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News & ArtsFriday, January 13, 2012
Economy What the Fed Said As the Housing Bubble Began to Burst
Posted by Eli Sanders on Fri, Jan 13, 2012 at 6:00 AM
Nothing that shows comprehension of the coming collapse, according to transcripts obtained by the New York Times:
Instead they continued to tell one another throughout 2006 that the greatest danger was inflation—the possibility that the economy would grow too fast.
“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.
As we now know, as the transcripts prove, and as the Times states: "Some of the nation’s pre-eminent economic minds did not fully understand the basic mechanics of the economy that they were charged with shepherding."
1
lol - how much money have we printed since then? (Hint: 3x as much) We are scheduled to print more this year as well...
2
anyone who couldn't see the real estate bubble coming was a MORON.
Greenspan is guilty of Economic Crimes Against Humanity
Greenspan is guilty of Economic Crimes Against Humanity
4
Gah. I do not understand how Timothy Geitner is even employed. That son of a bitch should be paraded through the streets with a dunce cap on his head, so the rest of us can spit on him as her passes by.
5
It's hard to see facts when your head is still so far up Alan Greenspan's ass. It took awhile to begin to see how wrong he was.
6
One of the things with America is that after a turnover in power and ideology, all the old guys hang around and continue to give speeches and get book deals.
If this were Stalinist Russia, a Greenspan would have been shepherded to a dacha near the Arctic Circle. Then there would be rumors of him getting 'sick'. Then ...
If this were Stalinist Russia, a Greenspan would have been shepherded to a dacha near the Arctic Circle. Then there would be rumors of him getting 'sick'. Then ...
7
This post made me think of an article by Trisha Ready that appeared in this very paper 3 1/2 years ago.
http://www.thestranger.com/seattle/Conte…
What's she doing these days? More importantly, can we get her and her brother Paul to start monitoring the economy all the time for The Stranger? She was certainly correct in her observations and predictions regarding the economy in mid-'08.
http://www.thestranger.com/seattle/Conte…
What's she doing these days? More importantly, can we get her and her brother Paul to start monitoring the economy all the time for The Stranger? She was certainly correct in her observations and predictions regarding the economy in mid-'08.
8
The elite are so insulated from everyday problems that it matters little what happens. There is never any responsiblity taken. Phil Gramm and the Republican mantra of deregulation has lead us here, so shifting the blame to Geithner is part of their plan to avoid their own responsibility.
9
Blame the Republicans all you want, Vince, but the simple fact is that Bill Clinton was more responsible for this than anyone.
10
I think the only one to get it consistently right as far back as that was the late Tanta of Calculated RIsk. What a great writer she was, wonderfully caustic on the Fed and bankers' inability to see the scale of the disaster they'd set up.
As @7 notes, two years later Trisha's fine article in this very paper was still able to come as a shock to almost every reader. Two years later. Comforting though the temptation may be to engage in a bit of thumbsucking, we shouldn't let hindsight fool us into pretending Tanta's foresight wasn't truly extraordinary - everybody missed the story. Tanta vive!
As @7 notes, two years later Trisha's fine article in this very paper was still able to come as a shock to almost every reader. Two years later. Comforting though the temptation may be to engage in a bit of thumbsucking, we shouldn't let hindsight fool us into pretending Tanta's foresight wasn't truly extraordinary - everybody missed the story. Tanta vive!
13
5280 is not wrong. Both parties are responsible for the repeal of Glass Steagall. I wouldn't say Clinton was wholly responsible, considering he was holding hands with a Republican Congress. By not dismantling Citi as he apparently directed Geitner to do, Obama continues to support 'too big to fail banks' engaging in nothing more than gambling. Geitner shouldn't have a job when he was tipping Vikram Pandit off the whole time.
Further, the Fed continues to be more concerned with keeping the Dow above 12,000, than with good fundamentals for an actual US economy.
Further, the Fed continues to be more concerned with keeping the Dow above 12,000, than with good fundamentals for an actual US economy.
14
#13
Yes, right.
Hence the activities of Bain are more useful to a vibrant economy as they distribute of assets based on productivity, creativity and current demand.
Yes, right.
Hence the activities of Bain are more useful to a vibrant economy as they distribute of assets based on productivity, creativity and current demand.
