Industry NewsMarkets & Economy

Recovery hinges on home prices

Commentary: Supply-and-demand thinking no longer applies

It is high summer, a scorcher, even mad dogs looking for shade. It's supposed to be a nothing-happening time. However, the anxious suspense in markets is as high and hot as the sun. Everyone knows that the U.S. economy has lost momentum. Federal Reserve Chair Ben Bernanke on Tuesday twice in one page used "decelerated," followed by "... the generally disappointing tone of recently incoming data." Everyone expects that the Fed will do something, but nobody knows what or when, possibly not the chairman. Bernanke vaguely mentioned use of the Fed's balance sheet -- "QE3" the shorthand for a third round of "quantitative easing" -- but no one outside the Fed can tell if action is held up by internal politics (resistance by the regional-Fed hardheads), or by doubts of QE effectiveness, or by desire to keep powder dry for something more troublesome than a slow patch. The primary purpose of QE has been to knock down long-term rates, but markets have al...