Wow. The basics: mortgages were at 5.75 percent last week, Monday a holiday, Tuesday markets stunned by the Fed's 0.75 percent cut; mortgages early Wednesday morning fell to 5.375 percent(!), wholesale rate-locking Web sites crashed in an hour, mortgages back up to 6 percent(!!) by Thursday noon. Citibank wholesale raised its rates nine separate times in 24 hours. Summary: The economy -- including housing -- is probably better than feared, and we'll all be OK. However, this was the worst week for economic public policy in my memory. We'll survive it, too. The details center on the Fed chairman and are not pretty. First, a crucial concept: Bond buyers love recessions and hate rescues. As the economy faints, bond players join a frightened scramble into bonds for safety, and make a great deal of money if they can sell the bonds before the Fed rescue. If the Fed looks too easy too quickly, bonds reverse in self-protection. A properly conducted Fed rescue must be delicate ...
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