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Read The NY Fed White Paper That Dismissed The Housing Bubble - Just Before It Burst

Video - Bernanke Was Wrong - July, 2009

Dec. 2004 NY Fed Paper:  Are Home Prices the Next "Bubble"?

The Fed got this one completely, 100% wrong.  Total FAIL.  This December 2004 study of the housing market is a reminder that the same people exerting almost total, unaccountable control over our monetary policy, are the same people who produce studies like this.

This paper has plenty of charts, regression analyses, hedonics and endnotes.  All absolutely worthless. 

Basic findings:

  • A "close analysis of the U.S. housing market" finds little basis for concerns about a steep decline in home prices
  • The rise in home prices is driven by fundamentals, not speculation (this time it's different)
  • Weaker fundamentals are unlikely to cause home prices to drop steeply on a nationwide basis
  • Any decline in home prices is unlikely to have serious ramifications for the broader economy and "is unlikely to plunge the U.S. economy into a recession."


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Reader Comments (9)

The Feds Finally Recognize The Anti-Cancer Potential Of Cannabis — 36 Years Too Late!


The gov't got this one wrong as well...
Mar 25, 2011 at 8:36 PM | Registered CommenterDailyBail
This is obscene. We have crossed the point of needing a Revolution to clean house of ineptitude alone.

Didn't the NY Fed also co-author a piece with MIT explaining that the entire rationale for TARP was nothing but a pack of lies? And didn't that paper confirm the thesis of Minneapolis Fed's Working Paper #666 [I shit you not], which posited that the entire TARP rationale was nothing but a pack of lies?

Does the right hand not know what the left is doing?

More importantly, am I the only one who gives a shit about the rules?
Mar 26, 2011 at 12:00 AM | Unregistered CommenterCheyenne
All right for once I'm gonna deliver news instead of the usual horseshit.

A guy told me in Vietnam Indiana that a local plant's weekly receipt of parts from Tokyo came to a halt, as apparently the plastic + aluminum content was enough to set off U.S. radiation detectors.

Oh, yeah. Things here are grimmer.
Mar 26, 2011 at 12:49 AM | Unregistered CommenterCheyenne
Mar 26, 2011 at 1:06 AM | Registered CommenterDailyBail
just realized i had the caps button on...not going to retype...
Mar 26, 2011 at 1:06 AM | Registered CommenterDailyBail
If that was the state of delusion in the Fed at the time then it must have now reached new heights with Quantitative Easing - bit like giving a dead man more and more drugs in the futile hope that he will rise form the dead. String out the illusion until the point it all collapses - not of these people will be done for their crimes. You are more likely to be sent to prison in the US for stealing bread and not for wiping out billions of dollars of wealth while pocketing millions.

We have the same deluded fools in Australia regarding housing - same stupid rubbish - we are different, decline in house prices will not impact the economy, the fundamentals are sound, we have houses that are built differently to those in the US, all sound fundamentals and no speculation, the banks are sound......etc.
Mar 26, 2011 at 1:59 AM | Unregistered CommenterNexus
Cheyenne, DB, I'm reading it's going both ways, many country's ships won't dock in Japan. So their imports are partly cut off, their own food is contaminated, how many energy plants shut down? I fear it could get awful bad for them...
Mar 26, 2011 at 8:27 AM | Unregistered CommenterCanuck
Mr. Bail, this is an excellent site, for information and a thoughtful community. This is an excellent information resource. Thank you for all your hard work.
Mar 26, 2011 at 1:15 PM | Unregistered CommenterJay C. Davis

Mar 26, 2011 at 3:52 PM | Unregistered Commenterpaul krugman's raging ulcer

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