The Fed Thought the Housing Bubble Was Hilarious
By Barry Ritholtz
Earlier this week, we considered the amount of laughter in Federal Open Market Committee meetings as a sign the Fed wasn't fully cognizant of the coming financial storm.
Today’s chart (via Elliot-today) adds another component to this, overlaying the Fed's laughter with the Case-Shiller residential real-estate price index. Perhaps the best way to examine the contrast is as a function of mass psychology: The Fed appears to have become complacent, apparently relaxed and satisfied with the way it handled the aftermath of the dot-com/technology/telecom bubble that burst in 2000.
Sure, there is some form-fitting here as the FOMC chart is adjusted 6 months to make the two correlate. Regardless, it is the sort of coincidence that would rarely be noticed in real time and is terribly significant in hindsight.
http://www.bloombergview.com/articles/2014-02-27/fed-thought-the-housing-bubble-was-hilarious-ritholtz-chart
