Better late than never...

Go GO GO bernanke.

Insolvencies soar by 50% |
Money |
guardian.co.uk

Rising interest rates--and also a change in the bankruptcy law--are creating a wave of bankruptcies in England, according to this article in the Guardian.

We have boxed ourselves in so that real pain is coming.

There are a lot of middle class homeowners who would be better off if the home lending standards had been tighter, but there could easily have been other weaknesses in that tire besides housing. Easy credit always pumps something up (unless risk aversion is very high from the last bubble). If it hadn't been housing, it would have been something else, not necessarily something productive. Heaven help us if it had been currency speculation. Some half-understood derivative market? How about if credit card lending rates had gone to zero instead of mortgages?

The fed can't keep real interest rates low to negative for years without unintended side effects. Recession or no, they have to normalize real interest rates or something else is going to break.

“Bernanke's remarks suggest to me the loss of control of the money supply, you?”
Spot-on Calmo, I think that’s part of what Bernanke is saying but in a central banker kind of way. Outrageously expensive housing, bonds, stocks (any asset really) is all about private money creation via credit expansion. There is a long history of this in the various monetary systems the US has tried; there is little mystery in this regard. Take a look at the meteoric rise in the money supply of the last 30 years, especially since 1995, that Thoma posted a couple days ago. This has Fed fingerprints all over it. Take a look at SOMA holdings over the last 15 years. They are pretty much monetizing at a decent clip. Look at commercial bank statistics for reserve binding, even the multiplier effect is obsolete now. Not to mention all the dollars being pumped abroad and circulating, they are basically inflating most of the world. To be fair, it’s not just the Fed, central banks around the world are guilty of egregious monetary easing as a substitute for international policy addressing the risks posed by realpolitik (sugarcoated with liberal lip service) and globalization. It’s true that it’s not necessarily the central banker’s job to address such issues, but they operate at a level of society that should be taking these things seriously, not just glazing them over with liquidity.

In this time of talking of simplifing the tax system I can't believe home equity loans are still tax protected. People can buy boats or trips to Europe and get a deduction for interest payments. Those without houses don't.

The dollar is gaining strength Madam. Making our exports less attractive, no? (It's those interest rate hikes trying to get hold of the housing inflation, yes?) Japan's trading surplus with us is modest compared to China at any rate.
I did notice some updated diplomacy with US/Japan lately, but I read that as Escapism from miserable WH polls.
Was there substance there beyond the photo ops?