UCLA researcher: Greenspan sucks
"Something's wrong here,'' Leamer wrote in a paper presented to a conference in Jackson Hole, Wyoming, attended by Chairman Ben S. Bernanke and other Fed officials. "Housing is the most important sector in our economic recessions, and any attempt to control the business cycle needs to focus especially on residential investment.''
Housing is vulnerable to ``persistent'' trends that, once under way, are difficult to restrain, Leamer wrote. The Fed ought to have raised interest rates more aggressively to head off the "bubble'' in home prices that grew from 2003 to 2005 and should have lowered rates by now, he said.
Leamer said in an interview today at Jackson Hole that some former "hot markets,'' such as pockets of California, may see declines of 30 percent to 40 percent.
He added that there's "very little possibility that a rate cut would make much of a difference'' at this point. "Once the wave has peaked and is crashing, there is not much that can be done to quiet the waters.''