A Different Kind of Measured

Today's Federal Reserve policy statement has been officially filed under "WTF?"
The reason? The all important use of the word 'measured' has transitioned from "policy accommodation can be removed at a pace that is likely to be measured" to "some further measured policy firming is likely to be needed".


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Somehow this nuanced, interim, transitional wordsmithing seems to be woefully inadequate for today's economic realities - realities that, unfortunately, many observers fail to see due to the bright lights of 4.3 percent economic growth, 5 percent unemployment, and a 2 percent core rate of inflation - the oft discussed rosy headline statistics.

Let's contrast the subtle changes in today's Fed policy statement with two stories that have come to our attention recently:

1 - Yesterday's monetary policy transparency discussion where praise was unabashedly heaped on Bank of New Zealand Governor Allan Bollard for saying what few other central bankers would dare utter:

In recent months, Mr. Bollard has said he is intent on raising interest rates "in a way that really hurts," in order to prevent people from borrowing more money against their homes - to prevent them from digging bigger holes for themselves, as Anglo-Saxons, for some reason, are wont to do. "People need to stop using their homes as a source of cash", Bollard told Radio New Zealand last month, where home prices have continued to rise at double digit rates.

2 - Comments in today's post at recent blogroll addition, Another F**ked Borrower, where a Southern California mortgage insider tells sordid tales daily about our debt addicted society:

It's GROUNDHOG DAY!!

Not really, but it sure seems like it. Of the 8 loans I looked at today 6 were stated and 2 were full doc. The "full docness" of the loans was about all they had going for them. On one, the bwr had multiple mortgage lates, and a sub 520 FICO score. At least the LTV was under 60%. At least I could actully price that loan out. It wasn't a great rate, but it was a decent diving or gymnastics score! On the other full doc deal, the bwr, who incidentally refi'd only 5 months ago, wanted to do a 100% refi, to pull the last remaining 10-15k out of his property.

Does anyone else conjure up images of Nero fiddling when the Fed speaks these days?

Nearly everyone has heard of Nero "fiddling while Rome burned". The true story of The Great Fire of 64 is debated but many believe Nero had the fire started to build his monumental "Golden House". There were reports that Nero climbed a tower in a stage costume and played the lyre while exulting in "the beauty of the flames".

Yes, this is a stretch, but why stop now? Nero's house -> Greenspan's legacy.