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Yet Another Housing Surprise?

Tuesday, April 08, 2008 | 09:15 AM

in Credit | Economy | Federal Reserve | Real Estate

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You keep using that word. I do not think it means what you think it means.
-Inigo Montoya

For the record, the definition of the word surprise is:

1: to attack unexpectedly; also : to capture by an unexpected attack
2 a: to take unawares (police surprised the burglars in the store)
b: to detect or elicit by a taking unawares (sometimes surprised a tragic shadow in her eyes — Willa Cather)
3: to strike with wonder or amazement especially because unexpected (his conduct surprised me); to cause astonishment or surprise (her success didn't surprise)

Which leads me to these truly frightening comments:

"Boston Federal Reserve Bank President Eric Rosengren said the delay in a rebound of U.S. home sales continues to "surprise.''

"People have been expecting a recovery in housing much sooner than it has occurred and that's continued to surprise on the downside,'' Rosengren said in a telephone interview with Bloomberg News.

Rosengren said it's "confounding'' that housing shows little sign of recovery after the Fed's six interest-rate reductions since September. Fed officials are in the eighth month of a credit crisis that began with rising delinquencies on subprime mortgages.

"The housing market is still weaker than we would like and that has contributed to some of the financial problems as well,'' Rosengren said."

Surprise? Really?

I find it disturbing to see a fundamental lack of comprehension from a regional Fed President as to what the root causes of the Housing problem actually are.

Hey guys! Here's a clue: It ain't high interest rates . . .

Previously
Housing: US vs Japan (March 2008)
http://bigpicture.typepad.com/comments/2008/03/housing-us-vs-j.html

Source:
Fed's Rosengren Calls Delay in Housing Recovery a `Surprise'
Anthony Massucci
Bloomberg, April 7 2008
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aMFTYMCW_0.Q