More Bernanke: "Many households remain more financially fragile than might be inferred from the...

More Bernanke: "Many households remain more financially fragile than might be inferred from the aggregate statistics alone," he says, touting new, even more detailed data the Fed is monitoring. The Fed never saw the greatest macro event in generations coming (even when it was on top of us), and Bernanke lays some of the blame on a lack of intricate numbers coming across the desks of central bank economists.
Comments (18)
  • bbro
    , contributor
    Comments (11216) | Send Message
    It would have helped if Residential Investment to GDP had been only 4 to 4.5% to GDP and not above 4.5% for effectively 8 years with a high of 6.3%....
    10 May 2013, 10:06 AM Reply Like
  • davidingeorgia
    , contributor
    Comments (2661) | Send Message
    >>The Fed never saw the greatest macro event in generations coming (even when it was on top of us), and Bernanke lays some of the blame on a lack of intricate numbers coming across the desks of central bank economists.<<


    They didn't see it coming because they refused to open their eyes and look. Thinking that any set of numbers contains the sum total of what's happening in the real world is part of the problem; having more numbers to use in distancing themselves from reality isn't a solution in and of itself.
    10 May 2013, 10:18 AM Reply Like
  • realornot
    , contributor
    Comments (1263) | Send Message
    because they live on top of the Eiffel tower. Things are just too small for them to see on the ground!


    This is What they do after the FED meeting every time.


    Cheers and drink up!

    10 May 2013, 01:05 PM Reply Like
  • hacimo
    , contributor
    Comments (38) | Send Message
    Sure sure, and I suppose you saw it coming. The fact is very very few saw it coming and those who had an inkling were too uncertain to really take action. But now everyone is a genius in hindsight. I respect Bernanke for at least having the honesty to acknowledge his own fallibility. You might try something similar yourself.
    10 May 2013, 11:02 PM Reply Like
  • marketwatcher23
    , contributor
    Comments (2185) | Send Message
    If the fed sees a bubble, what can they do about it now?
    10 May 2013, 10:31 AM Reply Like
  • june1234
    , contributor
    Comments (4353) | Send Message
    exactly. bonds like any other asset class can crash.
    10 May 2013, 06:00 PM Reply Like
  • Interesting Times
    , contributor
    Comments (15009) | Send Message
    10 May 2013, 10:49 AM Reply Like
  • Tack
    , contributor
    Comments (16267) | Send Message
    Well, regarding any real estate bubble, at least, common sense would have worked well enough in 2006-2007, if one paused from euphoria long enough to consider uncomplicated realities that had departed from sensibility. Just as an anecdotal example, I recall driving down the road one day, listening to the car radio, when one of the ever-present mortgage commercials blared out, "get 125% of the value of your home without any need to verify your income or provide documentation." No complicated set of academically-analyzed statistics, in retrospect, were required to ponder where that would end.


    Conversely, now, it's relatively easy to know we're not in or even near any realty bubble because loans are much more difficult to get, e.g., higher downpayments, higher credit scores, and lower appraisals. This latter item, appraisals, has had particular impact on containing home-price rises because after 2008 the liability of appraisers was greatly expanded, so, now, to protect themselves, appraisers are making very conservative appraisals -- excessively so, in many cases. Several realty agents I know say that this has been the number-one impediment to closing various sales, where all of the seller, buyer and bank were on board, but the appraisers would not sign off.
    10 May 2013, 10:52 AM Reply Like
  • pollyserial
    , contributor
    Comments (1113) | Send Message
    The bubble now is in investment real estate. Let's see what happens when they realize that the average person can't afford to pay more for the property they bought with cash. Speaking for California here, I don't know anything about the rest of the country.
    10 May 2013, 06:11 PM Reply Like
  • Miz Magic DiviDogs
    , contributor
    Comments (5148) | Send Message
    Polly, the investors in California think they're doing the average person a huge favor by buying up the depressed houses, fixing them up, and then renting them to the average person. They think it's a win-win. That's what they tell anyone who asks.
    11 May 2013, 01:48 AM Reply Like
  • svnt3stngray
    , contributor
    Comments (15) | Send Message
    financial monitoring, more agencies, more stimulus, more data. There is no "financial system". It's just materials, work, capital and trading. The fed reserve is a self licking ice-cream cone made from stolen milk.
    10 May 2013, 11:08 AM Reply Like
  • blueice
    , contributor
    Comments (4179) | Send Message
    SVN, nice twist, which they did a year or two ago...


