Did Bernanke kill housing recovery?

[elisab]

The words of Bernanke yesterday even leave the door open to an increase of the QE in case the conditions of the market require it. Yet another response to the unwillingness to stop the recovery of the real estate.

 

[Pharaoh]

Bernake is between a rock and a hard place. If real estate recovers (even though this means doing terrible manipulations), a lot of taxpayers will be happy. Also, this reduces the toxicity of a lot of toxic debt (even though it adds huge amounts of other debt to the deficit).

On the other hand, if he decides that the economy needs to swallow some bitter medicine and to cut away some of the infected areas, panic will ensue and everyone will blame him.

Of course, the longer we allow the infection to continue, the worse the situation will get and the more painful the treatment needed will become.

Keep on slapping bandages over the infection Ben. At least you can soak up some of the pus so that it looks like the patient is improving a little even while the rot works its way in deeper.

 

[elisab]

Meanwhile, the housing bubble and the crisis have caused the failure of Detroit.

 

[elisab]

On interest rates, a closure of the 10-years Tnote on these levels would formalize a monthly hammer, a clear bullish signal.

 

[Pharaoh]

Oh great! A Bullish signal on US debt.

 

[elisab]

Recent data on the U.S. real estate sector showed some weakness due to the rise of interest rates. I'm waiting for the data on sale of existing homes (today) and new ones(tomorrow).

 

[elisab]

Another negative figure yesterday on the U.S. real estate. The weakness in the existing home sales (-1.2%) confirms that the rise in mortgage rates is starting to produce its negative effects.

 

[Pharaoh]

Does this mean I can get out my "The End is Near!" sign and stand on a street corner shouting at people about the upcoming fiscal doom?

 

[elisab]

18% of the loans in the United States in the last few weeks are ARM. The same percentage was reached in July 2008 before Lehman ...we are coming back to the same old vices.

 

[Pharaoh]

Are people stupid? An ARM might start off a tiny bit lower in interest than a fixed rate mortage, but the Fed rate has hit bottom. It can't go any lower. That means an ARM will only be able to move in one direction, up.