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What does the government do now? This is a huge inflection point, IMO.
If they pull liquidity to drive down bond yields to influence rates, it will do so at the expense of the equity markets.
If they don't and rates are allowed to find their own equilibrium, that will accomplish the same thing, albeit far more severely and far more quickly.
I fear too many homeowners who were waiting for rates to hit that magical 4%, or were banking on a loan modification to get rates below 4%, may have missed their window of opportunity.
Who knows...the government has managed to forestall things for a while now, what's to say they can't keep this game up through the end of 2009?
I'm rather surprised rates have been allowed to shoot up so quickly. I've been waiting on a short sale contract for several months now. What used to be a good deal doesn't look so good anymore since my lender won't lock the rate until the seller gets bank approval. I doubt I'm the only one considering letting the contract expire soon and then rebidding at a lower value.
There's a Fed meeting coming up later this month. I wonder what they'll wind up doing. I also wonder why the NAR and NAHB aren't screaming about the sudden rate jump. This should guarantee further value declines. Maybe it'll smack some sense into those "high ball" listing price sellers too.
The Fed could jump in and "buy" more on the long end. Bernanke said he wouldn't monetize anymore debt, so you can pretty much bet on the opposite of what he says in public. I don't know how much longer they can keep the game up. If the Fed is buyin, it's time for everyone else with bonds to be sellin. Gold will spike once again on any announcement of Fed purchasing treasuries. Their efforts to keep rates down artificially will backfire in their face.
If it really does hit the fan, I'd imagine weapons and ammo would be the most valuable things to own. If the US fall off a cliff, but the world manages to survive, you could always move to a different country with your gold. It'll have value there.
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