Monday musings
A lot of good that "strong dollar" talk did. Dollar weakness has propelled oil to near $140 despite King Abdullah's promise to pump up production.
And anyone who still thought ethanol would pull our collective rear ends out of a sling is being disabused of that notion as Midwestern floods wreck the corn crop. Citigroup predicts many ethanol producers will be driven out of business.
Can we find any encouraging news on this Monday? No, but we can find amusement. The coda to this nigh-worthless story in the Washington Post about the housing bubble relates the following tale:
Greenspan puzzled over one piece of data a Fed employee showed him in his final weeks. A trade publication reported that subprime mortgages had ballooned to 20 percent of all loans, triple the level of a few years earlier.
"I looked at the numbers . . . and said, 'Where did they get these numbers from?' " Greenspan recalled in a recent interview. He was skeptical that such loans had grown in a short period "to such gargantuan proportions."
Greenspan said he did not recall whether he mentioned the dramatic growth in subprime loans to his successor, Ben S. Bernanke.
Bernanke, a reserved Princeton University economist unaccustomed to the national spotlight, came in to the job wanting to reduce the role of the Fed chairman as an outsized personality the way Greenspan had been. Two weeks into the job, Bernanke testified before Congress that it was a "positive" that the nation's homeownership rate had reached nearly 70 percent, in part because of subprime loans.
"If the housing market does slow down," Bernanke said, "we'll want to see how strong the subprime mortgage market is and whether or not we'll see any problems in that market."
Can these guys be brought up on some sort of criminal negligence statute?
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