Susan Bies of the Federal Reserve said that the Fed doesn’t want to hamstring “innovation” in the financial sector. That means that the financial services company will continue to come up with new products that expand the debt market and give credit to consumers/buyers who heretofore did not have access to credit.
Since we won’t see a cut-off of credit anytime soon, consumer confidence will hold and we’ll see the housing market slowly deflate over years. I believe it’s psychologically healthier to have a slow protracted downturn. Economically, we’re much better off to cut out losses and move-on.
