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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: Jim McMannis who wrote (25902)12/12/2004 11:17:12 PM
From: Mike Johnston of 306849
 
If China or Japan had suspended their purchases of agency debt for two weeks that could possibly cause some dislocations in the availability of mortgage credit.

Of course the Fed will fight to prevent collapse. It is fighting. But it can only do one thing. Print more money and monetize debt. Which only will increase the imbalances.

Six weeks ago Fannie Mae was in "trouble", now everything is fine. Just like in 2002 JP Morgan was on the verge of collapse and it was "fixed" in a span of one week.

I think the Fed will rather have the dollar go than let anything happen to real estate. One of the ways to fix the trade deficit problem would be to prick the real estate bubble and lower consumption demand.

Now real estate has become too big to fail, so big ,that government will pursue bad fiscal and monetary policy to protect it.
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