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February 9, 2001
Mortgage rates stayed in a tight range just above 7.00% this week, right in the middle of the last six weeks' trading range.
Twice in that six weeks rates dipped briefly into the sixes, reacting to news of a recession nearby; alternately, rates have risen as high as 7.50% on reports indicating the economy is okay.
So the market shall remain until something... happens.
The list of somethings:
1. The economy slips again, or recovers (next real news: first week of March).
2. The stock market soars or sinks (stocks have been just as range-bound as mortgages).
3. A bad accident temporarily drives panicked money to mortgage-backed securities for safety (Japan is candidate #1, followed closely by Ariel Sharon's election).
Not making the list: the Fed. If the Fed eases some more, the beneficial effect for the economy will offset the recession fear which so helps long-term interest rates; if the Fed does not ease, the greater risk of recession will offset the still-high cost of money.
And people think Alan Greenspan is a big deal. Hah.
Markets are stuck, but the latest political wrestling match with money is making progress.
During the Clinton administration, the Republicans lost every argument about money, and looked bad doing so. They persisted in demanding a tax cut when the nation clearly did not want one, preferring instead to get the budget deficit under control.
The worlds of money and politics are certainly not fair, but they do have a habit of alternating their doses of unfairness.
The Democrats came away from the Presidential election feeling victim to a vast, right-wing conspiracy, which included the United States Supreme Court. No sooner do the conspirators take office than the economy takes a nose dive, and -- unfair! -- the nation not only fails to blame the conspirators for the nose dive, but embraces the idea of a big tax cut, the very idea the voters had rejected for eight Clinton years and in every poll during the election.
Then Alan Greenspan joined the tax-cut conspiracy. You'd think Al Gore broke a mirror.
Senate Minority Leader Tom Daschle gave it a great shot yesterday, showing up with a Lexus to represent the tax-cut benefit the rich would get, and a muffler to show the working person's share.
Good try, but the cut is going to fly -- including the cut for "rich" folks: they pay most of the taxes, and deserve a proportionate share of the cut. Even some Democrats know that.
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