    The JMK crowd will never see the road ahead only to comment on how they missed each and every turn...
    10 May 2013, 11:46 AM Reply Like
  • Lakeaffect
    , contributor
    Comments (1449) | Send Message
    The Fed's easy money since 1987 (thanks, maestro) spawned this mess. Rather than admit that, they'll do anything to try to save their failing financial paradigm by pouring ever increasing amounts of fuel onto the fire.


    Now all of a sudden Ben senses that this isn't working, so he's going to take a closer look at the entrails.


    Get ready for mortgage principal forgiveness and asset grabs from those who aren't still upside down on their houses. All the while feeding the greedy maw of the TBTF financial institutions.
    10 May 2013, 01:02 PM Reply Like
  • Whitehawk
    , contributor
    Comments (3121) | Send Message
    "self licking ice-cream cone made from stolen milk"


    Lol. Actually, the Fed much prefers this current state over that which led to massive defaults in the subprime housing market. The responsible creditors among us do resent the JMK crowd stealing our milk, no doubt about that.
    10 May 2013, 03:07 PM Reply Like
  • The_Hammer
    , contributor
    Comments (5046) | Send Message
    Ticking inflation bomb could go off at any time. This is going to sink any semblance of standard of living down to thrid world levels for retirees, the middle class and the poor. The hero will be no longer.
    10 May 2013, 06:49 PM Reply Like
  • InvestoBullSG
    , contributor
    Comments (200) | Send Message
    I believe that there will be another Lehman Brothers Part II involving wrongly managed investment banks if the current subprime-mortgage bubble trend continues.
    11 May 2013, 04:18 AM Reply Like
  • mweaver
    , contributor
    Comments (199) | Send Message
    auto loans/leases to sub/below sub borrowers
    that will never be paid off
    student loans that can't possibly be paid back
    by students encouraged to pursue areas of study
    where there are no jobs
    hamp program participants back in foreclosure
    for the second time
    change you can believe in
    11 May 2013, 06:10 AM Reply Like
  • AllStreets
    , contributor
    Comments (1464) | Send Message
    The Fed not only saw the crash coming, they deliberately engineered it. The yield curve had been gradually flattening for many months in 2006-2007. Then the market topped almost exactly the day the Fed and other bank regulators put into effect the "Interagency Guidance on Nontraditional Mortgage Product Risk," October 6, 2007. By February, 2008 there were no more sub-prime mortgage lenders and sub-prime borrowers were trapped in their exploding interest rate mortgages. The guidance essentially eliminated by the swipe of a pen all the "stated" income and no doc loans. Soon thereafter, the Alt A market disappeared. Home equity wholesale lenders nearly all disappeared and guidelines dropped from 100% CLTV to 90%, then 85%, then 80%. Even high credit score borrowers were trapped into their mortgages if they couldn't meet ever tightening debt-to-income ratios and other guidelines.


    Did the Fed see this coming? Even rank amateur mortgage brokers, much less bankers, could clearly see what lay ahead if they read the rule. Like a few other commenters, in my testimony about the proposed rule I flatly stated that it would create a financial "tsunami" and a depression rivaling the 1930's. The rule-makers would have had to be catatonic and terminally ignorant not to see the easily understood drastic consequences when they radically transformed the entire mortgage market overnight with the swipe of the pen. That could have been done in a much more orderly gradual fashion. I wonder how many made fortunes buying default swaps.
    11 May 2013, 10:34 AM Reply Like
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