Oh, this is precious

I was looking for "Goldilocks economy".

Dated 22 November 2007, from Lawrence Kudlow at Real Clear Politics:

November 22, 2007

Three More Years of Goldilocks?

By Lawrence Kudlow

There was some revealing information in the three-year forecast published by the Federal Reserve this week. It looks like Ben Bernanke & Co. are dissing high oil and gold prices and the sagging dollar as influences on future inflation. Instead they basically see 2 percent inflation -- both headline and core -- in 2008, 2009, and 2010. The Fed also sees Goldilocks-type economic growth -- not too hot, not too cold -- for the next three years.

For 2008, an election year, the Fed is looking at 2.1 percent growth, their lowest estimate. This rises to 2.5 percent in 2009 and 2010.

So how did the Fed's GDP growth prediction work out?

One out of three.

But it gets better. Kudlow offers his own predictions and analysis:

I think the election-year economy will be stronger than the Fed's estimate -- closer to 3 percent. Too much is being made of both the sub-prime credit problem and the housing downturn. A recent Bank of England study shows that residential mortgage-backed securities in the U.S. total $5.8 trillion. Of that, only $700 billion, or 12 percent, are sub-prime. Even when you add in $600 billion of so-called Alt-A mortgage paper, most of which will not default, the total of these home loans is still less than 20 percent of all mortgage-backed paper.

What's more, the entire market in sub-prime debt is just 1.4 percent of the global equity markets. On any given day, a 1.4 percent drop in world stocks would erase the same amount of value as the collective markdown of all sub-prime-backed bonds to $0. It's just not that big a deal.

"It's just not that big a deal," Kudlow says.

You never know.