Skyhigh,
I raise the dissent. Lowering interest rates (IMHO) may bring the very problems it sought to alleviate, recall the Greenspan cuts of 02-04. The problem with an ARM is that the real value of home was much, much lower than the psuedo-value. Lowering interest rates will only raise the psuedo-value of the home and allow for increased demand, thereby starting the cycle over again. This is, of course, is only true if the "liquidity trap" does not exist in this context. The question for homeowners (rather home-borrower) will be where exactly will all this new liquidity go? There probably will be another demand-bubble because of it. We will see how those with the new liquidity handle the upcoming situation.
Last edited by ryan1234; 12-27-2008 at 07:06 PM.