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fru-gal

"the Fed Has Been Horribly Wrong" Deutsche Bank Admits, Dares To Ask If Yellen Is Planning A Housing Market Crash

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Typical ZH headline - if Deutschebank ever seriously asked whether Yellen was planning a house price crash, they immediately answered their own question with a resounding "no".

But I thought this bit was interesting:

So that leaves two policy choices. One is to wait much longer for supply to catch up with elevated house prices but “hope” that prices don’t become further elevated. (We can give a nod to the financial stability camp; there is a case for no more QE and maybe at some point the odd rate hike). The second would be to wait longer for further improvements in the debt income ratio i.e. the propensity for households to resume some re-leveraging. Now of course that can come from stronger incomes but there seems to be a little of a catch- 22 embedded in that. The other, is to give some regulatory relief to encourage more mortgage lending, even rolling back on the 80 percent LTV formula for example. However that is about as likely as getting a GDP forecast correct.

We went there years ago mate, you're well behind. Oh, btw - it doesn't work anyway.

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