Too little credit is just as dangerous as too much

Commentary: Fed bond buying 'saved our sorry patoots'

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As we approach the end of the traditional, news-starved Silly Season, there are important things going on. And some other things. Release of the Federal Reserve's July 31 meeting minutes on Wednesday collapsed the last courage in the bond market, taking 10-year T-notes to 2.9 percent and low-down, low-fee mortgages to 5 percent. The minutes were incomprehensible, but their failure to pull back from taper of QE3 means that it is still a "go." This morning Treasury short-sellers so pleased with themselves got clobbered by word that new-home sales had fainted 13.4 percent in July, and June was revised down by 8 percent. The 10-year slid briefly to 2.81 percent. New-home sales are measured by new contracts written, thus these June-July results are the first since mortgage rates jumped from 3.75 percent in May to 4.75 percent in June. Correlation is not cause -- some of the weakness is due to a shortage of inventory in turn caused by a shortage of credit to developers and builders. ...