The Residential Real Estate Crash Index Message Board

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Strategies & Market Trends : The Residential Real Estate Crash Index

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To: GraceZ who wrote (88434)	9/8/2007 7:05:07 PM
From: Hawkmoon	Read Replies (1) of 306849

Anything he does will be the wrong thing because it isn't possible for him to know where rates should be. Not sure I can agree with that.. When the government can borrow money at 4.50% for 10 years, it would seem to me that the very short term Fed Funds rate should not be higher than the rate. And for those who are afraid that a Fed move will create a stock market bubble, I would submit that there are a few places that cash can be invested.. (I think I've stated that here previously, so pardon my reiteration. ;0) If you push everyone into bonds by invoking a recession wher government debt rates are driven tremendously lower, then you re-inflate the RE bubble, and likely a Stock bubble. But if the Fed doesn't lower sufficiently to calm the "flight to safety" into Government debt, and maintains the inverted yield curve, then there will be no incentive to re-invert that debt curve, and every other storehouse of value, except cash, will suffer (including gold). In sum, there has to be a "pressure release" valve to convince bond holders to re-invert the yield curve. And that is normally found in stocks. Hawk

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