What can fix the Mortgage Credit Crunch?
April 24th 2008 06:54 am
This is just my opinion based on observations and historical information.
I think that the best and most effective way to help improve the credit crunch is by improving the weak dollar. The reason for this is that due to the weakness of the dollar a lot of investor cash is leaving the country.
If Washington was to even hint that it was looking at ways to strengthen the dollar it would improve investor confidence and reduce the numbers going out of the country.
Washington has done several things to help the dollar such as opening the Federal Reserves discount window to primary dealers for the first time in its history. This brings investment banks under the Feds protection.
The falling mortgage rates and housing prices will gradually improve the housing market, as long as rates are kept low.
The rebate checks from the government to millions of Americans are a means of lifting the economy by spurring them to spend the rebate
Yes, we have a weak dollar but still not as bad as an economy as 1977, or high interest rates like 1990 to 1991 when rates were in the teens.
The economy will rebound in the coming months and we will avoid the crash scenarios that abound.
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This information do make sense, having a weak dollar leads to a domino effect - that includes the credit crunch.
Now I wonder what the new administration will do to strengthen the dollar? =)
George from taux hypothèque(new comment) on 11 Nov 2008 at 5:07 am #