Thursday, January 12, 2012

Excerpts from the 2006 FOMC transcripts

Excerpts below were posted by Binyamin Appelbaum at the NY Times. I found via Calculated Risk. The transcripts are located HERE. I think the Galbraith quote from two posts ago is worth repeating here: "There are two types of forecasters; those who don't know and those who don't know they don't know."

Warsh, Dec. '06: "I consider the debt capital markets to be incredibly robust."

Warsh, Dec. '06: "Although we do see growth of household debt relative to income... I don’t really note anything overly disturbing there. "

Bies, Dec. '06: "some of us are optimistic that we may be approaching a bottom in the housing market. "

Geithner, Dec. '06: "We think the fundamentals of the expansion going forward still look good."

Bies, cont. " However... let me just say that the bottom line is that overall mortgage credit quality is still very, very strong. "

Bies, Oct. '06: "We are also seeing in a small way increased predatory activity with loans..."

Yellen, Oct. '06: "Of course, housing is a relatively small sector of the economy, and its decline should be self-correcting."

Stern, Oct. '06: "The housing situation notwithstanding, I remain somewhat more optimistic about our prospects for real growth..."

Mishkin, Sept. '06: "The excesses in the housing sector seem to be unwinding in an acceptable way... I'm actually quite positive."

Warsh, Sept. '06: "Capital markets are probably more profitable and more robust at this moment... than they have perhaps ever been."

Geithner, cont. "If we see a more-pronounced actual decline in housing prices, will that have greater damage on confidence and spending?"

Geithner, Sept. '06: "We just don’t see troubling signs yet of collateral damage, and we are not expecting much."

Guynn, stepping down from the FOMC: "I’m counting on all of you to protect the buying power of my hard-earned retirement savings."

Lacker, Sept. '06: "I’m still fairly skeptical of large indirect spillover effects on employment or consumption.”

Minehan, cont. "So it is hard actually for me to see that residential investment will be that hard hit that long."

Minehan, Sept. 06: "Buyers should recognize housing [is] more affordable & resume purchases, perhaps w/out further major price declines."

Yellen, cont. "Houses [in Boise]... are now being dressed up to look occupied... so as not to discourage potential buyers."

Yellen, Sept. '06: "The speed of the falloff in housing activity and the deceleration in house prices continue to surprise us..."

Fed staff, Sept. '06: "We are not projecting large declines nationwide in house prices."

Fed staff, Aug. '06: "We forecast single-family starts will bottom out at annual rate of 1.43m units." //Actual low (so far): 445k in '09

Bies, cont. "...rather than being a drain going forward and that will also get the growth rate more positive."

Bies, June '06: "So I really believe that the drop in housing is actually on net going to make liquidity available for other sectors..."

Geithner, June '06: "We see a pretty healthy adjustment process under way... The world economy still looks pretty robust to us."

Guynn, June '06: "...Of greater concern to me, however, is the inflation outlook."

Guynn, June '06: "We are geting reports that builders are now making concessions... even throwing in a free Mini Cooper -- [LAUGHTER]."

Fed staff report, June '06: "We have not seen—and don’t expect—a broad deterioration in mortgage credit quality."

Bernanke, March 2006: "Again, I think we are unlikely to see growth being derailed by the housing market."