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Housing boom or housing doom?

Analyst attempts to burst anti-bubble findings

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The bubble battle continues. In response to a study by two Federal Reserve Bank of New York economists that concluded there is little evidence to support a national home-price bubble, another economic analyst charges that this pair could be making "the greatest forecasting error since Irving Fisher declared in 1929, just prior to the stock market crash, that stock prices looked to be at a permanently high plateau." Raymond Sabat, editor and publisher of EconomicBriefing.com, critiques the analysis, "Are Home Prices the Next 'Bubble,'" by economists Jonathan McCarthy and Richard W. Peach. Sabat contends that the Federal Reserve's lowering of interest rates "sets the stage for major price inflation down the road," which, in turn, "forces the Fed to begin to fight price inflation by raising interest rates, which will ultimately lead to the bursting of the housing bubble." He adds, "It is thus that we also disagree with McCarthy and Peach when they argue that the Federal Reserve is o...