15
@14, if you're doing that with only a one or two year timeframe in mind, then 'no' I wouldn't agree. Bain was just out to make quick profits. With their model, all of those GM car jobs and thousands of supporting jobs would be gone. While we're in a time of cheap credit, this country needs to be investing. Heavily investing in education and infrastructure, not dismantling and just trying to push the Dow to 14,000. How the Dow is doing is so disconnected from economic planning - that's what really scares me about Geitner.
16
The titans missed it then, and they're still missing it. A paradigm has shifted. But still they sit around chanting incantations, burning sage and stroking their spirit talisman hoping things quickly return to 'normal'. It seems so obvious now that 'normal' is history.
17
I don't get it, how could these highly educated officials not understand this was going to happen?
I predicted during the first recession of last decade that there was a housing bubble that would burst before the end of the decade, but what I did not predict was how many people would purchase a home, thinking, "It'll never lose money, residential property never does anything but go up in value!!!"
Many people told me either this exactly, or something markedly similar. By 2003 I was considering purchasing a home, but after doing research and tracking real estate from 1890 to 1990, I determined that the era from 1991 - 2001 was a complete anomaly: double digit increases in residential property values compounding annually! That had never before happened in the history of the US, and all one needs to do is look at Japan during the 1990s to see a blueprint for disaster.
Real estate is essentially a vehicle for saving, and carries approximately similar risk as the stock market. It is gambling, and you can predict the results if you use your brain.
On a basic level, if you're considering purchasing a home that has increased in price by more than 50% over the last five years, that is a pretty good indicator that something has to give sooner or later. The property I came close to purchasing increased by 66% in the three years preceding my consideration of purchase.
Is this not obvious? It doesn't take a Nobel Economist to figure out supply and demand becomes adversely affected by the average citizens ability to purchase, when combined with stagnant wages which aren't keeping pace with inflation for, oh, lets say since 1975, then you got a recipe for disaster!!!
I predicted during the first recession of last decade that there was a housing bubble that would burst before the end of the decade, but what I did not predict was how many people would purchase a home, thinking, "It'll never lose money, residential property never does anything but go up in value!!!"
Many people told me either this exactly, or something markedly similar. By 2003 I was considering purchasing a home, but after doing research and tracking real estate from 1890 to 1990, I determined that the era from 1991 - 2001 was a complete anomaly: double digit increases in residential property values compounding annually! That had never before happened in the history of the US, and all one needs to do is look at Japan during the 1990s to see a blueprint for disaster.
Real estate is essentially a vehicle for saving, and carries approximately similar risk as the stock market. It is gambling, and you can predict the results if you use your brain.
On a basic level, if you're considering purchasing a home that has increased in price by more than 50% over the last five years, that is a pretty good indicator that something has to give sooner or later. The property I came close to purchasing increased by 66% in the three years preceding my consideration of purchase.
Is this not obvious? It doesn't take a Nobel Economist to figure out supply and demand becomes adversely affected by the average citizens ability to purchase, when combined with stagnant wages which aren't keeping pace with inflation for, oh, lets say since 1975, then you got a recipe for disaster!!!
18
@8, Vince & @17, scratchmaster joe,
...so shifting the blame to Geithner is part of their plan to avoid their own responsibility.
I don't get it, how could these highly educated officials not understand this was going to happen?
For the record, @17, the overwhelming amount of data indicates this was by design --- although you may respond with typical Paulie Constant (& Henry Kissinger) mantra: "Conspiracy theory, conspiracy theory."
It is important to remember everything which occurred when Timmy Geithner was chair at the FRBNY (Federal Reserve Bank of New York, the control element within the Federal Reserve System, hence its proximity to Wall Street).
During that time, Reuben Jeffery III, was the number two guy (and number one finance guy) at the Coalition Provision Authority in Iraq when that oil securitization took place and $8.7 billion in Iraqi oil funds went missing (Route: Ex-Im Bank/Iraq Trade Bank >>> FRBNY (kept on account there) [chair: Timothy Geithner] >>> contract managed by JPMorgan Chase [Managing Director: Daniel Zelikow, best friend of Timothy Geithner]).
