Ben Bernanke on Housing Market in 2006

No worries back in 2006 by Ben Bernanke or Tim Geithner.  Below are excerpts from No worries back in 2006 and Transcripts show Fed slow to see fallout from housing bust.

"in his second meeting as chairman of the Federal Reserve in May 2006, Ben Bernanke heard a Fed governor warn about the nation's mortgage market. But Mr. Bernanke described the cooling of the housing boom as a "healthy thing."

 "So far we are seeing, at worst, an orderly decline in the housing market," he said."

This what housing did after that statement:

In September 2006, Treasury Secretary Timothy Geithner, then a Fed official, expressed confidence that "collateral damage" from housing could be avoided.

However, by June, Bernanke was expressing more caution, saying the slowdown in housing was "an asset price correction" that bore watching.  

"Like any other asset-price correction, it's very hard to forecast, and consequently it's an important risk and one that should lead us to be cautious in our policy decisions."

By the September meeting, Bernanke sounded even more concerned about the impact on the broader economy from the slowdown in housing.

"I don't have quite as much confidence as some people around the table that there will be no spillover effect." 

By contrast, Geithner, who was then president of the Fed's New York regional bank, expressed more confidence that the economy could weather the troubles in housing, saying the issue would be the impact on consumer and business spending.

"We just don't see troubling signs yet of collateral damage and we are not expecting much,"" Geithner said at the September FOMC meeting.

The discussion by the members of the FOMC, the Fed board members in Washington and 12 regional bank presidents, gave no indication that any of them foresaw the devastating impact that the collapse of the housing bubble would have.

CHF vs USD: SNB Frau Hildebrand - Swiss National Bank

-------- Original Message --------

Subject:	Someone Took My Advice On Selling Swissie (CHF) and Buying Dollars (USD)
Date:	Thu, 5 Jan 2012 06:28:12 -0800
From:	Jas Jain

Someone Took My Advice On Selling Swissie (CHF) and Buying Dollars (USD)

That someone is the wife of the head of Swiss National Bank (SNB), Herr Hildebrand. She bought $517K with Swissie in August and made a tidy profit of 75K CHF when Swissie was brought down by the actions of SNB. At the peak one could have bought one USD for 0.7 CHF, which is now at .95 CHF, an increase of 35%. Of course, no one could have timed the top, but a 25% gain was there for the taking to diversify out of very dear CHF and into the unloved USD. Fair value for CHF, at $1.05 currently, is $0.85. However, when currencies reverse the trend they never stop at the fair value. Swissie has at least 35% more to go down against the USD over the next few years if historical trends are any guide.

The well-connected Swiss, Frau Hildebrand, made money, while poorly connected and badly informed holders of CHF missed out on once in a lifetime opportunity to move into dollars and even Euro. The worst informed, or the most ignorant, investors are those who were very bearish on the long-term US Treasuries and on the USD 6-9 months ago. There were lot of shysters on financial TV and in newsletter writing business who were making money peddling the bad advice.

Jas