From the NY Times
In an unusually blunt interview, the president of the Federal Reserve Bank of Philadelphia said he already expected growth to slow to an annual pace of 1.5 percent or less. But he said he would not support another rate cut unless the slowdown appeared to be even sharper than that.
Read the whole thing.
Well I read it but I am not sure I get it. First of all I am not sure when that 1.5% is supposed to kick in, how long it should be expected to last and precisely what has so dramatically changed since 2006 that we should expect growth to drop by 50%.
I fully understand the concept of a housing led recession but to tell the truth if the kind of meltdown Roubini has been prophesizing for all these many moons now is going to happen you would expect it to start showing up in the broader economy. But instead every time you push a little at the data you find that most of the pain is sitting right where it deserves to be, in the bubble markets and with the people who tried to peddle this paper to start with.
Take foreclosures. Everyone is selling this as some across the board phenomenon that is going to take everyone down. Yet if almost every case where they reduce it to an actual human interest story it seems that the borrower would have been in trouble in any market in any loan, that is they were faced with job loss or divorce or unexpected forced job relocation.
I won't deny to myself that I was a little too optimistic six months ago, but this still seems to be a lot more about flippers and speculators and Wall Street types getting burned than an economy wide meltdown. This article didn't give me any insight as to why he has come to the conclusion he did. Given that most people were surprised by the last job number and Q3 GDP clearly a lot of crystal balls are a little cloudy to start with.
All the more reason to stop easing.