Mark Trahant: Those who know don't really know

"It's interesting to go back and read what we've been told by Those Who Know.

Two years ago, now Fed Chairman Ben Bernanke told Congress that there wasn't a housing bubble about to burst. Sure, prices went up, by nearly 25 percent in two years, but that was explained by "strong economic fundamentals."

Don't worry.

A year later he testified that the "economy appears to be in a period of transition." Instead of strong economic fundamentals, he said, "the anticipated moderation in economic growth now seems to be under way ... . That moderation appears most evident in the household sector."

Great. Why worry about moderation?

This year it's a different story.

The conversation shifted from a "is there a disease?" to the "post-mortem."

Bernanke testified last month: "During the past two years, serious delinquencies among subprime adjustable-rate mortgages have increased dramatically."

He now says there is greater risk. "Subprime mortgage losses that triggered uncertainty about structured products more generally have reverberated in broader financial markets, raising concern about the consequences for economic activity ... the turbulence originated in concerns about subprime mortgages, but the resulting global financial losses have far exceeded even the most pessimistic estimates of the credit losses on these loans."

I don't know about that. I've been collecting warnings -- some that exceed those so-called most pessimistic estimates -- since early 2005. Many economists were saying that U.S. consumers had too much debt and that some mortgages were unsustainable. The predicted result was a recession -- or worse, a full-blown depression.

Those dire forecasts have not come true. Yet.

Get the Story:
Mark Trahant: Those Who Know don't know much (The Seattle Post-Intelligencer 10/28)

More Mark Trahant:
Mark Trahant: It's time to let the workers win (10/15)
Mark Trahant: Standing at roads not traveled (10/8)
Mark Trahant: An antidote to the ways of war (10/1)
Mark Trahant: Everyone still interested in the money (9/17)
Mark Trahant: Election system presents few choices (9/10)
Mark Trahant: Deflation a threat to U.S. economy (9/4)
Mark Trahant: 'Prez on the Rez' forum a success (8/27)
Mark Trahant: Is America turning inward? (8/20)
Mark Trahant: Democrats pass on Prez on the Rez (8/13)
Mark Trahant: Bush tax cuts come with a price (8/6)
Mark Trahant: Real estate crisis really about credit (7/30)
Mark Trahant: Science still clear on global warming (07/02)
Mark Trahant: Sacred sites must be saved (6/25)
Mark Trahant: Society is being numbed by dumb (6/18)
Mark Trahant: Creating a world with less garbage (6/11)
Mark Trahant: A boost of the unambiguous (6/4)
Mark Trahant: Economics of immigration reform (5/28)
Mark Trahant: The changing face of America (5/21)
Mark Trahant: Agree to disagree about warming (5/7)
Mark Trahant: Optimism for the newspaper business (4/30)
Mark Trahant: Tribal colleges effective and essential (4/23)
Mark Trahant: The global warming debate (4/16)
Mark Trahant: America's cycles of boom and bust (4/9)
Mark Trahant: Spring cleaning for the government (3/26)
Mark Trahant: The state of the changing news media (3/19)
Mark Trahant: Mismanagement of the Indian trust (3/12)
Mark Trahant: More gloomy prospects for economy (3/5)
Mark Trahant: An important vote for Seattle (2/26)
Mark Trahant: America headed toward credit meltdown (2/19)
Mark Trahant: Doom and gloom on global warming (2/12)
Mark Trahant: Americans unsettled over economy (2/5)
Mark Trahant: Too hard to ignore global warming (1/22)
Mark Trahant: Women finally take their place (1/15)
Mark Trahant: Raise taxes to pay for war in Iraq (1/8)
Mark Trahant: President Gerald Ford and Indian health (1/2)
Trending in News
More Headlines