Free Republic

Central bank holds benchmark at 5.25% amid housing market worries Federal Reserve policymakers Wednesday decided to leave key interest rates unchanged, determining the economy is in no imminent danger despite recent concern about problems in the housing market. Fed Chairman Ben Bernanke and his colleagues concluded after a two-day meeting that the economy is likely to continue to grow moderately despite what it called an "ongoing" adjustment in the housing sector. The Fed left the benchmark overnight rate at 5.25 percent, exactly where it has been since the central bank ended a two-year rate-hike campaign in June 2006. But the...

Arnold Schwarzenegger is once again leading US states to action on policy reform ahead of lawmakers on Capitol Hill. The California governor, who this year introduced significant environmental and healthcare reforms, has now moved to slow the rate of home loan defaults brought on by the collapse in the subprime mortgage market. Mr Schwarzenegger’s deal with four of the state’s biggest mortgage lenders – Countrywide Financial, GMAC, Litton and HomeEq – is “nothing less than jaw-dropping in its ambition and implications”, according to Matt Fellowes, a fellow with the Brookings Institution. Under the scheme, the four lenders will extend for...

Let me stick my neck out today. The Intrade price for "U.S. will go into recession in 2008" is 70. (see here : http://www.intrade.com//?request_operation=main&request_type=action&checkHomePage=true). That is, bettors have given a 70% probability to this bad outcome. To most of the media, a recession is a 100% probability ... a foregone conclusion. But I wouldn’t take the bet at 50. Or 40. Or 30. What gagged the stock market yesterday was an ISM survey showing a steep decline in business services. The decline is supposed to predict a recession. Does it? I asked my friend Brian Wesbury what he thought the...

...There’s plenty of blame to go around these days. But the prime villains behind the mess we’re in were Reagan and his circle of advisers — men who forgot the lessons of America’s last great financial crisis, and condemned the rest of us to repeat it... -------------- ...But there was also a longer-term effect. Reagan-era legislative changes essentially ended New Deal restrictions on mortgage lending — restrictions that, in particular, limited the ability of families to buy homes without putting a significant amount of money down. These restrictions were put in place in the 1930s by political leaders who had...

People are bumed, at least according the latest Ny Times poll. “Americans are more dissatisfied with the country’s direction than at any time since the New York Times/CBS News poll began asking about the subject in the early 1990s, according to the latest poll.In the poll, 81 percent of respondents said they believed “things have pretty seriously gotten off on the wrong track,” up from 69 percent a year ago and 35 percent in early 2002.Although the public mood has been darkening since the early days of the war in Iraq, it has taken a new turn for the worse...

WASHINGTON (AP) - President Bush is nominating Randall Kroszner and Kevin Warsh to fill two vacancies on the Federal Reserve's board of governors. With the nominations announced Friday, Bush will have nominated or re-nominated all seven members of the Fed board including selecting Ben Bernanke to take over as chairman of the Fed from Alan Greenspan, who is retiring Tuesday after 18 1/2 years in the job. Kroszner, 43, is an economics professor in the University of Chicago's graduate school of business and a previous member of the Council of Economic Advisers. He directs the university's George J. Stigler Center...

The White House on Friday nominated Randall S. Kroszner, a conservative economics professor from the University of Chicago Graduate School of Business, to fill one of two vacancies on the seven-member Federal Reserve Board of Governors. --snip-- "We're on different sides of the aisle, but he's extremely intelligent," said Goolsbee. "He's one of the two or three people in the world you'd turn to on banking regulation. I think any economist who knows Randy would say `Wow, what a good choice.'" --snip-- Kashyap said Kroszner has a libertarian bent when it comes to issues like taxation and entitlement programs. He...