The intertubes were abuzz yesterday after the release of the Federal Reserve’s 2006 policy committee meeting minutes in which it seems the central bank was blissfully unaware of the trouble ahead for housing and credit markets, a point nicely illustrated below from the Wall Street Journal’s Little Alarm Shown at Fed At Dawn of Housing Bust($).
“So far we are seeing, at worst, an orderly decline in the housing market,” he said.
Mr. Bernanke predicted a “soft landing” for the economy as 2006 ended, not a housing bust that would trigger the worst financial crisis since the Great Depression.
Timothy Geithner, then president of the New York Fed and now Treasury Secretary, playfully offered this forecast about Mr. Greenspan’s legacy: “I think the risk that we decide in the future that you’re even better than we think is higher than the alternative.”
Amazing stuff (no, not really)… For those still playing catch-up on this, some more links:
FOMC: Transcripts and Other Historical Materials, 2006 – Federal Reserve
Inside the Fed in 2006: A Coming Crisis, and Banter – NY Times
Fed 2006 Transcript: Riding Housing Roller Coaster With Eyes Shut – WSJ
Fed’s image tarnished by newly released documents – Washington Post
Richard Fisher Compares the Housing Bubble to Brad Pitt’s Baby – WSJ
On bank self-regulation and other Greenspan fairy tales – Credit Writedowns
The Fed’s Undistinguished Macro Discussions Circa Jan 2006 – Capital Spectator
Comments from FOMC meetings which resulted in laughter – Economist
So This Central Banker Walks Into a Bar…. – Crossing Wall Street
The Federal Reserve Is…Gasp…Funny – NetNet