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March 23, 2001
Even during Thursday's maximum panic, when the Dow was down 900 points in four days, low-fee mortgages held at 7.00% or above.
What's the difference between the Mir and the stock market?
The Mir looked better on the way down, and didn't hurt anybody in the crash.
There was no flight to quality, no lunge for the safe and positive yields (what a concept!) in the mortgage market, and no mortgage response whatever to the Fed's third, half-percent rate cut this year.
Year-to-Date 2001
52 weeks
Dow Industrials
-13%
-29%
S&P 500
-15%
-27%
Wilshire 5000
-16%
-30%
Nasdaq
-23%
-61%
If neither the stock market nor the Fed have the power to drive mortgage rates down another notch, what does?
The economy does; the real economy, meaning consumers, 70% of whom have service-sector jobs. As long as they keep those jobs, the real economy will be okay, growing modestly, and mortgages will stay above the sixes.
The next serious read on the real economy, as opposed to the New Economy (remember it?) will be Friday, April 6 with the release of March payroll statistics.
The economy is holding up under the weight of stock market re-entry to reality, but fingers are beginning to point. Soon they will shake, and be angrily poked into opposing chests.
The Democrats are having a wonderful time accusing Dubya of "talking down the economy" in order to get his tax cut passed.
What would they have him do, say the economy is fine? That's what Poppy did, and it got him sent home. Or, confess that he doesn't know how the economy is, the only honest answer, which would get him laughed home?
In a much more serious gathering outside the Temple, politicians of both parties, pundits, and financiers are grousing about the conduct of the high priest. The same people who deified this homely bureaucrat, genuflected at his infallibility, and believed riches beyond reason were their just reward...
Now they say: He should never have let the bubble get so big... he shouldn't have tried to break the bubble... he should cut rates more and faster to fix the bubble... he should have warned us... who does he think he is to treat us this way?
Whenever you hear this line of argument, give it the treatment it deserves.
Contempt.
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