50" TVs.
3. dohousescrashinthewoods said...
I think they are still lying.
The underlying story has got a lot worse and the lie is still about the same distance removed from the truth.
4. Taffee said...
the underlying situation is far far worse....typically the main figures which would tell you what is really going on in estate agents there and here are about 3 months behind.The housing market is a tanker and its set to keep falling for many mnay years.
5. taffee said...
underlying trend which is what is actually happening in realtors and estate agents is about 3 months behind.........I hear its horrific in the US(some parts) and getting hairy in the uk.
more open chains,buyers being picky,offers below the asking price,many houses not even getting viewings etc......I was an estate agent in the late 80's and would say the situation was very similar to then.bizaarly its the agents who will hammer the prices down 'cos they need to sell to survive....they will refuse to market houses unless they go with the agents price......The one red herring is that in the late 80's we didn't have people with 5 buy-to-let properties.....imagine getting hammered x 5!Scary
6. japanese uncle said...
``The chances of early, then deep, interest-rate cuts are increasing daily. When push comes to shove, forget inflation fears.''
---------------------
This man must not be stupid enough not to realize rate cut in the US could trigger greenback meltdown.
Any professional comments of this nature must accompany full disclosure of the position of financial holding of the speaker himself or of his major clients.
7. royston said...
japanese uncle,
The greenback is gone anyway. Recent articles posted on this site showed that the Chinese and the Arabs have already started cashing in their chips. I suspect Central Banks are currently intervening in the FX markets to maintain the appearance that the dollar is OK, while, via the backdoor, official reserves are being transferred into other currencies.
8. Richc said...
The fundamental problem is pretending that house price inflation isn't inflation. OK, so at this point, the Fed (right there with the BoE) has created a huge housing bubble, all the while claiming that since CPI isn't going up, there is no inflation. Now, within the next few months, the Fed will have to lower interest rates to save the skins of speculators who created this mess and prevent GDP growth from going into a tail spin, even though inflationary pressures are still quite high. At that point, inflation is back just like disco music and bell bottoms.
9. george monsoon said...
Ok, for those of us who associate the name Greenback with a toad on Dangermouse, can someone enlighten as to what greenback is?
10. harold said...
george monsoon
$.
11. paul said...
9. george monsoon said...
Ok, for those of us who associate the name Greenback with a toad on Dangermouse, can someone enlighten as to what greenback is?
Friday, March 30, 2007 12:54:50 PM
10. harold said...
george monsoon
$.
You see. Analogies within analogies Dangermouse was cleverer than you thought.
12. sold 2 rent 1 said...
The Fed are stuck whatever they do.
The real problem is that the word "recession" is treated as a dirty work.
The fact is that recession’s are a necessary part of the economic cycle.
They play an important role in getting the labour force into more productive jobs.
All this madness is the result of desperately trying to avoid a recession at all costs.
Now we will have to face a depression.
13. Rainbow said...
Why would Ben wish to rescue the situation?.
The blame won't be laid at his door, not been in the job long enough,every one knows it's down
Greenspan.
The Republicans are toast in 18 month's, no need to rescue them, Benanke will be thinking about his new paymasters. Hilary is probably already in his ear, "don't you think about re-flating this $hit, let it go, the worst should be past by the time I walk into the White House".