Credit & Debt: Meanwhile, Back At The Fed...

It's good to see that Bernanke has his priorities in order:

In the minutes, Fed officials worried that the latest readings on core inflation were higher than expected and might not moderate as hoped. They also decided that holding rates steady was the best course to foster moderate economic growth and to bring core inflation down from "its elevated level." But policy-makers also felt surprisingly weak business investment and the rise of delinquencies in subprime mortgage markets were risks to economic growth."The combination of generally weaker-than-expected economic indicators and uncomfortably high readings on inflation suggested increased downside risks to economic growth and greater uncertainty that the expected gradual decline in core inflation would materialize," the Fed said.

If you're hoping that the Fed would recommend stronger regulation of predatory lenders and oversight of the subprime sector, think again. Bernanke is a firm believer in the invisible hand:

Regulatory oversight of hedge funds is relatively light. Because hedge funds deal with highly sophisticated counterparties and investors, and because they have no claims on the federal safety net, the light regulatory touch seems largely justified. However, the growing market share of hedge funds has raised concerns about possible systemic risk.

In other words, the more complex something is, the less likely there is to be anything guiding or watching it.

Yep, we're screwed.

Posted at April 11, 2007 06:37 PM

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It's good to see that Bernanke has his priorities in order: In the minutes, Fed officials worried that the latest readings on core inflation were higher than expected and might not moderate as hoped. They also decided that holding rates steady was the best course to foster moderate economic growth and to bring core inflation down from "its elevated level." But policy-makers also felt surprisingly weak business investment and the rise of delinquencies in subprime mortgage markets were risks to economic growth."The combination of generally weaker-than-expected economic indicators and uncomfortably high readings on inflation suggested increased downside risks to economic growth and greater uncertainty that the expected gradual decline in core inflation would materialize," the Fed said. If you're hoping that the Fed would recommend stronger regulation of predatory lenders and oversight of the subprime sector, think again. Bernanke is a firm believer in the invisible hand: Regulatory oversight of hedge funds is relatively light. Because hedge funds deal with highly sophisticated counterparties and investors, and because they have no claims on the federal safety net, the light regulatory touch seems largely justified. However, the growing market share of hedge funds has raised concerns about possible systemic risk. In other words, the more complex something is, the less likely there is to be anything guiding or watching it. Yep, we're screwed.