The Great Recession Blog

The House’s passage of the debt agreement is likely to jolt stocks into a relief rally, but how long can the new mojo drive the market up before relief from the political battle that held stocks back in May gives way to the enormous downdraft coming from hundreds of billions of dollars in new Treasury issuances the government will be making?

You’ve heard the warnings many times from every direction. In fact, it is almost all you hear right now: default is a serious threat if the debt-ceiling is not raised: “The White House warned a US debt default will cause stocks to plunge 45% and will crash the US into a deep recession” and “JPMorgan warned that just getting close to the default scenario could create a market panic.”

You would think the Fed wanted housing to become as overpriced as possible, having supported the market with $2.575 trillion in purchases of mortgaged back securities on its balance sheet to keep those securities flowing through with very low yields. That translated downward, of course, to very low mortgage rates, which the Fed sustained throughout […]