“At first, I was convinced that this bubble is going to pop. Very loudly and very quickly. But given the political ramifications of this issue, I’m not so sure anymore.”
“I just think that politics could very easily keep this bubble fully inflated for a long time.’
I have to respectively disagree in this regard….The bubble Popped!…..very loudly and very clearly. I say this because in light of the wall to wall coverage of bad mortgages (if hear subprime one more time I am going to scream) and resulting credit and liquidity crunch, plus the entire global financial markets being obsessed with Ben Bernanke’s words and how he said them, and the President of the United States holding a press conference on the emerging housing crisis, that pretty much means the horses are out of the stable. There is no way they can keep the bubble inflated at this time, we have passed a point of no return. The primary objective right now is not to save housing and keep the bubble inflated, the primary objective is to pry the credit crunch’s grip on the market and it ain’t budging. In all the hoopla today the secondary market for mortgages are in effect still Closed with no sign of opening anytime soon. Commercial paper is still falling off a cliff. The credit crunch remains in tact. In my mind the Bear Stearns hedge fund disaster was the shot heard around the world. Investors did not take a loss in these funds……they took a total loss. Since then FEAR has gripped the markets. Bubble over. Are we going into a recession or a depression is the real question here…and no that is not hyperbole. If the Fed begins firing ammo at this and those credit markets stay locked up……the consequences will be severe.
