I read this in the book
Reckless Endangerment by NY Times reporter Gretchen Morganstern and co-author, investment analyst Joshua Rosner.
In December 2004, a study was published by two economists named McCarthy and Peach, both of whom worked at the New York Federal Reserve bank. The major finding of the study was that fears of a housing bubble (and inevitable collapse) were unfounded. At the time there were growing concerns about such a scenario.
The paper was well publicized, and was "cited in the popular press as evidence that real estate prices were not, in fact, bubblicious."
In the summer of 2005, researcher Joshua Rosner went to visit the two economists to dicuss serious defects that he though he had found in the study:
Quote:
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Originally Posted by reckless endangerment
After Rosner spent almost an hour running through some of the major weaknesses in the paper, Peach raised his hand to stop the discussion. There's economic research that is done to solve for an unanswered question, he said, and then there is the analysis produced because the director of research comments in a morning meeting that he is sick and tired of seeing the word "bubble" bandied about so liberally in press stories about home prices.
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(page 230).
So just who was responsible for such an irresponsible and damaging study? Who was it that did his best to persuade us that we were not headed for a cliff, when in fact we were? The head of the NY Fed at the time was none other than Tim Geithner, now Treasury Secretary. You know, that guy who was the only one smart enough to guide us through these waters. The guy who had to be confirmed in spite of certain 'issues' relating to his own income taxes.
WTF? Why was Geithner considered so indispensable? Was the thinking in the Obama admin something along the lines of 'he got us into this mess; he's the only one who can get us out?"
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