Shiller says no recovery from Bernanke: “he’ just got one button to push”
Famous Yale economist Robert Shiller says Benanke can’t fuel housing recovery on his own. “How do we expect him to fix it with just one button to push on the money supply?”
CNBC reports,
The Federal Reserve can’t spark a recovery in the housing market by itself because mortgage rates don’t predict where home prices are going, economist Robert Shiller told CNBC’s “Squawk on the Street” on Friday. . . .
The Fed’s latest stimulus plan involves buying up mortgage-backed securities to keep rates low and help spur home buying, which the central bank sees as key to an economic recovery.
But Shiller, a Yale professor who helped create the widely watched Case-Shiller home price index, said Fed Chairman Ben Bernanke only has one policy tool and “doesn’t have a way of changing the ‘animal spirits’” that a full-fledged housing recovery will depend on. . . .
Home prices could also remain stagnant for while still, the economist said.
“If you look at the last housing cycle, it peaked in the 1990s and took a decade to turnaround,” Shiller noted.
This housing downturn is in only its sixth year.