ps-If the Fed acts reactively to bail out a collapsing housing sector by engaging in a rate easing campaign, it could have the opposite of the desired effect. The market is unhinged from fundamentals, operating on psychology. Overt action by the Fed to counteract a housing collapse would signal to everyone that even the Fed is nervous about housing and this might serve simply to increase the sense of panic in people whose monetary well-being depends on steady or increasing housing values.