Our Market is in trouble. Not just mine , but yours and all of ours. It is not from the sub prime problem. It is not from speculators. It is not from drought or fire. All these things are not so good but they do not effect OUR overall market.
What is killing our market today is our governments inability to spend and live within its means. This is very simple. But the line to the problem is not a straight one. Let's look at it. The Fed is lowering rates because of the housing drag. On the other hand the Fed should be raising rates because the government is borrowing so much money that money is in demand so interest rates should go up. So the Fed is caught in a vise. The economy may be slowing and the housing market sluggish so lower rates. Spending means more borrowing so raise rates. The Fed has chosen to lower.
What this lowering means is generally lowering interest rates to stimulate the housing market. But at what cost ?The cost has been the devaluation of the currency. Now I would argue that 3 plus dollar gas, 3 plus dollar gallons of milk generally rising prices for goods coming into the country keep more people out of the housing market than a quarter of a point or a half a point interest rate cut.
So the sad fact is that given people wanting to buy ,given lower rates, the government which is spending in a run away manner is the reason the housing market may drag this year. Now the guys in Washington will point to sub prime ,bad loans dishonest leaders, and over extended speculators. And they will be right for the early part of this problem. But at the end of the day it is their devaluing of the currency that will cause this problem to last a lot longer than it should.
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