There "may be" an asset bubble in Housing? Why can't the Fed acknowledge what every one with eyes can see?
The NAR data referenced here shows it: this is not a "localized" bubble. When home prices rise double-digit y/o/y in Biloxi, MS, you have a bubble everywhere.
Median home prices in Hawaii rose 44% in the last year.
As Schiller has shown statistically, this bubble is nationwide, and it is unprecedented in modern history in terms of magnitude.
The Fed may not see it's job as dealing with asset bubbles, but I can't help but feel that behind the scenes they are acutely aware of it, just as the minutes show they were acutely aware of the Nasdaq bubble even though publicly they maintained that no one can know whether it is a bubble until it is over.
They know. They are just not going to do anything about it.
The Fed could start to prick this bubble by doing one thing -- raising rates another 25 bps and at the same time removing the word "measured" from their statement.
But I fear Greenspan does not have the guts to do it...
There "may be" an asset bubble in Housing? Why can't the Fed acknowledge what every one with eyes can see?
The NAR data referenced here shows it: this is not a "localized" bubble. When home prices rise double-digit y/o/y in Biloxi, MS, you have a bubble everywhere.
Median home prices in Hawaii rose 44% in the last year.
As Schiller has shown statistically, this bubble is nationwide, and it is unprecedented in modern history in terms of magnitude.
The Fed may not see it's job as dealing with asset bubbles, but I can't help but feel that behind the scenes they are acutely aware of it, just as the minutes show they were acutely aware of the Nasdaq bubble even though publicly they maintained that no one can know whether it is a bubble until it is over.
They know. They are just not going to do anything about it.
The Fed could start to prick this bubble by doing one thing -- raising rates another 25 bps and at the same time removing the word "measured" from their statement.
But I fear Greenspan does not have the guts to do it...