Where’s The Demand?

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By now, it is only a matter of time, before the Fed starts QE2 in some shape or form. Probably not the “shock and awe” of early 2009,  but more of a measured, drip style, if you can call an estimated $100 billion per month a drip. More like a plop. Anyway, do we really need to expand the Fed’s balance sheet anymore? Will it really help consumer demand? My simple answer is ‘No”. Let’s replace QE2 with another buzzword for 2010, austerity. How about reducing spending? Seems to me commercial and residential mortgage activity is falling again and shows no signs of abatement. Perhaps the market forces are telling us we can find an equilibrium point, if only you let us. But ’tis the season of politics and our “wise men and women” of the Beltway can let a good crisis go to waste. The hell we can’t. A memo to Washington: You fostered the problem with Fannie and Freddie and you can pump all the artificial stimuli you want, but you are the problem and are prolonging the agony. Let the market forces work. Yes, it will be painful, but let’s clean up the housing mess and get on with a sustainable, organic recovery. Maybe this occurs in Shangri-La, but why not give your legislator an earful. Whether they’re up for re-election or not, sooner or later they will be and then you can curtly remind them of their duplicity in kicking the can down the road. Let’s the markets work and demand will not just come back, but snap back like the V-shaped recovery everyone was hoping for. Have a great day…

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Greg Zandlo

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