You keep using that word. I do not think it means what you think it means.
For the record, the definition of the word surprise is:
1: to attack unexpectedly; also : to capture by an unexpected attack
2 a: to take unawares (police surprised the burglars in the store)
b: to detect or elicit by a taking unawares (sometimes surprised a tragic shadow in her eyes — Willa Cather)
3: to strike with wonder or amazement especially because unexpected (his conduct surprised me); to cause astonishment or surprise (her success didn’t surprise)
Which leads me to these truly frightening comments:
"Boston Federal Reserve Bank President Eric Rosengren said the delay in a rebound of U.S. home sales continues to "surprise.”
"People have been expecting a recovery in housing much sooner than it has occurred and that’s continued to surprise on the downside,” Rosengren said in a telephone interview with Bloomberg News.
Rosengren said it’s "confounding” that housing shows little sign of recovery after the Fed’s six interest-rate reductions since September. Fed officials are in the eighth month of a credit crisis that began with rising delinquencies on subprime mortgages.
"The housing market is still weaker than we would like and that has contributed to some of the financial problems as well,” Rosengren said."
I find it disturbing to see a fundamental lack of comprehension from a regional Fed President as to what the root causes of the Housing problem actually are.
Hey guys! Here’s a clue: It ain’t high interest rates . . .
Housing: US vs Japan (March 2008)
Fed’s Rosengren Calls Delay in Housing Recovery a `Surprise’
Bloomberg, April 7 2008
Alan Greenspan seems to be hellbent on destroying what little reputation he has left.
Over the past few years, the man formerly known as The Maestro has been slowly revealed as the grand architect of a Fed era which will forever be known for easy money and non regulation.
Thus, the inflationary spiral we are presently enjoying, with $100+ Oil and $5 milk, is only the first half of his legacy. The second part is the enormous credit crisis/housing debacle directily attributable to his malfeasance. Greenspan’s ideological refusal to allow the Fed to fulfill its role of Banking System Regulator is what is directly the root cause of many of the conflagrations we are dealing with today — from housing to credit to derivatives to the demise of Bear Stearns.
Here comes the fun part: The man that helped bring about the Housing crisis is now saying its almost over. Never mind the historic inventory overhang, accelerating foreclosures, and all of the price metrics that reveal Houses remain way too expensive. According to Easy Al, the end of the problem will soon be here:
"Former Federal Reserve Chairman Alan Greenspan said the drop in U.S. home prices will probably end "well before” early next year as the number of houses on the market diminishes, aiding an economic rebound.
"It will not be until early 2009 that we will get close to having eliminated most of this” home inventory, Greenspan told a conference in Tokyo today sponsored by Deutsche Bank AG and co-hosted by Bloomberg LP. "But it is very likely that home prices will stabilize well before that.”
Greenspan added that the extent of damage stemming from the collapse of the subprime-mortgage market won’t be known for months. He described the credit crisis as the worst in 50 years, echoing the assessment of International Monetary Fund economists."
That’s kinda like Mrs. O’Leary’s cow telling you that the fire is almost over. If he is proven to be wrong about this also — and I think he will be — that should be the final nail in the coffin of his reputation.
UPDATE: April 8, 2008 9:14am
When I wrote this up early this morning, I had not yet seen the front page of the WSJ:
His Legacy Tarnished, Greenspan Goes on Defensive http://online.wsj.com/article/SB120760341392296107.html
Video after the jump.
Free Lunch: Myths of the Greenspan Era (January 2006) http://bigpicture.typepad.com/comments/2006/01/free_lunch_myth.html
Greenspan Says U.S. Home Prices May Stabilize in 2008
Scott Lanman and Lily Nonomiya
Bloomberg, April 8 2008
After Monday’s NYSE close, Alcoa (A) reported a 54% earnings miss, blaming soaring energy costs and the weak dollar, reporting .37 (ex-items .44); .50 to .53 was expected.
For those who believe technology is non-cyclical, i.e., immune from recession, AMD missed Q1 revenue forecasts. The company said sales declined 22%, falling to ~$1.5B (AMD dropped 7% in after-hour trading). In response, the firm is cutting 10% of its workforce (1,600). PALM also issued an earning miss, saying its Q3 loss would increase to .53 vs. a forecast .30.
Which leads directly to this: