I have told you before that the stock market would rise if FED raised rates. Nobody believes that. They think it's daft because if FED raised, more RE loans would default or more SIVs would cullapz. Nope. That's only true if FED lowers. Don't you believe that? If not, show me why not.
I dont know if I'm in the middle of a conversation and missing stuff. But this appears funny to me.
In answer,
because debt will be harder to buy, the numbers of those needing to refinance and who are unable, will grow. Forcing more fire sales & immediate pressure on the stock market.
This would make the markets clear faster, but I can not see how it would rally. It seems this would present a nice buying opportunity if it happened. However, a slow and steady clearing seems to be the preferred course of action, even if, in the long run, easier money encourages lax lending. Something I'm not convinced as many seem to be in their criticisms of the former FED chairman.
An example of this, is the Australian Centro Properties Group & and the effect it has had on the ASX over the last few days. |
