Fed's Plosser Admits Fed Was Responsible For Last Housing Bubble, Doesn't Want To "Create Another"

Tyler Durden's picture

The "mutinying" half of the Fed - that which the FOMC minutes indicated wanted an end to QE by the end of 2013 - is not going to take Bernanke's Wednesday steamrolling lying down. Enter Charles Plosser, who becomes a voting member next year:

  • PLOSSER SAYS FED SHOULD HALT QE BY END OF THIS YEAR

Good luck there. But here is the punchline:

  • PLOSSER SAYS 'WE DONT WANT TO CREATE ANOTHER HOUSING BOOM'

Finally, someone from the Fed admits it was Greenspan's and Bernanke's ruinous cheap money policies that created the last housing bubble. As for preventing another housing "boom" or bubble as it is popularly known, we have two words: too late.

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nope-1004's picture

 

 

"Although house prices are rising, I don't see any evidence of a bubble."

- Bernocchio, 2006

 

Pladizow's picture

Every day there's a contradictory comment - I'm convinced the Fed's job is to confuse the market, so that it wont see the rape thats coming

doomandbloom's picture

Damn...I was about to put on offer on that SAC guys apartment ....should i wait?

Obchelli's picture

Are you SACed in? be careful Stevie might be asking more then house is worth...

socalbeach's picture

One day it's bullish QE comments, the next it's bearish.  Am I the only one who suspects the Fed is giving banks advance notice, and is just jacking the markets around so as to increase banks' trading profits?

FL_Conservative's picture

How about equity and debt "booms", fucking Fed morons? 

eatthebanksters's picture

Fannie Mae and Freddie Mac are fine and healthy - Barney Frank summer of 2007.  As a result of that statment millions of people lost trillions of fucking dollars.  The guy ought to be the first one lined up in front of a firing squad.

James_Cole's picture

As a result of that statment millions of people lost trillions of fucking dollars. 

Oh, is that what people tell themselves lol

franzpick's picture

The ostensible fed member countertalk isn't designed to confuse, but rather to convey the impression that these reasonable men/women have a range of reasonable options to discuss and pursue, and that they have wide and safe operating room in which to manuever.

Assuring us they won't recreate a housing bubble, while no one sees the bubble-shaped 900 pound equity and bond gorilla hiding in plain sight right here in the financial room, is as devious and misleading as big government gets.

They have no choices, they're up against the wall, and Bernocchio's disastrous taper-caper trial balloon leading immediately to the biggest credit event since Lehman '08 proves their dead-end location at the corner of Rock St. and Hard Place.

mickeyman's picture

Everyone knows there was no bubble--only "froth" in selected markets. Bernanke himself said so.

http://www.washingtonpost.com/wp-dyn/content/article/2005/10/26/AR2005102602255.html

edited - sorry, it was Greenspan

Stoploss's picture

I'll be at the gun shop if anybody needs me..

Staplegun's picture

Just got SS109 projectiles for my latest handload batch. I hear the green tips match nicely with blue helmets. 

HowardBeale's picture

Save yourself the trip. I just bought everything.

Bay of Pigs's picture

"rape that's coming"

What have we had so far? LOL.

zjxn06's picture

Good cop. Bad Cop.  No matter which cop is telling the truth, a smart criminal knows he's screwed either way.

azzhatter's picture

Leave the fucking market alone you pencil dick geeks.

derek_vineyard's picture

no need for 20% down and proof of solid income stream wasn't the culprit?

or was it stock market gone wild wealth effect?

wasn't the previous bubble pre-QE? 

they just want all other assets to boom----not housing?  (we already knew this)

slaughterer's picture

Bullard, I mean Bulltard to the rescue in less than 1 hour.  Another Fed Ping Pong day.   Kev' mumbling after third Red Bull: Must close Green.  Green Bull.

Dingleberry's picture

Hey bitchez,

We don' use "bubbles" as a term when describing exploding house prices anymore.

We use "frothy" now.

Get it straight.

--Greenspanio, 2005

DRT RD's picture

 

 

froth·y

 

  Synonyms foamy - yeasty - spumy - spumous - scummy - barmy   or if you like bub·ble     Synonyms noun.   blister - vesicle - bleb verb.  

effervesce - boil - gurgle - seethe

 

.

 

Not far off, uh? Particularily, I was looking at synonyms. Blister, yeasty, boil, scummy.

 

DosZap's picture

Finally, someone from the Fed admits it was Greenspan's and Bernanke's ruinous cheap money policies that created the last housing bubble. As for preventing another housing "boom" or bubble as it is popularly known, we have two words: too late.

 

IMHO the housing bubble was created by the Democratic party, and Bill Clinton,when they decided that EVERYONE who wants a house should be able to get one.SO, everyone and their dog was allowed to QUALIFY for a new home whether they could even remotely afford it or not, the old standby house pmts/and utilities not exceeding 25% of income was thrown OUT the window, and the NO move in costs, and financed by LAW or the Banks were penalized(esp if it was a minority).It mattered not if you cound not even spell FICO, or not, or what the credit history looked like for millions.

francis_sawyer's picture

Confess your sins to a rabbi... Don't come crying to me...

