understanding the psychology of behavior

The Government will bail out housing with the Paulson Bill. (Annoys the hell out of me that my tax dollars will be used like this.)  Then (IMO) a rise in interest rates.

I am under the strong impression that rates have not risen because of housing. (its okay to call me a genius with that extremely obvious assumption … weak economy be damned.)  Negative rates have lasted for far too long, and with stability in housing and the credit markets I think the Fed will get the green light to raise rates.

What will this mean for the markets?  I am not sure.  After the White House said they will not Veto the Paulson Bill, markets rallied.  The bill will solve one of the major economic issues, but the consumer slow down is still with us and most businesses are not growing profits as quickly.  And until the VIX sees aroud mid 40s or so, I do not think the bear market is over.

(FYI… Brazil raised rates significantly, and are planing to do so again soon. The economic drivers… BRIC… are acting on inflation, and we will too, once housing is taken care of.)

This entry was posted on Thursday, July 24th, 2008 at 12:40 pm and is filed under markets, economy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.