Ironic

In a wild twist of irony, Helicopter Ben's interest rate cut has had the opposite of the intended effect ....

Logic suggests that if you cut interest rates homeowners with adjustable mortgages will have an easier time of it when adjustment time comes around.

But.



The above chart is of the longer end of the yield curve. In other words, interest rates on longer loans .... like mortgages. Because of fears of inflation (the money supply is expanding at a larger rate than right after 911), bond traders are selling bonds. What this means is that interest rates in the market place go up in order to attract money.

So Ben's actions to "save housing" have actually made the situation in housing worse ... much worse. Meanwhile, gold and other commodities are going through the roof. Watch for seriously higher inflation numbers next spring.

Poor Ben. He's made a serious rookie mistake in order to bail out his banking buddies. And like Bush, we'll all pay the price for his cronyism.