Ben Bernanke (1/3/10): “The Federal Reserve had a role in inflating the housing bubble, but it wasn’t low interest rates in the U. S. that fueled speculation in housing around the globe. Rather it was lax supervision of toxic mortgages by the Fed and other bank regulators along with excessive flows of capital around the globe that inflated the bubble, setting up the world economy for what may have been the worst economic crisis in modern history”.
Helicopter Ben’s current plan has been and continues to be the purchase of mortgage backed securities and agency paper in an effort to keep interest rates low. Apparently artificially low interest rates are different this time.
Let’s not forget Uncle Ben’s brilliant comments a couple of short years ago:
Ben Bernanke (3/28/07): “At this juncture…the impact on the broader economy and financial markets of the problems in the sub prime markets seems likely to be contained”.
Then, after the alarm clock going off a mere 50 times, another poignant view:
Ben Bernanke (5/17/07): “The sub prime mess is grave but largely contained. Given the fundamental factors in place that should support the demand for housing, we believe the effect of the troubles in the sub prime sector on the broader housing market will likely be limited”.
Be very, very careful Uncle Ben, grandpa is watching…