This time it is different, but still contained

US Federal Reserve Chairman Ben Bernanke in May 2007

The subprime mess is grave but largely contained.

US Federal Reserve Chairman Ben Bernanke in December 2008

I and others were mistaken early on in saying that the subprime crisis would be contained. The causal relationship between the housing problem and the broad financial system was very complex and difficult to predict.

RBA assistant governor Michelle Bullock in March 2019

Currently, the (property) risks here appear to be elevated but contained

Central bankers and their containment strategies …..

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15 Responses to This time it is different, but still contained

  1. Pyrmonter

    What would TAFKAS do? Target M3? Nominal GDP Targeting? Require the Chairmen of Banks not to call all for Royal Commissions? (the latter seemingly the origin of the current liquidity squeeze).

  2. Assess the impact of climate change on monetary policy.

  3. Leo G

    Hmm? Primary stage containment- where else have I come across that concept?

  4. Central bankers and their containment strategies …..

    The older I get, the more evident it becomes that very few people in positions of power have the slightest clue.

  5. duncanm

    aka

    Well I got my money out of property, so I’m ok

  6. Tom

    There’s a reason “central banker” is rhyming slang.

  7. Dr Fred Lenin

    How many of the greedy grasping bankers who caused the so called GFC were jailed for their selfish criminal acts? Probably none , they bought off the politicians with stolen money ,and got the Taxpayers to pay for their cupidity . The western world needs to lease the old gulags in east Siberia from Russia and fill them with political , business and union criminals . Sub contract security to armed Siberian firms to make sure the buggers stay locked up . Wonder how many inmates we would end up with if all those crooks were locked up ? Be much cheaper than keeping them in power .

  8. Pyrmonter

    @ Fred Lenin

    What were bankers doing differently in 2007 and 2008 than in 2004 and 2005? (‘Losing money’ isn’t the answer). The idea that bankers undergo some temporal cycle of venality is one of those ideas popular with left-wing media talking heads – the same people who insist ‘globalization’ is a conspiracy to make the poor poorer; but does it belong on the Cat?

  9. Squirrel

    “Currently, the (property) risks here appear to be elevated but contained”

    Hence today’s pantomime, designed to convince the surly proles that there will be meaningful cuts to the rate of population growth, while actually keeping up the numbers of potential new buyers for all those impeccably designed and constructed….towers.

  10. Peter Greagg

    I wish the RBA would introduce something like the Taylor Rule (of John Taylor fame).

  11. Julian

    Would you like me to explain why the subprime was very much worse? It was all off balance sheet and it was exacerbated by synthetic CDO’s which were purchased on balance sheets across large institutions across the world as tier 1 capital when they were not only worthless piles of crap but also actually insurance for which they could be called upon if the tranches of securities they replicated defaulted. Slightly bigger and more complex issue than the problem Australian Banks face. The two issues cannot be conflated just by quoting central bankers.

  12. Lutz

    We aren’t lumbered with FannieMay and FreddieMac.

  13. Paulo Nigrum Anatis

    @Rob MW

    ……. and ISIS!

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