Bernanke reserves option to lift interest rates

NY Post ^ | January 4, 2010 | HOLLY SANDERS WARE

[Scanian]

It could be the bets are off on low interest rates.

In uncommonly frank remarks yesterday, the Fed's Ben Bernanke blamed lax regulatory oversight -- not super low interest rates -- for the housing bust.

"All efforts should be made to strengthen our regulatory system to prevent a recurrence of the crisis, and to cushion the effects if another crisis occurs," he told the annual meeting of the American Economic Association in Atlanta.

"However, if adequate reforms are not made, or if they are made but prove insufficient to prevent dangerous buildups of financial risks, we must remain open to using monetary policy as a supplementary tool," he said, adding he wouldn't rule out raising interest rates to prevent another crisis.

[Zeddicus]

Denninger on this:

Fed Bubble Blowing: A Study Of Denial

We're screwed. The math is what it is, and thanks to decades of fraud by our central government and the resulting built-up debt, we've got a long deep depression dead ahead.

[LibLieSlayer]

I have been saying this for the past year... there are those that still believe in the tooth fairy.

LLS

[Ghost of Philip Marlowe]

You’ve ALWAYS had that power, Ben.

But it’s too late to lift the interest rate, Ben.

Far too late.

[bert]

What we need is higher interest rates and a tightening of the credit markets to squeeze the last remaining life out of small business

[BeAllYouCanBe]

Far too late.

I just heard that the number of homes defaulting is going to increase in 2010 and the bubble exploded in 2008-2009 but hasn't really begin to heal yet. Having once paid on a 17% mortgage in 1981 I know how painful high interest can hurt but by increasing the rate it would limit the new loans and strenghten the market by rationing to only the best candidates.

Also, who said it was a right to own a home? Home ownership should mean you take some pride in your investment. BTW the neighborhood I lived in in 2008 had at least a 40% forclosure rate so I understand how shaky some of these loans were.

[Ghost of Philip Marlowe]

The housing bubble hasn’t finished bursting yet.

Option-ARMs and Alt-As are both due to reset, which will be bigger than the Subprimes. Also, commercial real estate is about to implode. Most loans for CRE have been interest-only and are due to roll over. Most won’t, which is going to put a huge hole in those outlays and in leasing of space.

In regard to your comment (right to own a home), I agree. But isn’t it hypocritical for Bwawney (Thuffering Thuckatash) Fwank, on the one hand, to prop up Fannie/Freddie and shut down the Republicans two years ago when they thought they were in trouble and claimed that they were all fine — all because he believes the middle-class taxpayer SHOULD be buying a home for “the poor” — but then to turn around when it all collapses and says, “It’th not the American dream to own a home. It’th the American dream to live in a home”? I love it when a slobbering communist tries to tell real Americans what the American dream is.

Whatever it is, when the government gets involved, it quickly turns in to a nightmare.