Magic Eight Ball Says...
I thought it would be interesting to look back a year or so and see what some leading U.S. economists thought of the subprime mortgage crisis back in early 2007.
According to CNN, in March 2007, Federal Reserve Chairman Ben Bernanke told Congress that problems in the subprime mortage sector may not affect the overall economy. Remarkably, he apparently said "At this juncture ... the impact on the broader economy and financial markets of the problems in the subprime markets seems likely to be contained."
What is going on one year later? Oh, nothing much. Only $260 billion in short-term loans from the Federal Reserve to banks since December 2007. And don't forget about the continual decline in interest rates in the first calendar quarter of 2008, in large part, to ward off a recession caused by the purportedly "contained" subprime mortgage crisis.
Think Bernanke wants a "do over" on his prediction last year?
