Transcripts Reveal Fed Asleep at the Wheel During Early Stages of Housing Collapse
Full transcripts of Fed meetings from 2006 reveal a gross misunderstanding and underestimation of the impact that the bursting of the housing bubble would have on the U.S. and global economies.
It's rather interesting that full transcripts of meetings of the Federal Open Market Committee are not made available to the public until five years after they occur. But given how the housing market collapse and the Great Recession played out, it's understandable that the powers that be would want that sort of protective cushion in place to shield them from even harsher criticism - or worse. Minutes of each meeting are published shortly after the meetings occur, but they are only summaries, without detailed statements from each of the members.
Now that the full transcripts of 2006's meetings have been made public, it's quite disturbing to realize (if you haven't already) that the people in charge of steering the U.S. economy have such little understanding of the machinations of the complex organism. Throughout 2006, as it was becoming clear that the U.S. housing boom was going bust, members of the Fed had absolutely no clue that the fallout would be anywhere close to as bad as it was. Instead, Ben Bernanke and Timothy Geithner, both of whom are "still" leading the U.S. economy, noted that they believed that the U.S. would experience a soft landing from housing and that it was unlikely that there would be spillover into other areas of the economy.
Obviously, those assessments in 2006 could not have been more wrong. Rather than a soft landing, the collapse of the U.S. housing market in 2006 and 2007 prompted the Great Recession, officially noted as lasting from December 2007 until July 2009, with significant aftershocks being felt into 2012.
And, again, these individuals are still dictating U.S. economic policy and essentially driving the global economic train on a daily basis. The same people who had all the data at their disposal, but couldn't see the biggest financial crisis since the Great Depression hanging over their heads, are calling the shots as nations are struggling with unsustainable debt burdens that once again threaten the global financial system.
Looking ahead five years, won't it be interesting to see the full transcripts of the Federal Open Market Committee's meetings about the events that occurred in 2012?
Now that the full transcripts of 2006's meetings have been made public, it's quite disturbing to realize (if you haven't already) that the people in charge of steering the U.S. economy have such little understanding of the machinations of the complex organism. Throughout 2006, as it was becoming clear that the U.S. housing boom was going bust, members of the Fed had absolutely no clue that the fallout would be anywhere close to as bad as it was. Instead, Ben Bernanke and Timothy Geithner, both of whom are "still" leading the U.S. economy, noted that they believed that the U.S. would experience a soft landing from housing and that it was unlikely that there would be spillover into other areas of the economy.
Obviously, those assessments in 2006 could not have been more wrong. Rather than a soft landing, the collapse of the U.S. housing market in 2006 and 2007 prompted the Great Recession, officially noted as lasting from December 2007 until July 2009, with significant aftershocks being felt into 2012.
And, again, these individuals are still dictating U.S. economic policy and essentially driving the global economic train on a daily basis. The same people who had all the data at their disposal, but couldn't see the biggest financial crisis since the Great Depression hanging over their heads, are calling the shots as nations are struggling with unsustainable debt burdens that once again threaten the global financial system.
Looking ahead five years, won't it be interesting to see the full transcripts of the Federal Open Market Committee's meetings about the events that occurred in 2012?
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