BalanceOrBust's picture

The problem with rising house prices is that it bails out homeowners and average joes.  The Fed's itnention is only to bail out banks and put feed in their trough.

Low interest rates unfortunately help the home owner. 

 

how can this be fixed?

machineh's picture

By ramping stocks to concentrate the help where it's needed -- on institutions and hedge funds. /sarc

adr's picture

Rising home prices and rates screw over homeowners that aren't underwater because there are fewer people who can buy. Which leads to cuts in asking price. The actual housing market is horrendous. If you take away the investors hoping for the greater fool theory it is almost impossible to sell a home without losing money. Which is why there are fifteen vacant homes within a few blocks of my house, with more added every week.

It may bail out a homeowner lucky enough to be in a hot market, but 90% of the real market is still down from even a year ago.

The paper claims home values in my town have increased 4% in the past year. Perhaps based on the average that included all the foreclosure sales, since foreclosures have essentially stopped, there aren't many $20k homes being sold off to flippers. Real homes with owners who are current on their payments have seen values drop at least 15% since August of last year.

Homes that were listed for $145k last year are now listed for $120k. My home appraised for $138k two years ago and my neighbor just sold for $106k. Instead of selling, people are just walking away. If I sell my house now I am out at least $10k, maybe more. I'm not handing the bank $10k or more to get out of my house.

There are two markets, the wealthy market and everything else. If you can afford to buy in the wealthy market, you were probably already wealthy. Your gains are from others transferring Bernanke generated stock market wealth, into the real estate market. The average Joe market doesn't see this pump and dump effect, so it must ride on affordability based on wages. Wages have been taking a nosedive, so home prices have gone along with it.

MachoMan's picture

If you take away the investors hoping for the greater fool theory it is almost impossible to sell a home without losing money.

This is the way it's supposed to be...  the house is a depreciable asset and loses value over time due to use.  The question is not whether you lose money on the deal, but whether home ownership costs more than renting an equivalent house.  You can have to pony up money at closing and still be ahead of renting...

The problem is that people don't have rainy day funds for when the deficiency comes due...  they have the expectation of perpetual appreciation and, thus, begin spending money they will never see.     

Lord Blankcheck's picture

Perpetual property taxes don't help the bottom line either.

Cheeseus Sonofdog's picture

It bails out deadbeats. The responsible among us would rather have affordable homes with low property taxes. 

Blankenstein's picture

 

"The problem with rising house prices is that it bails out homeowners and average joes"

 

This is so backwards, it sounds like it comes straight out of the NAR handbook.  Rising housing prices caused the last housing crisis.   The prices no longer were based on sound fundamentals, they were based on fanatasies of future home price gains to pay mortgages.  And the herd of buyers would say they were making an investment.  What was their plan?  Buy high, sell low?   HIgh prices also hurt buyers by requiring more or their income to pay as well as increasing the home valuation for property taxes.


LetThemEatRand's picture

I hope he doesn't own a Mercedes.  They go real fast and explode on contact, or so I hear.

Cursive's picture

@LetThemEatRand

He'll be re-assigned to study BOJ QE policies in the the Fukashima prefecture.

the black arrow's picture

Do not taunt happy fun ball, happy fun ball may explode at any time

HowardBeale's picture

And the motors are so expensive, they self-eject before the explosion...

Cursive's picture

Let's see how he votes next year.  Lots of talking, but these hawks need to walk the walk.

NoDebt's picture

I again beseech and beg the all-knowing Wizard Bernank to continue blowing housing bubbles until I get Mom's old house sold.  Then you can tank the market, if you like. 

Amen.

PaperBear's picture

The non-federal non-reserve has been creating bubbles for 100 years and only a very few people have any idea what awaits the world when the non-federal non-reserve loses control.

random shots's picture

More jawboning.  Notice he did not say Fed should increase rates. 

Joebloinvestor's picture

Yeah these MF's come out of the woodwork now.

Full on chickenshit declaration of an obvious fact.

Inthemix96's picture

Bit late now you daft cunt.

Nevermind, its just us stupid fuckers who live with their 'Insightful' legacies.

You're another one for the chopping block you cunt.

Fucking 'Plosser'?  You taking the fucking piss?  Tosser more like.  And by the way, my surname is 'WankShaft'.

 

azengrcat's picture

Free... Markets?  That is un-American, I demand the NSA search his computer!

overmedicatedundersexed's picture

of course GSE's and congress had absolutely nothing to do with it, they just wrote the damn regs for no doc loans..hate the fed for what it is (bank crime central) but pal .gov is in it up to barney frank's ball sack.

chunkylover42's picture

eh, I think you're reading to hard between the lines here Tyler.  One can interpret Plosser's statement in such a way that "another" housing boom does not necessarily imply that they created the first.  It just acknowledges that another housing bubble took place.  Maybe there's more to the comments that I'm not seeing.

I would be surprised if anyone at .gov or .fed ever admitted or took responsibility for anything bad that happened.  It's just not in their DNA.

PaperBear's picture

What the hell is the 10 year U.S. treasury bond doing ? It's been drifting lower all day and now it's shot up from 2.52% to 2.59%