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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Les H who wrote (84238)	8/9/2007 3:49:48 PM
From: Les H	Respond to of 306849

mclauren mclarenreport.net.au

To: Les H who wrote (84238)	8/10/2007 3:03:10 PM
From: Les H	Read Replies (3) \| Respond to of 306849

NYC: The Federal Reserve is dumping cash into the system and buying up mortgage backed securities. What is the downside to that for the general economy if any? Will that have a lasting effect that will come home to roost in the years to come? How does that effect the debt we are already carrying? And it appears the Fed will ease credit how will that effect inflation? Thank you Steven Pearlstein: Because of the short term nature of the intervention, and the size of the short-term credit market (large) versus the size of the intervention (relatively small), there is no serious macroeconomic impact. It won't come home to roost, as you put it. But it does call into question the Fed's arguments for the last decade that Fannie and Freddie are unnecessary as buyers of last resort of mortgages and mortgage backed securities because the private market was so deep and liquid. The Fed is doing exactly what Fed and Fran do, and which they used to claim was very "dangerous" in terms of "systemic risk." Springfield, Va.: How long will it take for the banks/brokers to disclose their losses? If a repricing of risk is going on what is the time frame? The stock market seems to be in denial about how bad things may get-we are still positive for the year. Steven Pearlstein: The disclosure will occur over the coming months, hitting a big peak in October. Don't go away for the long Columbus Day weekend without leaving your number with your broker! The stock market is no longer in denial. washingtonpost.com