Two major issues dominated the news in late July: Inflation – whether it is, is not a problem or is likely to be one; and the prospect that millions of renters would be evicted from their homes as a federal moratorium barring evictions for nonpayment of rent expired.Read More
The implicit federal guarantee for Fannie Mae and Freddie Mac, long assumed by investors but often denied by government officials, became explicit last week, as the Treasury Department and the Federal Reserve announced separate but coordinated plans to provide financial backing for the two giant government services enterprises (GSEs).
After a seemingly endless cascade of dismal economic reports, there is only one shoe left to drop on the battered housing market. Unfortunately, it’s “a pretty heavy shoe,” according to Nicholas Retinas, director of Harvard’s Joint Center for Housing Studies.
The law of gravity dictates that what goes up eventually comes down. The same principle applies generally to economics, but economic ups and downs tend to be both more extreme and less symmetrical than Newton’s encounter with his apple might suggest.
In a recent speech, Federal Reserve Chairman Ben Bernanke said the financial markets are “stabilizing” but remain “far from normal.” That assessment might also apply generally to the economy, which is hardly “normal,” if your definition of normal includes even moderate growth and a housing market that isn’t on life-support. Whether the economy is stabilizing remains an open question, however, as economists continue to debate whether we are heading into a recession, have already stumbled into one, or still have some hope of avoiding a serious downturn entirely.