The NYT, Ben Bernanke, and the $8 Trillion Housing Bubble

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As the economy is being pushed into a recession by the collapse of housing bubble, everyone now agrees that it is a serious problem. So how can the NYT publish a 10 page magazine piece on Ben Bernanke and not ask him about why he failed to recognize the bubble, either in his stint as a Fed governor or in his first year and a half as Fed chair? The evaporation of much or all of the $8 trillion in excess housing wealth created by the bubble is creating the largest financial crisis since the Great Depression and might well lead to the most serious recession since World War II. While Greenspan, as Fed chair, must carry the primary responsibility for failing to take steps to stem the growth of the bubble before it reached such dangerous dimensions (arguably, he promoted its growth), given his position as a Fed governor, Bernanke must share part of the blame. It is remarkable that the NYT did not even think to ask about this failure. It may have seemed rude, but a serious piece cannot ignore such an enormous issue. After all, even in Washington, $8 trillion is real money.

--Dean Baker

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