Archive for November, 2010
From The Man Who Thought Up QE2 – A friend, who is a bigger pack rat than I am, passed along a Washington Post article from October 27, 2005. At the time, Mr. Bernanke had just been nominated to replace Alan Greenspan as Fed Chairman.
Here’s how the article began:
Ben S. Bernanke does not think the national housing boom is a bubble that is about to burst, he indicated to Congress last week, just a few days before President Bush nominated him to become the next chairman of the Federal Reserve.
U.S. house prices have risen by nearly 25 percent over the past two years, noted Bernanke, currently chairman of the president’s Council of Economic Advisers, in testimony to Congress’s Joint Economic Committee. But these increases, he said, “largely reflect strong economic fundamentals,” such as strong growth in jobs, incomes and the number of new households.
A bit later we read:
Many economists argue that house prices have risen too far too fast in many markets, forming a bubble that could rapidly collapse and trigger an economic downturn, as overinflated stock prices did at the turn of the century. Some analysts have warned that even a flattening of house prices might cause a slump — posing the first serious challenge to whoever succeeds Fed Chairman Alan Greenspan after he steps down Jan. 31.
Bernanke’s testimony suggests that he does not share such concerns, and that he believes the economy could weather a housing slowdown.
“House prices are unlikely to continue rising at current rates,” said Bernanke, who served on the Fed board from 2002 until June. However, he added, “a moderate cooling in the housing market, should one occur, would not be inconsistent with the economy continuing to grow at or near its potential next year.”
Further on we find:
But if Bernanke is confirmed as Fed chief, and if the housing market slows more than he expects, he would be unlikely to use the central bank’s power over short-term interest rates to prop up falling housing prices for the sake of individual homeowners, according to comments he has made in numerous speeches and statements in academic papers.
Oh well, everyone is fallible.
from Credit Writedowns
By JAMES VERINI
Published: November 10, 2010
One night in July 2003, a little before midnight, a plainclothesN.Y.P.D. detective, investigating a series of car thefts in upper Manhattan, followed a suspicious-looking young man with long, stringy hair and a nose ring into the A.T.M. lobby of a bank. Pretending to use one of the machines, the detective watched as the man pulled a debit card from his pocket and withdrew hundreds of dollars in cash. Then he pulled out another card and did the same thing. Then another, and another. The guy wasn’t stealing cars, but the detective figured he was stealing something.
Indeed, the young man was in the act of “cashing out,” as he would later admit. He had programmed a stack of blank debit cards with stolen card numbers and was withdrawing as much cash as he could from each account. He was doing this just before 12 a.m., because that’s when daily withdrawal limits end, and a “casher” can double his take with another withdrawal a few minutes later. To throw off anyone who might later look at surveillance footage, the young man was wearing a woman’s wig and a costume-jewelry nose ring. The detective asked his name, and though the man went by many aliases on the Internet — sometimes he was cumbajohny, sometimes segvec, but his favorite was soupnazi — he politely told the truth. “Albert Gonzalez,” he said.