Mortgage & Loan: After Stock Bloodbath, Bernanke Spins

The B. Bizzle lets his homies know that he's keepin' it real for the 0-7, yo.
Either that or he's wishing he had a gun.

A day after the Dow Jones took a 500-point header into the toilet, Ben Bernanke was tearing out what little hair he has left playing spin control:

``My view is that taking all the new data into account, that there is really no material change in our expectations for the U.S. economy'' since his monetary-policy testimony to Congress Feb. 14-15, Bernanke said. ``We are looking for moderate growth in the U.S. economy going forward.''

Bernanke stayed on-message throughout, insisting that troubles in the subprime market wouldn't spill out to the prime sector, and that the big threats to the economy were still Social Security and Medicare.

Unfortunately, even Freddie Mac itself is exiting the subprime market, putting a grim coda on the era of speculative buying. The money quote comes at the end of the article:

Robert Moulton, who owns a mortgage brokerage firm on Long Island, said the industry’s greatest failing was not fully anticipating or preparing for the troubles of the housing market, especially the drop in home prices in some areas. Too many people believed that home prices would not or could not fall. Adjustable rate loans made sense as long as home prices were rising; borrowers could sell their properties for more than they bought them or refinance using their rising equity. “When these subprime loans were written, I honestly don’t think anyone from the borrowers to the bank anticipated a collapse in real estate values,” he said.

Amazing, isn't it? A bunch of bloggers were able to figure out something that apparently eluded a multibillion-dollar industry and all of its adherents, spin doctors, and PR flacks--that no market can expand indefinitely. Tech, gold, homes, you name it--every cycle has to boom and bust.

How do you think Bernanke has to feel knowing that his predecessor not only left him to clean up a mess that he himself helped create, but took time out to stick a knife in his ribs to boot?

And how will it be explained to the thousands of homeowners who are facing default and foreclosure and don't even understand why or how?

Posted at February 28, 2007 06:13 PM

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The B. Bizzle lets his homies know that he's keepin' it real for the 0-7, yo. Either that or he's wishing he had a gun. A day after the Dow Jones took a 500-point header into the toilet, Ben Bernanke was tearing out what little hair he has left playing spin control: ``My view is that taking all the new data into account, that there is really no material change in our expectations for the U.S. economy'' since his monetary-policy testimony to Congress Feb. 14-15, Bernanke said. ``We are looking for moderate growth in the U.S. economy going forward.'' Bernanke stayed on-message throughout, insisting that troubles in the subprime market wouldn't spill out to the prime sector, and that the big threats to the economy were still Social Security and Medicare. Unfortunately, even Freddie Mac itself is exiting the subprime market, putting a grim coda on the era of speculative buying. The money quote comes at the end of the article: Robert Moulton, who owns a mortgage brokerage firm on Long Island, said the industry’s greatest failing was not fully anticipating or preparing for the troubles of the housing market, especially the drop in home prices in some areas. Too many people believed that home prices would not or could not fall. Adjustable rate loans made sense as long as home prices were rising; borrowers could sell their properties for more than they bought them or refinance using their rising equity. “When these subprime loans were written, I honestly don’t think anyone from the borrowers to the bank anticipated a collapse in real estate values,” he said. Amazing, isn't it? A bunch of bloggers were able to figure out something that apparently eluded a multibillion-dollar industry and all of its adherents, spin doctors, and PR flacks--that no market can expand indefinitely. Tech, gold, homes, you name it--every cycle has to boom and bust. How do you think Bernanke has to feel knowing that his predecessor not only left him to clean up a mess that he himself helped create, but took time out to stick a knife in his ribs to boot? And how will it be explained to the thousands of homeowners who are facing default and foreclosure and don't even understand why or how?