The financial media today cannot get enough of the story that the Fed missed the housing debacle in 2006, as those transcripts are now out. “Fed officials look extra dumb...,” is one headline.
We’re not defending the Fed but these are shots from the cheap seats by individuals, 99% of whom missed it themselves.
What is instructive about this story is certainly not the Fed miss. For serious students of market dynamics, those who wish to understand price movement, it is key that they capture the key point - the market crowd, any crowd demands a leader, a god. And when that crowd feels betrayed by that god, they grow vengeful.
Fed officials are just like any of us who make our living peering at the economy, some a tad more gifted, some not so, but all mortals and none gifted with the powers of a seer. Within the FOMC crowd, the Fed presidents tend to be a tad more qualified, having come up the hard way. Governors, more political promiscuous, less so.
Under the Greenspan Fed every effort was taken to hide the decision making process for the simple reason that it was seat-of-the pants; that is not how gods are supposed to behave. The jig is up with the 2006 release (Bernanke has just taken over) but it can only be petty to criticize. Best is to learn, coming to grips with market-crowd behavior; that is the lesson be extracted from this frenzy.
Robert Craven
No comments:
Post a Comment