2009-07-27nakedcapitalism.com

I decided to locate a little example of Fed mis-prognostication, a declaration by Bernanke as two Bear Stearns hedge funds were imploding in July 2007, done in by an overdose of subprime and leverage. He had said around then that subprime losses were expected to be $50 to $100 billion. I recall gasping out loud when I read that, because no one in the private sector had had loss estimates like that for a while. The lowest estimates I was seeing around then was $150 billion.

So a quick Google search unearthed a MarketWatch story, reporting on Senate testimony by Bernanke. It sounded like quite the relic. Not only did it have the estimate I so fondly recalled, but it had doozies like this

Federal Reserve Chairman Ben Bernanke said Thursday that there will be "significant losses" associated with subprime mortgages but that these losses should be regarded as "bumps" along the road of market innovation....



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