"So Henry Paulson is going to freeze the interest rates on home loans
and Ben Bernanke is going to lower the Fed discount rate a whole
point. It’s kind of like fishing with a shotgun in a glass bottom
boat. You get a swimming lesson after you pull the trigger.
http://tinyurl.com/23jchx
What happens when you freeze the interest rates? Go out and try to
buy any house with financing, its just isn’t going to be there. What
businessman will loan money under fixed assumptions only to be paid
under a changing set of rules. Georgia a while back passed a law to
protect homeowners and effectively shut down the loan industry in the
state. This is the old “Pull the rug out from under the lender routine.”
Then we have Bernanke lowering the Fed funds rate. It doesn't take
much thinking to figure out that the exchange rate on the dollar will
fall. In this case, smart money will refuse to renew their Treasury
Bills. Since it’s competitive bidding, less bidders, means higher
prices. There is a couple of trillion dollars that could vote with
feet. Foreigners will sell the dollar now and wait. Then buy when it
hits bottom. If things don’t go right, this could be like catching a
bag of cement dropped from the second floor (messy to say the least).
Treasury bill rates could surge up as soon as tomorrow."
