Tuesday, September 20, 2005

Interest Rates Up Despite Katrina

There's been a lot of speculation regarding whether the Fed would increase interest rates given the devastation wrought by hurricane Katrina and the effect it will have on our economy. Well, we have our answer. And it is clear (as clear as Alan Greenspan can be anyway) that the Fed will continue to increase rates.

It seems to me that the housing bulls are being sacrificed for the greater good of the nation. I'm all in favor of that. For the Fed (by mandate) inflation is the "Great Evil" and maintaining stability, employment, corporate well-being, and the banking sector trumps housing values. Furthermore, the Fed needs ammo (fiscal stimulus in the form of being able to lower interest rates) to combat the next recession. Well, we'll see. After all, it's the long-term rates that matter to housing.

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