Comments on: Fed Governor Mishkin Urges Swift Action to Combat Housing Price Decline http://www.nakedcapitalism.com/2007/09/fed-governor-mishkin-urges-swift-action.html Sun, 22 Nov 2009 06:06:33 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: Anonymous http://www.nakedcapitalism.com/2007/09/fed-governor-mishkin-urges-swift-action.html#comment-696 Anonymous Mon, 03 Sep 2007 21:48:00 +0000 http://www.nakedcapitalism.com/2007/09/fed-governor-mishkin-urges-swift-action-to-combat-housing-price-decline/#comment-696 Mishkin paper<br/><br/>http://www.federalreserve.gov/pubs/feds/2007/200740/200740pap.pdf Mishkin paper

http://www.federalreserve.gov/pubs/feds/2007/200740/200740pap.pdf

]]> By: Anonymous http://www.nakedcapitalism.com/2007/09/fed-governor-mishkin-urges-swift-action.html#comment-688 Anonymous Mon, 03 Sep 2007 09:05:00 +0000 http://www.nakedcapitalism.com/2007/09/fed-governor-mishkin-urges-swift-action-to-combat-housing-price-decline/#comment-688 4% growth 2Q, when housing correction on its way = not enough impact for rate cuts. What has changed?. The credit "turmoil". Any effect on real econ, (or the covers of price stability, or employment) not that we can see.<br/><br/>Therefore no justification for cuts.<br/><br/>Unless the all-seeing-eye can really predict the future. If so then the present would'a/should'a/could'a driven policy in the past. <br/><br/>Mishkin appears to come from the Cheney school of bird hunting. Who is he spraying with birdshot? 4% growth 2Q, when housing correction on its way = not enough impact for rate cuts. What has changed?. The credit “turmoil”. Any effect on real econ, (or the covers of price stability, or employment) not that we can see.

Therefore no justification for cuts.

Unless the all-seeing-eye can really predict the future. If so then the present would’a/should’a/could’a driven policy in the past.

Mishkin appears to come from the Cheney school of bird hunting. Who is he spraying with birdshot?

]]> By: Constantine http://www.nakedcapitalism.com/2007/09/fed-governor-mishkin-urges-swift-action.html#comment-680 Constantine Sun, 02 Sep 2007 16:21:00 +0000 http://www.nakedcapitalism.com/2007/09/fed-governor-mishkin-urges-swift-action-to-combat-housing-price-decline/#comment-680 Yves, your remark about there being differences between Mishkin's speech and his paper is interesting.<br/><br/>Bloomberg's take was similar to the wsj's econ blog. I can't find the original piece but a bloomberg writer says much the same thing in this piece <a HREF="http://www.bloomberg.com/apps/news?pid=20601087&sid=agrcjp4O4M6Y&refer=home" REL="nofollow"><br/>> here</a>.<br/><br/><i> Earlier in the day yesterday, Fed Governor Frederic Mishkin presented a paper in which he said that U.S. banks can cope with ``stressful'' conditions and that the financial system is in ``good health'' even with the disruptions of the mortgage market.<br/><br/>Mishkin also reiterated that policy makers should avoid setting interest rates according to swings in the housing market and respond ``only to the extent that they have foreseeable effects on inflation and employment.'' That point was challenged by some participants, including Bank of Israel Governor Stanley Fischer. </i> Yves, your remark about there being differences between Mishkin’s speech and his paper is interesting.

Bloomberg’s take was similar to the wsj’s econ blog. I can’t find the original piece but a bloomberg writer says much the same thing in this piece
> here.

Earlier in the day yesterday, Fed Governor Frederic Mishkin presented a paper in which he said that U.S. banks can cope with “stressful” conditions and that the financial system is in “good health” even with the disruptions of the mortgage market.

Mishkin also reiterated that policy makers should avoid setting interest rates according to swings in the housing market and respond “only to the extent that they have foreseeable effects on inflation and employment.” That point was challenged by some participants, including Bank of Israel Governor Stanley Fischer.

