Everyone can relax, Fed claims subprime losses contained

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Submitted by Allan from Fallbrook on July 20, 2007 - 12:30pm

Well, it looks like we can all relax regarding the subprime mess. Fed has declared it "contained". Strangely, there was an article in the NY Times today about the damage spreading into the Alt-A market, which is showing a rising number of delinquencies. Of course, we all know how inept the NY Times is, so the article is probably bogus.

Link to the story:


Submitted by PerryChase on July 20, 2007 - 1:04pm.

The financial/political leaders have no choice but to sugarcoat the latest bad news, lest they create a panic by being too blunt.

It was the same during the early 1990s recession. Bush senior kept on saying there was no recession all through the elections. Of course, the people knew better and felt it in their pocket books and we all know who won the elections. It's the economy, stupid. :)

In the real estate market, the real suckers are the people who need to sell but are waiting for a Spring 2008 bounce. They'll be chasing the market all the way down.

Submitted by FormerSanDiegan on July 20, 2007 - 1:17pm.

Perry - I think your point regarding the government sugarcoating is spot on. Piling on is not in their best interests.

However, I think you have the facts wrong wrt Bush Sr and the early 90's recession. In that case he was claiming that we were already coming out of recession.

According to NBER that recession lasted through the quarter ending in March 1991, although they did not make this official until December 22, 1992 because there were several weak quarters of low growth following this recession (The jobless recovery that evolved into goldilocks and eventually became the late 90's boom).



So, actually Bush Sr was right, but by the time it was figured out it was too late (for him).

Submitted by PerryChase on July 20, 2007 - 1:29pm.

Ok FormerSanDiegan. Thanks for the history lesson. 15 years later, my memory is fading. :)

Submitted by beanmaestro on July 20, 2007 - 1:55pm.

I suppose I have to agree. That doesn't mean we'll forgive Bush Sr for having children.

Submitted by Allan from Fallbrook on July 20, 2007 - 1:57pm.

Perry: After 15 years, it ain't only the memory that is fading!

On a more serious note: It appears that Bernanke is almost religiously opposed to admitting there are significant pricing pressures out there and the effects that these are having on the economy as a whole.

I agree that I can't imagine the Fed coming out now and admitting that Greenspan's reckless monetary policy landed us in this mess and, more importantly, discussing the stringent steps necessary to help fix it.

While I never thought Bernanke was "his own man", I certainly didn't think he was imbibing the Kool-Aid to this extent. Then again, why not?

Submitted by Allan from Fallbrook on July 20, 2007 - 2:03pm.

beanmaestro: Poor Bush Jr. You know it's bad when you get castigated by Jimmy Carter!

Course, for a former blow monkey alky who is prone to fits of cronyism and jingoism, he hasn't done all that badly. I mean combining the worst parts of Nixonian Republicanism with a wrong-headed interpretation of Gunboat Diplomacy hasn't taken us completely off-track. Right?

And, yes, believe it or not, I am a Republican.

Submitted by blue_sky on July 20, 2007 - 2:21pm.

"And, yes, believe it or not, I am a Republican."

Yeah, Bush cured me of that...

I'm for small government (though really, our health care system is just messed up), which doesn't mean I'm for republican government.

Submitted by PerryChase on July 20, 2007 - 2:22pm.

I voted for Bush Sr myself because Clinton was an unknown at the time. However Clinton grew on me after a few years.

I do think that Bush Sr was a very smart statesman. Can't say the same for his son.

Submitted by Allan from Fallbrook on July 20, 2007 - 4:10pm.

It used to be that being a small government fiscal conservative meant being a Republican. However, after Bush Jr that has all changed. The party has truly lost its way and, unfortunately, the Dems are no different.

Both are pandering to their respective bases, and anyone in the middle (moderate to center/right) is left out in the cold.

I also agree that Bush Sr was an adept statesman, as evidenced by his nearly excellent handling of Gulf War I. I say nearly because he failed to finish the job and left the mess for Junior to handle. Or, more accurately, horribly mishandle.

Well, at least Fred Dalton Thompson will ride in to save the day, right? Or is it Giuliani? McCain?

Submitted by desmond on July 20, 2007 - 4:40pm.

Ron Paul

Submitted by cr on July 20, 2007 - 5:39pm.

Phew! I feel better now.

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