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Fed Officials Led By Greenspan Saw Housing Bubble in 2005, Didn't Alter Policy - Newly Released FOMC Minutes

Scroll down for very special Greenspan video...


Source - Bloomberg

Federal Reserve staff and policy makers identified a housing bubble in 2005, and failed to alter a predictable path of interest-rate increases to slow down the expansion of mortgage credit, transcripts from Open Market Committee meetings that year show.

  • The “measured” pace language helped fuel the housing boom by keeping longer-term interest rates low and was inappropriate at the time given the uncertainties about both inflation and asset prices, said Marvin Goodfriend, a professor at Carnegie Mellon University in Pittsburgh.
  • “It was a major mistake by Greenspan,” said Goodfriend, who attended some of the 2005 meetings as a policy adviser to the Richmond Fed. “It gave markets a sense that the Fed was on top of everything to a degree that wasn’t the case. It gave the impression that this was a mechanical adjustment to normality. The market was overconfident.”

New York Fed researcher Richard Peach dismissed press reports describing a bubble in housing markets.

  • “Hardly a day goes by without another anecdote-laden article in the press claiming that the U.S. is experiencing a housing bubble that will soon burst, with disastrous consequences for the economy,” Peach told the committee.

Greenspan followed the presentation with questions about the effect of underlying land prices in housing indexes, and the quality of data on whether home purchases were for investment or residences.

  • “There was a fundamental failure of economic analysis to understand what was going on in the potential for house prices to stop rising,” said William Poole, the former St. Louis Fed president who attended the meetings in 2005. “The high degree of assurance that we all felt that house prices could not decline on a national average basis in a fundamental way -- that was a significant mistake.”

Continue reading at Bloomberg...


Greenspan admits the Fed is above the law...

Greenspan spells it out...


Video - PBS Frontline The Warning


Of course Bernanke never saw a housing bubble...

Video - Bernanke's failed CNBC predictions - classic...

He was too busy chasing Keynes ghost all over Princeton...




Slideshow - Time Magazine Looks inside the Private Offices of Fed Chairman Bernanke - Including Photos of Bernanke Growing up in South Carolina

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Reader Comments (25)

« FLIP-FLOP Fed Chairman - Greenspan The Bank Fraud Denier! - FLASHBACK To Battles With Brooksley Born - PBS Frontline Video »

Jan 14, 2011 at 6:44 PM | Registered CommenterDailyBail
« PBS Frontline: The Warning -- How Greenspan, Summers & Rubin Conspired To Silence Derivatives Whistleblower Brooksley Born (Complete VIDEO) »

Jan 14, 2011 at 6:44 PM | Registered CommenterDailyBail
Settling Prosecutions For Pennies on the Dollar Is a Type of Bailout

Jan 14, 2011 at 6:45 PM | Registered CommenterDailyBail
Government Says No to Helping States and Main Street, While Continuing to Throw Trillions at the Giant Banks

Jan 14, 2011 at 6:46 PM | Registered CommenterDailyBail
Greenspan not only knew about the housing bubble, it was exactly what he wanted.
Same for Benanke.
They aren't dense, just criminal.
Jan 14, 2011 at 9:24 PM | Unregistered CommenterJohn Jay
Criminal politicians, Criminal Federal Agencies, Criminal political appointees, Criminal fraud by Wall Street banks and Major Corporations.

Instead of doing anything to demand justice and enforcement of the law, the American People just keep dog-paddling around in the toilet.

They better have some Scuba gear cause the Federal Reserve is pushing hard on the flush handle.

Jan 18, 2011 at 1:56 PM | Unregistered CommenterSagebrush
well said sagebrush...
Jan 19, 2011 at 5:10 AM | Registered CommenterDailyBail
Dude, Greenspan saw it coming. There's NOTHING prophetic about that-no revelation-we were all warned. Nobody heeded.We all knew "IT" was coming. We just didnt know WHEN nor did we know "to what degree". Greenspan was the person that suggested all of American get up on the ARM's. He knew when rates did rise, that the banks would take everyone's homes. Why would you even hint Bernanke had anythg to do with this ?
Jan 21, 2011 at 9:59 AM | Unregistered CommenterLexyLionel
Why would you even hint Bernanke had anythg to do with this ?


