I’m sorry, I can’t make it any more plain than that. To argue that financial bubbles aren’t dangerous, and that the Fed shouldn’t try to combat them — which is what ex-Fed governor Frederic Mishkin just did in the Financial Times — is monumentally stupid. Can this guy be serious? Haven’t we seen what a huge disaster the Fed’s “Don’t fight bubbles when they’re inflating — just ‘mop up’ when they pop” approach has been? I seriously hope sitting members of the Fed don’t believe this claptrap.
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Wow. Tell us how you really feel!
As the Fed, Treasury, banks & Congress attempt to recreate the bubble in housing through cheap interest and payoffs, you have to know the answer to your question.
Yes, they are that stupid now.
I like Mike. He tells it how it is. Here in England we have exactly the same problems as in the US. We had a massive housing bubble where prices in my street went from £90k to £350K (around $500,000). Another went from £42K to £208K. Other houses in the locality went from £10K to £100-150K+ which was absolutely crazy. Prices have come down since, but folk who are selling still expect buyers to offer silly money! The result of this bubble has caused record bankruptcies and mortgage defaults, yet we’re told to spend money we haven’t got. I lost my job in 2003 and have struggled to find work since. I did a bit of temping but a day here and a day there is no good to me. Then the agency put their prices up and I found myself surplus to requirements. Where I am there used to be a street full of them. Several are now closed, even the big international ones, so it now looks like a ghost town. A part-time wage won’t pay full-time bills. Fortunately I saved like mad, but a lot of others didn’t. Now my savings are in a bank bailed out by (American) taxpayers. The world was warned, but those in power didn’t take any notice and it is that alone that makes your average Jo(e) angry.