My complaint is that events such as the mortgage crisis could have been foreseen by intelligent review of the trends and practices that were going on in the housing market. Granted the severity and timing were not obvious, but we wpould have been better off if policy makers would have paid more heed.

Most models never saw the severity or depth of the financial crisis because the assumption that mortgage delinquencies would never go above a certain level was not reconsidered.

Building the possibility of discontinuities is extraordinarily difficult in standard modeling.

I worry that this may cause a bubble in the stock market and/or housing construction/business investment without real demand. I’m not an economist but this seems like it may create worse problems down the road. Bernanke could be doing this because he is an ally to the president or because he is doing his best to use his own position to try to help the country the best he can. At best, this will delay coming to terms with the real problems we have and at worst make Obama’s policies look much better than they really are leading to his reelection.