"Some economic or financial shock could hit us, from within the U.S. economy or from outside. If we are surprised by higher inflation than we currently expect, we might need to raise rates more aggressively. Some argue that gradual rate increases are better than waiting and having to move aggressively."
Given the multiplying and shrilling-squawking omens of hubris and overconfidence in today's hyper-extended markets -- a murder of complacencies, if you will -- we conclude we've reached the point in this storyline where the suspense has risen to its zenith, and the real violence then begins.
At least two major Chinese private providers of home price data have stopped publishing the figures, at a time when China's housing bubble appears to be bursting. "Housing prices are an extremely sensitive matter right now."
Today we got the first confirmation that the latest Chinese housing bubble has finally popped, as housing prices across the 70 cities were up 12.7% Y/Y, below the 12.9% annual growth rate in November. This was the first moderation in year-over-year housing price growth after 19 months of continued acceleration.
In spite of being exposed in what is either a self-exculpating lie (the claim that bubbles can only be seen after they burst) or a sign of gross incompetence (the failure to see two of the largest financial bubbles in history), no Fed official has ever been asked to explain or rationalize the Fed’s contradictory positions on bubbles.
"Beijing will increase controls on the property market to maintain stable home prices in 2017, said a statement issued after a plenary session of the Beijing Municipal Committee of the Communist Party of China on Saturday. Housing prices in the capital are already too high and ensuing increased social tension brings enormous challenges to ... stability in the city."
Average new-home prices in the 70 cities tracked surged by 1.8% in September from the month prior. On an annual basis, housing prices soared 11.2% year over year, after a 9.2% jump in August. This was the biggest annual jump on record, and the 12th consecutive month in year-over-year gains.