Elevator Going Down?
Article in Yahoo Finance today:
As recently as two months ago, the Federal Reserve sounded optimistic about the economic recovery. Now the central bank is clearly more worried, and economists say there’s not much more it can do to help.
The Fed said Tuesday that it would spend a relatively small amount of money — about $10 billion a month, economists estimate — buying government debt. The move is designed to drive interest rates on mortgages and corporate borrowing at least a little lower and help the economy grow faster.
It is uncertain what it will do, if anything.
In May of 2009 I wrote a post called 2009 Housing False Bottom. I attributed a large part of the false bottom to overstocked housing supply. Here is a section from that post.
Supply & Demand
Supply, supply, supply. There is simply too much of almost everything in America: never-ending “last weekend only” sales; a Starbucks in every shopping center. One of the biggest factors in determining price is supply and demand. I think of the scene out of Blood Diamond, where DiCaprio’s character Danny Archer is talking about the supply of diamonds and how many diamonds are kept in a vault to keep the supply down and create a “scarcity”.
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