Tuesday, January 17, 2006

A Fine Line

The Fed has a difficult task ahead of it. It has to try to let the air out of the housing bubble, and at the same time not allow the broader economy to slide into a recession.

snip...

[Goldman Sachs analysts note housing busts were "a standard feature" of all U.S. economic downturns from the 1960s on.

The president of the New York Fed Bank, Timothy Geithner, said in a speech last week fluctuations in asset prices may loom larger in Fed thinking than previously.

"The behavior of asset prices will play an important role in the formulation of monetary policy going forward, perhaps a more important role than in the past," he said.

Fed officials have always said they do not target asset prices directly, but they do respond if a stock market crash or deflating housing bubble damages the entire economy.]

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2 Comments:

Anonymous dhiatt@comcast.net said...

Not a comment, but a question:
Hello- Thanks for your interesting blog. I was wondering what you know about Cheshire Square in Little Silver. I am trying to find local housing for my father. I heard there's a "waiting list" of some sort.

Wednesday, January 18, 2006 9:35:00 AM  
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Wednesday, January 18, 2006 1:36:00 PM  

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