NP - The Fed's Priorities

[alice wellintown]

we had a bust, a big bust, a huge bust and because the boom and bubble
were made by debts, a good deal of it housing debts,we have to clean
up the balance sheets around housing and that means that consumers and
banks must pay down debts and get rid of bad one. this is happening at
a remarkable pace, given the size of the problem and given the
so-called headwinds, foreign and domestic, such as the euro-zone
problems and the political and fiscal complications that compound and
prevent additional solutions from being implemented. I suspect that we
have hit a bottom on housing. this does not mean that we can expect
housing to perform well over the next 5 years, but the shadow
inventories and the underwater price to mtg ratios are no longer at
crisis levels. the income to debt ratios, though much improved, has
also a ways to go. it will be slow. unemplyment will hang around 7 for
5 years or more. this is the reality and there is little that any
institution, the fed, the congress, can do to speed up the recovery.
that is, there is not much more they can do; the fed has done a
brilliant job thus far.

the come back kid, as the economist call the us economy, is recovering
with remarkable speed. when we contrast it with euo zone, japan, etc,
we can see that the us economy is a flexible and resiliant one. at
this point, we simply need more time.