For 3 years the main topic of conversation has been why the monetary authorities won't do anything. Well they are all "doing something" now. While there are still lots of skeptics everywhere from the MMT Left to the Austrian Right, the markets are responding well.
The Market Monetarists of course believe that whether monetary policy works or not can be judged by the immediate market reaction. Today again the market is up mildy. Since the big gains on Thursday we've seen the market hold on to them.
It's interesting as well that the market was rallying even before Bernanke's Shock and Awe last week. This is a good sign for the President as when the market rises in an election year this is usually bodes well for the incumbent. In addition if you believe that the market is a forward indicator-based on the last 5 years the market has done pretty well in this regard-this suggests that the good times that Clinton promised us may be real. Certainly many seemed to believe him as confidence spiked after the DNC.
There are certainly some signs that there is a modest housing recovery. Today while the housing starts weren't quite as good as expected-they did increase just not as much as expected-the housing sales for August seemd to show more evidence of the recovery:
"Sales of existing single family homes and condominiums beat expectations for August, rising to the highest level since May of 2010, when the government’s home buyer tax credit juiced sales temporarily. This time it could be argued that the government stimulus behind sales is record low mortgage rates, but that may not be all of it."
"With the August jump of 7.8 percent from July, Realtors now say they are confident that home sales for all of 2012 will hit their highest level in five years. They do warn that there are still “frictions” in the market, not the least of which are about 12 million borrowers who owe more on their mortgages than their homes are worth. These so-called “underwater” borrowers are largely stuck in place, unable to cover their debt and unable to move up. (Read More:Cities With the Most Affordable Homes)"
“Bottom line, housing continues to
recover, but the bounce still has to be put into the perspective of how much
damage was done,” notes Peter Boockvar at Miller Tabak. “Looking specifically at
single family homes, at a sales level of 4.30mm, it's back to where it was in
1998 and of course still well below the bubble high of 6.34mm in Sept '05.”
No doubt not where we want to be but we're getting there. Between the Fed QE3, the brightened prospects for Obama, and the nascent housing recovery, American may not be a half bad place to live over the next 4 years.
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