Jan, has the government run out of tools to promote growth?
Additional fiscal stimulus has become much less likely from a political perspective. And once you've hit zero bond rates, it becomes difficult to provide more stimulus on the monetary side as well. That said, we do think that the Fed will eventually move to additional stimulus via more purchases of Treasuries in the markets.
You've thrown some numbers out about the size of such purchases. Are we really talking about another trillion or so added to the Fed's balance sheet?
There's no point in doing anything less than that. The number last time was $1.75 trillion if you add up all the announcements in late 2008 and early 2009.
We've had yields on 10-year Treasuries recently fall to new lows of 2.5 percent or so. Is this the bottom?
The pressure is probably still there for bond yields to come down somewhat further, but I think most of the economic slowdown is discounted at these levels. I think the yields are quite sensible. I don't think there's a bond bubble. This is a reflection of what we're seeing in the economy.
Where are home values going?
Longer term, we'll get back to increases. Over the next one to two years, we'll see renewed declines. We still have a lot of excess supply out there.