Department of Perverse Effects

The financial markets may calm down, because they got the cheap(er) money that they want. I think the rate cuts will do little to help the housing market. The 8 bp difference in the fixed rate is relatively inconsequential. The rate cut /may/ rescue a very few people in ARMs, but resetting from, say, $1000/mo to "only" $1700/mo, instead of $1850/mo, isn't going to make a difference. I suspect most people in ARMs are at their financial redline as it is, and the increase will kill them either way. These people made stupid and/or uninformed decisions and they're going to have to pay for them. Too bad - that's life. Maybe they'll learn something.

The real and continuing damage is in the nonconforming and that represents a large part of the market.

This is fabulous... a great question for my college level economics class tomorrow.

What really happened was the US Prime Rate was 1% too high causing retrenchment in our economy.

We still have commercial banks unwilling to lend or even re-amortize commercial loans.

Mortgages were never the real problem; it was higher interest rates outracing the return on equity and the cost of fuel squeezing an additional 10%-15% out of consumer’s purchasing power.