75 point cut, page-56

What if, when the time comes, long-term Treasury yields do follow short rates lower, but mortgage rates refuse to follow as lenders tighten credit standards? If that happens, the Fed would have to cut rates a lot, according to an article I read.

The U.S. economy experienced one of the biggest real estate bubbles in history in the last five years. The glut of homes on the market, which is apt to get larger as foreclosed properties are dumped into inventory, will take a long time to work off, just as it did in the last boom-bust real estate cycle of the late 1980s, early 1990s.

Housing won't be leading the economic recovery. Unlike fiber-optic cable, empty homes can't be co-opted for a new business venture.

The asset class standing alone in the corner when the music stops isn't the first one asked to dance when the band starts up. Something else is. And it will be lower interest rates that make that something else do a jig.