Release of Fed Transcripts Show Fed Scary Ignorant in 2008, WaPo Scary Ignorant in 2014

[unhappycamper]

http://smirkingchimp.com/thread/dean-baker/54397/release-of-fed-transcripts-show-fed-scary-ignorant-in-2008-wapo-scary-ignorant-in-2014

Release of Fed Transcripts Show Fed Scary Ignorant in 2008, WaPo Scary Ignorant in 2014
by Dean Baker | February 23, 2014 - 10:16am

It's great to be an economist in a top policymaking position in the United States. Unlike dishwashers, cab drivers, and most other workers, you are not held accountable for the quality of your work. We already knew that, since almost none of the people responsible for allowing the housing bubble to grow large enough to collapse the economy have paid any career price. (Ben Bernanke is praised for avoiding a second Great Depression. Talk about setting the bar low.)

Anyhow, the release of the 2008 transcripts of the meetings of the Fed's Open Market Committee (FOMC) once again show a group of people that is frighteningly ignorant of the economy. The housing market was already in a full-fledged collapse by the end of 2007 with prices falling at the rate of 1.5 percent a month. That translates into a loss of $300 billion in household wealth every single month. Yet the transcripts show the Fed debating whether the economy would see a recession until well into 2008. (The pace of decline eventually accelerated to 2.0 percent a month.)

~snip~

Yeah, a touch lower, and reducing growth by 0.1 percentage point in 2008. This is pretty amazing stuff. It's almost as though they didn't have access to the data showing that house prices were already plunging.

The other item that is amazing in this transcripts is that no one seems to know about the Census Bureau's data on housing vacancies. Vacancy rates of ownership units were already about 50 percent above normal levels by the end of 2007. The vacancy rate on rental units was about 30 percent above normal levels. What did the Fed folks think this implied for house prices?

[snot]

1. Yet apparently they knew of the LIBOR rigging in 2008!

http://www.democraticunderground.com/10024552258 .