do you really need a response...
Jan 21, 2011 at 12:10 PM | Registered CommenterDailyBail
Former New York Governor Elliot Spitzer was 'cleared' in the first week of November, 2008 of A serious offense against the Mann Act, a much more serious Federal Offense as opposed to a State Offense against prostitution laws.
Well, they didn't really clear him; they just 'declined to prosecute'.
Why? The Bush administration's job was done: It has been universally accepted that the political assassination of Elliot Spitzer was engineered by the Bush administration because of his public accusations against the United States Federal Reserve Bank (Lincoln, Kennedy, Iraq, Iran, Pakistan et. al.) and the top Wall Street bankers and lending institutions of a predatory lending practice called 'sub-prime'.
Spritzer and most of the other fifty state governors were watching their constituents being robbed by Wall Street through this lending practice, losing their livelihoods, losing their houses, losing their pensions, losing their lifetime accumulation of wealth.
Once this practice was integrated into the banking system, by 2005 it was - many believe deliberately - allowed to escalate into trillions of dollars of international Triple-A-Securities loans backed by massively (unknown to global purchasers) defaulting loans and sold to the European and other global bankers who were reported to be 'furious' with Wall Street and at the time, Europe, China and a host of others threatened to pull out of the dollar until Bernanke's Fed payed some three trillion dollars to buy back all that toxic garbage at American taxpayers' expense in 2010.

AS THE DEFAULT loan payments stopped coming in the fuel for the debt-based trading ran out and the third biggest financial bubble ever created began to deflate.
The biggest is the coming-soon-to-a-neighborhood-near-you Credit Default Swap bubble and the second biggest, the Commercial Property Default bubble is Afront runner.
(Greed on the part of low-level thieves unaware of the bigger picture tripped them up with the foreclosure mess, but watch a little retroactive legislation clean that up).
One man put his finger in the dyke. But instead of helping him stem the tide, they broke his finger.
'They' took him out with A short, sharp, vicious and unprecedented public humiliation: Formally charging him with associating with prostitutes 'across state lines'.
How often are prostitutes' clients 'busted'?
All of you men can answer that one.
We all know how often public outrage has insisted on, demanded! Lists – names, addresses, pictures, and videos - of the men who visit 'the working girls'.
Successfully, as far as I know, only once, and in New York State.
And only one name on the list: Elliot Spitzer – that was the power of the Bush administration.
But then, Spitzer was trying to save the world from Capitalism gone awry, a world that includes us here, now, with our falling housing prices – and that takes either a Superman or a brave little Dutch Boy.
He actually tried!
Why he's doing what he's doing on a talk show today is quite beyond me!
He stood up in an apotheosis of 'his fifteen minutes', thinking that as governor of one of the most powerful states in America, he could rally the nation against the banksters who were running it.
He brought out his guns and fired them off on MSNBC and Fox News, all the wire services, at the whole world that did not listen:
He fired the first (and only) volley of his charge inside the prestigious American National Press Club thinking that this shot would be so loud it would be heard around the world, and that the mediAwould follow his leading charge against the crime of the millennium, Grand Theft Planet ®.
The price of your house today is an echo of that shot. (From 'Grand Theft, Planet' by Tom Dennen)
Jan 21, 2011 at 2:27 PM | Unregistered CommenterTom Dennen
GE invest in GM, GM hires GE, and Obama continues to break his campaign promises.
Jan 21, 2011 at 6:46 PM | Unregistered CommenterZoolander

In regards to your comment:

Instead of doing anything to demand justice and enforcement of the law, the American People just keep dog-paddling around in the toilet.

They better have some Scuba gear cause the Federal Reserve is pushing hard on the flush handle.

This is such a heavy and depressing topic and just when I think I can't listen anymore about the corruption in our country, I read an inspired comment like yours. Thank you for the belly laugh. A little levity goes a long way. Well done.
Jan 22, 2011 at 9:57 AM | Unregistered CommenterThePermabear
Try some Damon Vrabel if you're able:
Apr 18, 2011 at 2:53 PM | Unregistered CommenterWil Martindale
In the summer of 2000, I asked a group of 100 people at a conference of spiritually committed people which of them would push a red button if it would immediately stop all narcotics trafficking in their neighborhood, city, state, and country. Out of 100 people, 99 said they would not push such a red button. When surveyed, they said they did not want their mutual funds to go down if the U.S. financial system suddenly stopped attracting an estimated $500 billion – $1 trillion a year in global money laundering. They did not want their government checks jeopardized or their taxes raised because of resulting problems financing the federal government deficit.

