Wednesday, October 14

Imagine how bad it would be if STUPID people were in charge..

The date is July, 2005. Can you guess who is answering the questions?

Q. "Can you give us your view of whether there is a housing bubble out there?"
A. "I don't know whether prices are exactly where they should be but I think they are supported by the strength of the economy."

Q. "So tell me, what is the worst case scenario, if in fact we were to see prices come down substantially across the country? "
A. "I don't buy your premise. It is a pretty unlikely possibility. We've never had a decline in house prices on a nationwide basis. I'm confident in the fact that the bank regulators will pay close attention to the kinds of loans that are being made, making sure that underwriting is being done right... I do think this is mostly a localized problem and not something that impacts the national economy."

In hindsight, it sounds like this person was not very well informed, doesn't it? But who could blame him?

You'd need to actually know what was going on inside the banks to realize that they were making loans they knew couldn't be repaid - and the only people who knew that were the bankers themselves.

And you'd need to know what was going on with the bank regulators to realize they weren't doing a thing about it - and the only people who knew that were the Bankers responsible for watching over the banks. No, the only possible way you could expect someone to know what was really happening with the banks would be the people in charge of the Federal Reserve. They were really the only ones who could possibly know, right?

So you could hardly blame this guy for being so completely clueless.

Good thing we have really well informed, intelligent and ethical individuals deciding how to save the economy.


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