]]> By: "Cassandra" http://www.nakedcapitalism.com/2007/09/fed-governor-mishkin-urges-swift-action.html#comment-679 "Cassandra" Sun, 02 Sep 2007 15:46:00 +0000 http://www.nakedcapitalism.com/2007/09/fed-governor-mishkin-urges-swift-action-to-combat-housing-price-decline/#comment-679 On the other side of the fence to say Fisher and Geithner, Mishkin strikes me as a member of what I call: <i>The School of Asymmetrical Monetary Policy</i>. The disciples of this school seemingly are blind to the potential overshoot of their own loose policy, or the resulting monetary (and liquidity) conditions in combination wiuth prevailing domestic fiscal, and global fiscal and monetary situation. They seemingly disavow any attempt to recognize shortcomings (e.g. runaway asset prices, negative savings rates, ) so long as errors to growth have a postive sign. But the nanosecond growth or liquidity is threatened, they voiciferously chime on-the-record about what's needed to prevent impending disaster. They philosophically seem to believe that an occasional financial forest fire is only destructuve (to the interests they serve, at least) and must be prevented or fought at ALL COSTS, irrespective to the externalities (moral hazard) or diminishing returns to the policy measures used to fight the fire. <br/><br/>What I am interested to know is: is this driven by (1) genuine economic belief, (2) class-interests (3) ideological socionomic concern ?? On the other side of the fence to say Fisher and Geithner, Mishkin strikes me as a member of what I call: The School of Asymmetrical Monetary Policy. The disciples of this school seemingly are blind to the potential overshoot of their own loose policy, or the resulting monetary (and liquidity) conditions in combination wiuth prevailing domestic fiscal, and global fiscal and monetary situation. They seemingly disavow any attempt to recognize shortcomings (e.g. runaway asset prices, negative savings rates, ) so long as errors to growth have a postive sign. But the nanosecond growth or liquidity is threatened, they voiciferously chime on-the-record about what’s needed to prevent impending disaster. They philosophically seem to believe that an occasional financial forest fire is only destructuve (to the interests they serve, at least) and must be prevented or fought at ALL COSTS, irrespective to the externalities (moral hazard) or diminishing returns to the policy measures used to fight the fire.

What I am interested to know is: is this driven by (1) genuine economic belief, (2) class-interests (3) ideological socionomic concern ??

]]> By: Yves Smith http://www.nakedcapitalism.com/2007/09/fed-governor-mishkin-urges-swift-action.html#comment-672 Yves Smith Sat, 01 Sep 2007 22:53:00 +0000 http://www.nakedcapitalism.com/2007/09/fed-governor-mishkin-urges-swift-action-to-combat-housing-price-decline/#comment-672 Constantine,<br/><br/>I have to differ with you on this one. The headline to this post does not say central bankers should prevent a drop, but combat one. To combat it, the fall has to have started to occur.<br/><br/>The FT's own headline to the article I cited was "Mishkin urges swift action to any fall in house prices." That's a very similar take.<br/><br/>And the article (and the quote is in the post above says that Mishkin said central banks should "“react immediately to the house price decline when they see it.”<br/><br/>Given that statement, and particularly the use of the word <i>immediately</i>, I don't see what's wrong with the headline. Constantine,

I have to differ with you on this one. The headline to this post does not say central bankers should prevent a drop, but combat one. To combat it, the fall has to have started to occur.

The FT’s own headline to the article I cited was “Mishkin urges swift action to any fall in house prices.” That’s a very similar take.

And the article (and the quote is in the post above says that Mishkin said central banks should ““react immediately to the house price decline when they see it.”

Given that statement, and particularly the use of the word immediately, I don’t see what’s wrong with the headline.

]]> By: constantine http://www.nakedcapitalism.com/2007/09/fed-governor-mishkin-urges-swift-action.html#comment-668 constantine Sat, 01 Sep 2007 20:57:00 +0000 http://www.nakedcapitalism.com/2007/09/fed-governor-mishkin-urges-swift-action-to-combat-housing-price-decline/#comment-668 To quote the wsj's eco blog<br/><br/><i>In Mishkin’s paper, he estimated the possible policy response to a hypothetical 20% drop in home prices over two years. Under his scenario, a central bank doesn’t anticipate the home-price drop but reacts once it occurs by lowering the federal funds rate “more aggressively and substantially faster” than it would under traditional Taylor-rule economic models.</i> To quote the wsj’s eco blog

In Mishkin’s paper, he estimated the possible policy response to a hypothetical 20% drop in home prices over two years. Under his scenario, a central bank doesn’t anticipate the home-price drop but reacts once it occurs by lowering the federal funds rate “more aggressively and substantially faster” than it would under traditional Taylor-rule economic models.

]]> By: constantine http://www.nakedcapitalism.com/2007/09/fed-governor-mishkin-urges-swift-action.html#comment-667 constantine Sat, 01 Sep 2007 20:54:00 +0000 http://www.nakedcapitalism.com/2007/09/fed-governor-mishkin-urges-swift-action-to-combat-housing-price-decline/#comment-667 Yves, many folks would say you have misunderstood Mishkin with your headline.<br/><br/>http://blogs.wsj.com/economics/2007/09/01/mishkin-home-prices-shouldnt-get-special-empasis/<br/><br/>Mishkin wasn't advocating preventing the price drop. He was saying the effects of the drop should be combated. Yves, many folks would say you have misunderstood Mishkin with your headline.

http://blogs.wsj.com/economics/2007/09/01/mishkin-home-prices-shouldnt-get-special-empasis/

Mishkin wasn’t advocating preventing the price drop. He was saying the effects of the drop should be combated.

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