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  • From: Don Bowen KI6DIU <don.bowen AT earthlink.net>
  • To: homestead AT lists.ibiblio.org
  • Subject: [Homestead] causes of the housing related credit crunch
  • Date: Fri, 21 Sep 2007 10:38:25 -0700

This is a good overview by one of the Fed Vice Chairmen.
http://www.federalreserve.gov/newsevents/speech/kohn20070921a.htm

This part highlighted by
http://calculatedrisk.blogspot.com/2007/09/feds-kohn-on-causes-of-housing-bubble.html

"... it is far too soon to pass judgment on what went wrong in the U.S. housing market and why. I suspect that, when studies are done with cooler reflection, the causes of the swing in house prices will be seen as less a consequence of monetary policy and more a result of the emotions of excessive optimism followed by fear experienced every so often in the marketplace through the ages. To some extent, too, the amplitude of the housing cycle was heightened by the newness of the subprime market, the fragmentation of regulatory oversight responsibility for that market, and the complexity and opacity of the newer instruments for transforming and distributing risk. Low policy interest rates early in this decade helped feed the initial rise in house prices. However, the worst excesses in the market probably occurred when short-term rates were already well on their way to more normal levels, but longer-term rates were held down by a variety of forces. And similar, sometimes even sharper, trajectories of house prices have been witnessed in some economies in which the central banks said they were paying more attention to asset prices."

While there watch the little video on Real estate bubbles and California's economic growth.

Don Bowen Awl Knotted Up KI6DIU
http://www.braingarage.com




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