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View Diary: "Change You Can Download" - Wikileaks Releases 6,780 CRS Reports. [UPDATED 3x] (140 comments)

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  •  Here is a nugget-housing bubble (3+ / 0-)

    Current Economic Conditions and Selected Forecasts

    An examination of Figure 2 reveals that over the past eight years, the federal funds target has
    been on a sort of roller coaster path--down, up, and down. The initial decline in the target was to
    set in motion a recovery from the 2001 recession and to deal with the uncertainties from the 9/11
    attack on the United States. The rate was then held low for nearly three years because of the
    slowness of the economy to recover and expand and because of a fear that the U.S. might
    experience price deflation similar to that experienced by Japan. This policy may have had serious
    unintended consequences. The shift in housing finance in the U.S. from fixed rate to variable rate
    mortgages meant that the housing sector was now far more vulnerable to short-term interest rates.
    A number of analysts now believe that a consequence of keeping the target rate low for three
    years was to set in motion a housing price "bubble." A bubble that began to burst as the Fed
    tightened monetary policy.

    Sorry, I can't quite figure out what figure 2 reference is in the text.
    I offer no analysis....
    link here

    Nature's laws are the invisible government of the earth - Alfred Montapert

    by whoknu on Sun Feb 08, 2009 at 10:46:06 AM PST

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