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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Umunhum who wrote (37912)	8/5/2005 3:44:29 PM
From: philv	Read Replies (2) \| Respond to of 110194

I understand your points, but looking at the bigger picture, if real estate busts, and the lender has to take a loss, that is a done deal. The economic picture will look very ugly in this depression/recession environment. If there are any new borrowers to be found, why would the lender or FED make things even more difficult for this customer? Or if it is a roll over mortgage, and if the customer can't make it at the existing low interest rate, how can he possibly repay at a higher rate? Besides, in such a depression, there would be too few borrowers chasing helicopters full of money that the FED would be pushing to get out of that depression. A real estate melt down is normally followed by a decline in interest rates, not an increase, is it not? Any increase would exacerbate the problem, and I just can't see the ever inflationary FED having any other choice but to lower their funds rate to zero like Japan did if necessary. By then Bernanke might well be sitting in the pilot's seat anyway.