Later that same day (see post below), I added this: If you want to reassure 14 million homeowners that they have
just a bit of relief and thus some hope, and if
you want to avoid a panic that feeds on itself as mortgage
companies declare bankruptcy, a tiny rate cut might just be the
right solution -- IF it is understood, because of a clear
Fed statement, that it does not signal a long-term lack of concern
with inflation.
What it comes down to is this: A
whole bunch of people bought their first homes about four years ago
when rates were absurdly low, and made the mistake of getting an
adjustable rate mortgage. (This does NOT apply to me, by the
way, thank goodness.) They are now realizing they can't make their
payments, and they need to sell. But buyers are a bit wary. It is
amazing what even a quarter-point can mean to a new home buyer. It
could make the difference between buying or not. If they buy, they
get an asset, and the over-extended seller gets out of a bad deal
rather than being forcelosed upon or declaring personal bankruptcy,
or whatever. Which is why yesterday would have been a good time, as
Cramer said in his rant, for a little help from the Fed.
And the next day, in another post, this:
My goal is to help the homeowners and
potential home buyers -- the individuals, not the lender/profiteers
-- AND to guard against a generalized panic that would harm not
just the lenders, but the fairly innocent bystanders such as the
builders and construction workers who they employ, and, from there,
all the others down the line who would be affected. Also,
note that I am not suggesting a bailout of the
lenders -- the typical Democratic response, which is what
Bush in the past two days has so rightly rejected -- but a VERY
modest move by the Fed to stabilize the economy as a whole.
In January, I wrote this
column. The closing lines: "Stagflation
could make its ugly face obvious as early as this
summer.
And nothing, nothing at all, would do more to
assure an Obama or Clinton victory in the Fall, with horribly
liberal policies on economics, defense, and judges sure to
follow."
topics:
Economics
