There have been people like Peter Schiff warning about the recession and specifically saying when it will happen and how long it will last, and even politicians like Ron Paul warning about the housing bubble since 2003. They just refused to believe it, and I guess everyone in the Fed fell prey to group think. They couldn't admit to themselves that their strategy was failing, and even worse, that they were responsible for the economic failure through their policies over the past few years.<p><a href="http://www.youtube.com/watch?v=LfascZSTU4o" rel="nofollow">http://www.youtube.com/watch?v=LfascZSTU4o</a><p><a href="http://www.youtube.com/watch?v=mnuoHx9BINc" rel="nofollow">http://www.youtube.com/watch?v=mnuoHx9BINc</a>
Based on the transcripts, we need more innovative thinking in all walks of life, not just technology/software/etc. Economic forecasting will always have a large degree of uncertainty involved, but the frivolity with which the Fed approached the unusual signs of an aberration in the housing market shows that the Fed provided commentary on the crisis as it unfolded instead of taking action.
Based on the transcripts, sounded like the Feds have never heard of mortgage-backed securities! It might not be their official job to know, but one would figure, being in their position, that they would know how prevalent it was. How could any of them expect no collateral damage in the event of a housing market implosion when a lot the growth of the big banks in the previous decade was fueled by the housing market?