In you search the transcripts of the Federal Reserve transcripts, just run a query for [Laughter]…. And you might get mad.
David Stockton, March 22, 2005, Sept. 20, 2005 and Dec. 13, 2005. Economist and Fed funnyman–I offer one more piece of evidence that I think almost surely suggests that the end is near in this sector. While channel surfing the other night, to the annoyance of my otherwise very patient wife, I came across a new television series on the Discovery Channel entitled “Flip That House.” [Laughter] As far as I could tell, the gist of the show was that with some spackling, a few strategically placed azaleas, and access to a bank, you too could tap into the great real estate wealth machine. It was enough to put even the most ardent believer in market efficiency into existential crisis. [Laughter]–So what should we worrying about? While my colleagues who attend our lengthy forecast meetings were not exactly thrilled by it, the removal of my arm from its sling in the past few weeks has allowed me, once again, to bring my principal value added to the forecasting process, and that is copious amounts of hand-wringing. [Laughter]–With the retail price of gasoline having risen above $3.00 per gallon in much of the country, there is certainly cause to be concerned. As a macro guy, I hope that those of you involved in supervision haven’t been too hard on home equity lending, because pretty soon people are going to need a loan to fill up their SUVs. [Laughter]–Our calibrated vintage capital models failed us, and clearly finger-crossing has not proven a terribly robust forecasting technique. We even tried an approach gently suggested to us by Governor Olson at the time of our last forecast—you know, had we thought about trying common sense? [Laughter] We tried, but even that didn’t seem to work.
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