Please ignore the convenient "suicide" of James McDonald at Rockefeller Financial Services, which opened up the position for Trilateral Commission member, Reuben Jeffery III (18 years at Goldman Sachs, naturally), to assume that position. This was after Mr. McDonald negotiated a successful deal with Societe General (SocGen) whereby SocGen purchased 37% of Rockefeller Financial Services, ostensibly enabling them greater penetration into the ultra-high-net-worth-individual market).
Please ignore the bizarre death of Philip Merrill, the chair of Ex-Im Bank during that period, whose death by shooting half of his head off with a shotgun aboard his yacht, then picking up an extremely heavy anchor, diving overboard and swimming 11 miles from the ship, where he would then weigh down his body with said anchor, was ruled a "suicide."
The SocGen deal was a perfect manner in which to launder, or "wash" those missing funds. SocGen has a rather spotty record with regard to international money laundering.
Also, please ignore that Reuben Jeffery III is a long-time member of David Rockefeller's Trilateral Commission, and the fact that Timothy Geithner was a past member of David Rockefeller's Trilateral Commission, and that Geithner was reputed to be handpicked by his successor, Peter G. Peterson, protege of David Rockefeller, to follow him at the NY Fed. After all, ignorance is bliss!
(And for the record, I am a lifelong democrat, authentic progressive, was a national campaign worker for Jimmy Carter's first presidential campaign, a volunteer researcher on the House Select Committee on Assassinations in '77/'78 (the JFK side, the other section investigating the assassination of Rev. Martin Luther King), and am aware enough to know, @8: Vince, that Geithner was first appointed during the George. H.W. Bush administration, reappointed during Clinton's administration, and appointed to the Fed of NY during Geo. W. Bush's administration, you clown!)
More...
...so shifting the blame to Geithner is part of their plan to avoid their own responsibility.
I don't get it, how could these highly educated officials not understand this was going to happen?
For the record, @17, the overwhelming amount of data indicates this was by design --- although you may respond with typical Paulie Constant (& Henry Kissinger) mantra: "Conspiracy theory, conspiracy theory."
It is important to remember everything which occurred when Timmy Geithner was chair at the FRBNY (Federal Reserve Bank of New York, the control element within the Federal Reserve System, hence its proximity to Wall Street).
During that time, Reuben Jeffery III, was the number two guy (and number one finance guy) at the Coalition Provision Authority in Iraq when that oil securitization took place and $8.7 billion in Iraqi oil funds went missing (Route: Ex-Im Bank/Iraq Trade Bank >>> FRBNY (kept on account there) [chair: Timothy Geithner] >>> contract managed by JPMorgan Chase [Managing Director: Daniel Zelikow, best friend of Timothy Geithner]).
Please ignore the convenient "suicide" of James McDonald at Rockefeller Financial Services, which opened up the position for Trilateral Commission member, Reuben Jeffery III (18 years at Goldman Sachs, naturally), to assume that position. This was after Mr. McDonald negotiated a successful deal with Societe General (SocGen) whereby SocGen purchased 37% of Rockefeller Financial Services, ostensibly enabling them greater penetration into the ultra-high-net-worth-individual market).
Please ignore the bizarre death of Philip Merrill, the chair of Ex-Im Bank during that period, whose death by shooting half of his head off with a shotgun aboard his yacht, then picking up an extremely heavy anchor, diving overboard and swimming 11 miles from the ship, where he would then weigh down his body with said anchor, was ruled a "suicide."
The SocGen deal was a perfect manner in which to launder, or "wash" those missing funds. SocGen has a rather spotty record with regard to international money laundering.
Also, please ignore that Reuben Jeffery III is a long-time member of David Rockefeller's Trilateral Commission, and the fact that Timothy Geithner was a past member of David Rockefeller's Trilateral Commission, and that Geithner was reputed to be handpicked by his successor, Peter G. Peterson, protege of David Rockefeller, to follow him at the NY Fed. After all, ignorance is bliss!
(And for the record, I am a lifelong democrat, authentic progressive, was a national campaign worker for Jimmy Carter's first presidential campaign, a volunteer researcher on the House Select Committee on Assassinations in '77/'78 (the JFK side, the other section investigating the assassination of Rev. Martin Luther King), and am aware enough to know, @8: Vince, that Geithner was first appointed during the George. H.W. Bush administration, reappointed during Clinton's administration, and appointed to the Fed of NY during Geo. W. Bush's administration, you clown!)
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