[JasonC]

I never said the Fed had no control over it. If the US Air Force nuked New York City, it would have a pretty dramatic impact on the volume of trading the next day on Wall Street. But this doesn't mean the US Air Force traded all shares exchanged on Wall Street yesterday.

The Fed's actions had secondary impact on the real estate bubble. Dramatic enough actions by the Fed would have changed the behavior of everyone participating in the real estate bubble. But the Fed didn't put guns to anybody's head, and force them to buy more house than they could afford, or to lend acres of money to deadbeats. Free men did that all on their own. Then, when it was hurting the real economy, the Fed *did* do its job, raised interest rates, and broke the real estate bubble.

In the glowing fallout aftermath, it is a little silly to pretend it is all their fault because they should have nuked New York City a year earlier.

[groanup]

Then, when it was hurting the real economy, the Fed *did* do its job, raised interest rates, and broke the real estate bubble.

And that is the real story, isn't it? When I see these guys criticize the Fed for easy money policies I never see them criticize the Fed for the tight money policies that removed the puchbowl. But the ash heap of economics is littered with the Orange County, Californias and the Bear Stearns dead bodies that couldn't outlast the tight money.