Thursday, June 07, 2007
Nor, in a global sense, are most dollar-traded stocks a good return if you figure in the declining dollar. So what you've got is a nasty situation in which interest rates are going to have to go up for private credit, both consumer and commercial. Mortgage rates are going to rise, which is going to further push down housing.
Ugly as it sounds, the Fed should be raising rates to stop this from running away. Yes, it would put the economy down, but it would be a much shorter problem.
There will probably be good discussion over at Calculated Risk on these movements.