What I Think of the Federal Reserve…
I can honestly say the Fed made a mess… The combined intelligence of Janet Yellen, Ben Bernanke, and Alan Greenspan are all partially to blame….
Bernanke used to ignore the fact that subprime was likely to spill over into the economy, leading us to recession. In fact, about eight times, he uttered the words, “We believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system.”
We even listened as Hank Paulson – who in 2007 – noted, “We’re at or near a bottom in housing.”
They failed to pay attention, leading us astray. Nowadays, the latest Fed boss doesn’t seem to have paid much attention either, raising rates for the first time in almost 10 years, resulting in a cataclysmic rush to the exit doors…
The economy isn’t growing. If we were growing, manufacturing and retail growth would be strong. Unemployment would be picking up steam. Inflation wouldn’t be at less than 1%. Consumers would be spending.
The fact is – not one of them truly paid attention to reality.
So when Janet Yellen speaks about a bubble in commercial real estate, I’m flabbergasted.
She actually believes – without paying attention again – that “valuation pressures in commercial real estate are rising as commercial property prices continue to increase rapidly,” as reported by The Wall Street Journal.
Truth is – we’re far from bubbly conditions in commercial real estate. Growth is still running rampant. Capital inflow is still flowing from foreign investors. And we’re not likely to see too many near-term rates hikes that would fuel the death of commercial real estate headlines again…
And then – of course – there’s this genius that doesn’t seem to pay attention either.
I’d love to hear your thoughts on the Federal Reserve, if you have a chance. You can leave a note below. Or, you can speak with me in person at The 2016 Money Show.