The recently released Federal Reserve 2008 Transcripts and Other Historical Materials have made for some interesting reading for those whose job it is to peruse this material and write about it. It’s taken a few days to pore over it all and the reviews are in (they’re not good).
From Laughing all the way to an economic crash at Marketwatch:
“As somebody who stupidly is just going to contract on a new house because I have to please my wife, I actually thought exactly along these lines and was thinking about pulling out but then decided that my marriage was more important.” — Gov. Frederic Mishkin on falling housing prices and his marriage.
“Lehman’s short-term financing counterparties have generally proved to be patient. The financing backstop provided by the Primary Dealer Credit Facility has been cited by many counterparties as a critical element that has encouraged them to keep their financing lines to Lehman in place.” — NY Fed President William Dudley in June 2008
From that same June meeting in 2008 Fed Career Killers at Macro Business:
MR. FISHER: If Robert Frost will forgive me, the woods are not lovely, and they are indeed deep and dark on the price front. Although the tail risk of economic recession has diminished, I think it still exists. … But the risk of inflation, in my view, has assumed greater depth and breadth since we last met.
MR. LACKER: Even if we avoid outright recession, as now seems probable, the unemployment rate is likely to keep rising for a time.
Of course, as we now know, the recession was already seven months old by that time.