Fed Worship Turns To Disillusionment
It is amusing to hear this WS Journal writer's disbelief that the Fed has been wrong about the housing bubble. "For a long time, Alan Greenspan dismissed suggestions that the U.S. was in the early stages of a housing bubble. He talked about the extraordinary demand for houses among hard-working immigrants. He emphasized that it's almost impossible to have a national housing bubble. He explained that it's hard to speculate in a house that you own because to sell it you have to move out."
"But there has been a little more concern creeping into his commentary in the past few months. 'We do have characteristics of bubbles in certain areas,' he said."
"The Fed..contributed to the housing boom by keeping short-term interest rates so low for so long, and encouraging the bond market to do the same with the long-term rates that determine mortgage rates."
"If house prices stop climbing, it won't be pleasant. Americans will feel poorer."