As you may have heard, the Federal Reserve is now releasing transcripts of its FOMC meetings, in an effort to be open and honest with the public about what it is they do all day. Out this morning are the minutes from 2006′s get-togethers and one thing that stands out is how much fun these guys are having without us! In fact, they spent most of 2006 in stitches, as evidenced by the amount of material The Economist was able to compile under “comments from the Federal Open Market Committee meetings which resulted in laughter.” They’ve got their beard jokes (Mr. Poole: “Okay. Mr. Chairman, it is a great delight to see a 200 percent increase in the number of beards around this table. [Laughter]“), their penis innuendos (Chairman Bernanke: “Still pretty large. [Laughter]“), and their deep nerd humor (“Again, within the normal errors of Okun’s law—despite its name “law,” it’s a pretty loose empirical relationship [laughter]“). But the biggest laugh riot which still holds up today and unquestionably has Alan Greenspan pissing his pants in laughter as he reads it at home? Read more »
FOMC Minutes Reveal Little Known Long Time Fed Chair Tradition Of Pulling A Tiny Prank On Your SuccessorBy Bess Levin
If you like mortgages you should read this Fed white paper for Congress on the housing market though I sort of get the sense that Ben Bernanke’s heart isn’t in it. As he says, “Our goal is not to provide a detailed blueprint, but rather to outline issues and tradeoffs that policymakers might consider,” which is quite white-papery of him; the lack of enthusiasm for finding an actionable plan probably comes from the facts that (1) these issues are quite hard and (2) no one will do anything about it anyway because it’s Congress.
So the white paper does in fact mostly lay out tradeoffs that you can ponder quietly, like the one where nobody is lending (bad!) because nobody is confident that they can meet GSE underwriting standards (hmm, we want banks to not sell crap loans to Fannie and Freddie, right?). Or the suggestion, which has been kicked around for a while, to convert foreclosed homes into rentals, which on the one hand:
[Real estate owned] holders will likely get better pricing on these sales if the program is designed to be attractive to a wide variety of investors. Selling to third-party investors via competitive auction processes may also improve the loss recoveries.
But on the other hand: Read more »
I was a little tickled to read this morning that Ben Bernanke had refinanced his mortgage at around the same time the Fed announced Operation Twist in September. There are a couple of ways to read this story. One is that a hard-working and heavily mortgaged civil servant, savvy about the macroeconomy and the rates markets, decided that long-term fixed rates were as low as they are likely to be for a while and so September was a good time to refinance. The other is, as Simone Foxman tongue-in-cheek puts it, “Bernanke Personally Cashed In On Operation Twist.” Conspiracy theories abound with Bernanke, and I’m sure somebody somewhere really thinks that Ben Bernanke intentionally put the U.S. on a path to the Weimar-style hyperinflation that is coming any day now just to save a hundred bucks a month on his mortgage payments, but…I’m with her that it’s an amusing coincidence.
If you like a slightly different flavor of conspiracy, though, you might ask: why wasn’t Bernanke refinancing in, say, July or August? Sure, maybe he was busy with the whole stewardship of the economy and/or after-dinner Kindle reading. Or maybe he knew that the Fed was going to move to lower long-term rates and so abstained from trading based on that. Maybe he was taking advantage of his insider knowledge to make a personal profit, or at least avoid a loss.
Or not, whatever, what a stupid thing to think. But I thought of it again when I read Mr. Steven A. Cohen’s cogent argument that insider trading rules are somewhat more ambiguous than the proper form of address for him: Read more »
Mr. Bernanke said the U.S. recovery, now more than two-and-a-half years old, continues to be “modest.” He conceded the pace of growth has been slower than what the Fed expected. But he was more optimistic about the long run, saying the economy hasn’t been permanently scarred by the financial crisis. “Although important problems certainly exist, the growth fundamentals of the United States do not appear to have been permanently altered by the shocks of the past four years,” the Fed chief told the gathering, which this year focuses on long-term growth prospects for the global economy. [WSJ]
Ron Paul Would Like To Make Sure Everyone Can Tell The Difference Between Him And The Guy Who Suggested We Draw And Quarter BernankeBy Bess Levin
“If this guy prints more money between now and the election, I dunno what y’all would do to him in Iowa but we would treat him pretty ugly down in Texas. Printing more money to play politics at this particular time in American history is almost treasonous in my opinion.” Read more »