Janet Yellen vs Ben Bernanke:
Ben Bernanke (via Calculated Risk
): (emp add)
Although the severity of the financial stresses became apparent only in August, several longer-term developments served as prologue for the recent turmoil and helped bring us to the current situation.
The first of these was the U.S. housing boom, which began in the mid-1990s and picked up steam around 2000. Between 1996 and 2005, house prices nationwide increased about 90 percent. During the years from 2000 to 2005 alone, house prices increased by roughly 60 percent--far outstripping the increases in incomes and general prices ...
Janet Yelen of the Federal Reserve Bank of San Francisco (in her October 2007 speech at the Omni hotel in Los Angeles, printed in the Winter 2007 edition of the Town Hall Journal - not affiliated with townhall.com): (emp add)
Here in California, the rise and fall of house prices has been a lot like the nation's, only more so. In 2004 and 2005, many homeowners gleeflully watched the meter tick up and up on their house values. I know I did.
Yellen then went on to discuss Moral Hazard and bailing out institutions and individuals.
The point of this post is not Yellen specifically, but that she may represent others at the Fed who were clueless about the housing bubble and how its disconnect with fundamentals (e.g. wage growth) was likely to lead to the current problems with housing and the economy in general.