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Housing is not "out of the woods," says Ben Bernanke in an Atlanta speech. Seemingly begging...
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Thursday, November 15, 2012, 1:36 PM ETHousing is not "out of the woods," says Ben Bernanke in an Atlanta speech. Seemingly begging lending officers to go back to the ways of 2003, he laments "overly tight" mortgage standards, saying it's likely the "pendulum has swung too far the other way."
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If th Fed wants to see enhanced lending volumes, both on housing and commercially, then, they have to allow rates to rise. Otherwise, they can make all those unsound loans, themelves.
The banks have learned. They made the loans, at the original behest of the Government, and they took hundreds of billions in losses on them and have been harrassed, fined and sued relentlessly for doing so. I'm sure they'll be telling Ben or anybody else to whistle Dixie, if they are expected to go out on a new limb.
Board member: "We need to provide more liquidity."
Chairman: "Give me a timeline, milestones, outcomes."
Board member: "Uuuhhh."
Chaucer talked about the problem we have in the Canterbury Tales.
Simple Simon
Met a pie man
Going to the fair.
Said Simon
To the pie man,
"Can I taste your wares?"
Said the pieman
To simple Simon
"Let me see your money."
Said Simon
To the pie man,
"Indeed, I haven't any."
We were trying to consume without producing. Eventually, the fraud becomes apparent.
The Fed is still trying to pretend that the level of economic activity engendered by the bubble they created should be the natural level of economic activity without the bubble. And so they go to absurd lengths, trying to make it come true.
"The emperor has clothes! See that beautiful gold coat he is wearing. Those custom fitted leather boots. You can't see them? They're there! Really! Just believe, brother, and you will see."
It would be funny, like clowns performing, if it wasn't causing so much damage.
And people are still laughing at a possibility of hyperinflation? Within 3 years, I bet Congress will not only allow this to happen but they'll be on their knees begging Bernanke to "save the economy" by printing a ton of money and asking the Air Force to deliver them by helicopter.
I certainly don't worship them. But they are more important to our economy than the banks, who do seem to be worshipped, at least by the Federal Reserve. They are the tip of the spear for innovation and productivity growth. It only makes sense they have some say in the financial system. I would be happy to see a senior project manager from NASA, or an actuary (as David Merkel suggested) instead. Anyone who will question the group think that prevails.
That is the main thrust of my comment. We have a coterie of macro economists deciding economic policy for the country, people who all see the world the same way. Their track record is abysmal, yet they sail on unquestioned. A venture capitalist is a gambler, making bets on uncertain outcomes. A successful venture capitalist asks lots of difficult questions of potential bets in order to reduce that uncertainty, or at least narrow it, before betting. We need that kind of questioning at the Federal Reserve. The justifications they offer for their policies are just short of 'because I said so'.
Comrade Bernanke, chairman of the central planning committee of the United States Collective, today addressed the central committee of the housing directorate. He suggested they were not meeting the target he had set, and they should strive to achieve his goals.
After the meeting, there was a brief session with the press, witnessed by the local leaders of the proletariat. It began with a rousing rendition of The Internationale followed by the recitation of the US Collective pledge, 'From each according to his ability, to each according to his need'. The comrade then answered questions from the press, including US Truth, President's Progressive Thought, and Congressional Guidance. He suggested that the government would soon be opening stores where prices would be set by the central planning committee, and used for determining the rate of inflation. He indicated that prices would be significantly below those in private stores. When asked if there would be goods on the shelves, he stated the prices would be unrelated to whether there would be goods or not. The reporter for President's Progressive Thought daringly asked how the proletariat could have faith in the chairman given his track record of failure. The chairman calmly answered that past performance was not indicative of future returns. The fact this question was asked will lead to speculation of power struggle among the steering members of the Collective.
As the comrade left for his next meeting, to decide the toilet paper production level for the coming year, there was a spontaneous gathering of the proletariat. They cheered and threw flowers as he strode to his car and was whisked away. There are rumors that he is unhappy with the high cost of current toilet paper, and is going to argue for lower quality in order to meet production targets set by the central committee.
;-)