I guess the pop I’m referring to is the underlying credit bubble of which the housing bubble was made possible. The credit markets went from stable with large amounts of cheap credit to a panic stricken credit crunch within days. That’s a pop. You are correct housing kind of just hisses its way down much to everybody’s frustration and it will continue at a much faster pace now. The housing bubble was the body of the snake, the credit bubble was the head, the head has been severed and the body still has some last twitches to it but its dead with no chance of revitalization. I have pointed this out many times before this is a $5 to $10 Trillion dollar problem in the global CDO derivatives market. All of that stuff has to be re-priced. That is going to take a long time and with much pain that transcends even the political season. Bush and congress in actuality don’t have much in the way they offer at tax payers expense. This the FED’s problem and even they have limited ability to deal with this. If the FED takes big bold steps due to political pressures and the credit markets remain locked up, they run the the risk of creating an even bigger panic…..IF THAT DIDN”T WORK THEN…THEN…NOTHING WILL….OMG RUN AWAY, RUN AWAY! (remember Monty Python’s Killer Rabbit). If the politicians could re-inflate the bubble and could pressure the FED to their will….you are right they WOULD. The reality is that they CAN’T. Can they make things worse by trying…YEP!
