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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: John Vosilla who wrote (78649)2/8/2007 6:51:46 AM
From: Mike Johnston  Read Replies (1) of 110194
 
Talk about socialized government intervention and rampant fraud going to even higher levels than the last few years

The question is , will the government intervene to "fix" the negative consequences of its previous intervention ?

You say it is not going to happen, i am not so sure. The real economy has not suffered yet the full brunt of potential dislocation in housing, since prices in general have declined only 5% from the peak except overbuilt areas like Florida or Arizona. Cashout money is still being spent, and any property sale still generates substantial profits, as long as the house was bought pre 2004.

After a 200% runup , down 5% should be considered flat.
Another question is if prices decline further or if they just stay flat for another few years due to 10% inflation rate that i expect to persist or even accelerate.

If prices fall from these levels then i would not rule out the expansion of socialist solutions like loan modification programs, monetization of the bond market or homeowner directed tax cuts financed by freshly printed cash.

That will not save all J6Packs, but certainly enough of them so that the economy proceeds with no hiccups at least on the surface.
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