Fed's Low Interest Rates DID Fuel Housing Bubble, Contrary To Bernanke's Claims: Economists

CBS News:

Of all the economic factors that possibly fueled the inflation of the housing bubble last decade, Federal Reserve Chairman Ben Bernanke has said low interest rates weren't one of them. The Wall Street Journal Wednesday published the results of a survey showing that the nation's economists haven't exactly fallen in line behind the chairman on that.

Read the whole story: CBS News

Comments

[tankay]

11:25 PM on 03/15/2010

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[yourmomscalling]

01:18 PM on 01/17/2010

THEY SURE AS HELL DID THANKS TURBO TIMMY AND BERNANKE AND YOUR BANKING CARTEL

I HOPE YOU HAVE A NICE HOME TO SLEEP IN WHILE WHAT YOU CAUSED ALONG WITH OTHERS ARE DEVASTATED BY YOUR AND OTHER CORRUPT PEOPLE LOOKING TO MAKE A BUCK !!~!!! I HOPE YOU FEEL BETTER YOU FN CROOKS

I HATE YOUR FN GUTS

[stargazer13]

02:16 PM on 01/15/2010

Paulson and his collaborators in orchestrating the bank bailout, including Federal Reserve Board Chairman Ben Bernanke and Timothy Geithner, then president of the Federal Reserve Bank of New York and now Obama’s treasury secretary, were well aware of the legal implications of Paulson’s role in rescuing Goldman with public funds.

[stargazer13]

02:08 PM on 01/15/2010

This man and his Bank need to be fired !! for bad business practices just take a look around the proof is there we are all dealing with it in one way or another and it has broke real familys backs !! for such a firing go trump on him please for the sake of the country no less !!

[totaldisbelief]

01:44 PM on 01/15/2010

Hey Ben have you been over to Ft. Knox lately and cut a gold bar in half to make sure it's not gold-plated tungsten?

[stargazer13]

02:11 PM on 01/15/2010

I have been calling for an audit !!! of the Nations Gold since 78 !!! that gold belongs to the people of America and can not be sold or given away ever !!

and if we ever find out it is in the basement of the FED or any where besides Fort Knox then

you will have a very big problem !!!!

[Harrier]

11:46 AM on 01/15/2010

He is one of the guys who created the problem. Saying anything else would be admitting he was wrong. I don't agree with his reasoning on any level and would feel safer if he were unemployed.

[yourmomscalling]

04:28 AM on 01/15/2010

Of all the economic factors that possibly fueled the inflation of the housing bubble last decade, Federal Reserve Chairman Ben Bernanke has said low interest rates weren't one of them

BS GIETHNER (THEN NY FED HEAD)AS MEMBERS OF THE FOMC VOTED FOR THE RATE CUTS AS DID BERNANKE AND OTHERS IN THIS BANKERS CARTEL (THE MOST SECRETIVE PLACE IN THE COUNTRY) THEY ARE DIRECTLY RESPONSIBLE !!!!

[LeftRight]

08:30 PM on 01/14/2010

Wait, Ben actually said that low interest rates had nothing to do with the bubble????????? Why ELSE would banks have been so willing to lend out soooo much money to people who OBVIOUSLY weren't good for it?????

[stargazer13]

02:14 PM on 01/15/2010

they new they were not good for it because they knew what was to come

printing money and then not circulating it in the form of loans is a against the law !!!

[Rule Of Law]

07:02 PM on 01/14/2010

Bush had a recession on his hands, two wars to fight and had just lowered taxes to pay for it all. He was as they said in "Oh Brother, Where art Thou," in a tight spot.

He needed a bubble to engorge the economy, make his gdp look positive and churn cash for his Wall Street masters. He had the FED keep interest down, went on TV and told every one to buy a house and that the lenders should be more "creative."

We know what happened next.

Without those low rates, real estate would not have skyrocketed as it did. Paper profit from mortgage origination, repackaging as derivatives backed by those less than AAA debts, and then betting against those same products would never have happened.

It can all be traced back to Bush's need for a mechanism to keep money chasing itself through the system---and the end game of Federal Bailout for the Banks was Always the real money maker of a goal!

[econ1]

01:22 PM on 01/14/2010

Of course they did.

An item most people buy with a loan.
Loan cost goes down.
Price of item goes up.

If he doesn't believe low interest rates prop up home prices then why is he keeping interest rates at zero now?

It is clearly always someone else's fault. Our government at work...sort of.

[washlib]

11:37 AM on 01/14/2010

Low interest rates had one primary reason, to get foreigners to invest in American markets with wild abandon. Anyone with any brains knew the downfall was coming, we just wanted everyone to share the pain, and continue to buy oil in US dollars.

Extremely low interest rates fueled the bubble, without a doubt!

[my whitehouse]

11:31 AM on 01/14/2010

There is no economic recovery with 10% unemployment and lack of affordable education & healthcare.
hat tip to http://iamned-website.blogspot.com

[Peter007]

10:01 AM on 01/14/2010

An increase in money supply usually fuels inflation and this past inflation seemed to be only in commodities, housing, and government spending.

However, the increase in money came primarily from overseas investors that wanted to take advantage of American Real Estate growth. Theses CDO's and mortgage backed securities were required to be rated by a US Government approved Ratings company . There lies the hole that sank the ship.
If the Fed had any role, it might have been their lack of oversight on these new CDO's and investor money flowing in to the US but then again, the Fed is not the ruler of the world and has limited responsibility.

[Rule Of Law]

06:55 PM on 01/14/2010

Those CDOs and other mortgage backed derivatives originated Here.

They were sold to a variety of investors, funds, retirement programs, etc here, and to similar groups, but including sovereign wealth (meaning, government backed by a foreign country) funds overseas. The money did indeed flow in, but the product was "made" here in the US.

The were given bogus AAA ratings while the packagers were simultaneously betting Against them in the market, knowing they were doomed to fall. That's called fraud.

[SEQUOIABISON]

07:10 AM on 01/14/2010

Saving people money on their loans DID NOT cause the financial fiasco. Losing your job and not being able to pay the mortgage DID.

Shipping our jobs overseas and giving Wall Street a tax break to cover the expense of moving their factory equipment to China in pursuit of cheap labor is the underlying cause of the burst in the housing bubble.

If those home-owners who got a low interest loan still had a job there would be no problem. Blame Wall Street for the lose of our jobs. They hate Unions and are contemptuous of workers trying to make a decent living wage, because it cuts into their bottom-line.

Shipping our jobs to China was there way of trying to break the Unions and increase the return on their portfolio.

[Kassandra]

08:52 AM on 01/14/2010

And there it is in a nutshell. Themost unkindest cut was Bush subsidizing the corporations to take away our jobs and Rahm Emmanuel helping him ram thru his last 5 "free trade" agreements.
I think I had a modicum of hope for Obama until he picked Rahm as his CoS

[ibsteve2u]

06:33 AM on 01/14/2010

Hah! I concur with the economist who "are not falling in line" with Bernanke.

I would go further, and say that the great scam began with this speech: http://www.hud.gov/news/speeches/presremarks.cfm

June 18, 2002 - a MOST inglorious date, for that is the date when the idea that you could make a lot of money while simultaneously concealing the damage that "flood-up/trickle-down" economics and inequitable free trade were doing to the American economy coalesced into action.

All enabled by deregulation, of course.