Have a Fit with Fitts:

And of course at letthemfail:
Apr 18, 2011 at 3:06 PM | Unregistered CommenterWil Martindale
"Greenspan admits the Fed is above the law..."

A private organization that is above the law of the land!
I believe anybody involved in that organization who operates on that premise is committing treason.
Lets see, treason during three wars going on. Where in the hell is Homeland Security when we need them.

Actually I'm surprised that the hundreds of thousands of people who lost everything because of FED policy, cover-ups, and conspiracy haven't rioted and strung up every FED official they can catch along with the blood sucking parasites on Wall Street and a bunch of crooked congress and administration officials.

I guess the American People are turning into a herd of penned up sheep!
Hard to believe they are allowing 235 years of hard work and personal sacrifice by millions of Americans to be destroyed by a minority of elite parasites who value wealth and power above all else. Barely a whimper of protest except from a few sites like The Daily Bail and others who are trying to stem the tide of apathy and inaction that is drowning the American People.

Apr 18, 2011 at 3:49 PM | Unregistered CommenterSagebrush
well said sage...
Apr 18, 2011 at 3:57 PM | Registered CommenterDailyBail
Jul 3, 2011 at 5:51 PM | Unregistered CommenterTR

That's a crazy story. Can you flesh it out a bit and give us a little more? For instance, where was this conference, and how is it the attendees were so knowledgeable?

No rush. Just curious.
Jul 4, 2011 at 5:06 AM | Unregistered CommenterCheyenne
Jul 4, 2011 at 10:23 AM | Unregistered Commenterjohn
Happy Independence day everyone.
Jul 4, 2011 at 11:19 AM | Unregistered CommenterS. Gompers
'Happy Overthrow Your Government Day' to you and your family gomp...and to everyone...
Jul 4, 2011 at 11:53 AM | Registered CommenterDailyBail
GEORGE CARLIN you can't tell SHEEPLE anything.

"You have no choice! You have OWNERS! They OWN YOU. They own everything. They own all the important land. They own and control the corporations. They’ve long since bought, and paid for the Senate, the Congress, the state houses, the city halls, they got the judges in their back pockets and they own all the big media companies, so they control just about all of the news and information you get to hear. They got you by the balls."

Independence? MY ASS!! @&!^*+$%:{<?*
Jul 4, 2011 at 11:57 AM | Unregistered CommenterTR
Wall Street raping the middle class, banks and their representatives committing fraud to put people in the street while sold out Congress, Presidential Administration and state government officials try to legalize said fraud claiming Economic Armageddon if they don't.

Banks and their representatives guilty of felony burglary and grand theft, yet immune to criminal charges for acts that would put an American Citizen in prison for years.

Police ignoring the U.S. Constitution and the Bill of Rights and judges are agreeing with them.

A Supreme Court that puts big business ahead of the people.

A Justice Department that seems blind to the fact that the biggest theft in history has been committed against the American People and the criminals directing the robbery walked away rich laughing their butts off with no charges, when they should be sitting in prison with their wealth confiscated.

A private banking cartel that tells the Congress and the American People, we control monetary policy, how and what we do is secret and none of your business, if you don't leave us alone the sky will fall and the world will end.

With all these serious issues and many more ongoing on the anniversary of our 235 years of Independence, the biggest story in the American MSM for weeks now, is about the murder of a little girl in Florida.
Certainly a tragedy for the family involved.
But, the issues I refer to above are having tragic consequences for millions of Americans all across the country. The MSM keeps news on those issues in a closet somewhere, brings them out for a peek once in a while to see if they're still there and quickly shoves them back in the closet before anybody can get a good look at them.

I have to wonder if most of the American People today deserve the country many of our predecessors sacrificed everything including their lives for?
I think not!
The parasites are being allowed to steal from us and our children, our wealth, our futures, and our independence and there aren't enough of us raising hell about it to stop them.

It would appear that greed, corruption, decadence, and apathy are becoming the American traditions of the 21st. century.
Jul 4, 2011 at 12:28 PM | Unregistered CommenterSagebrush

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