One Step Forward, Two Steps Back?

What do the 2010 home buyer tax credits have to do with today’s stock market?

After producing a huge spike — actually two, due to the initial credit being extended and expanded — the housing market resumed its swoon.

With a vengance:  the second half of 2010 and well into 2011 were terrible for housing sales.

Ben Bernanke & QEternity

Now, instead of two, discrete government interventions, imagine stocks and bonds benefiting from essentially continuous government intervention (“interventia?”) and stimuli since The Crash of 2008.

If/when said stimuli are withdrawn — or just as ominously, fail to stimulate anymore* — might something similar be in store for stocks and bonds?

Stay tuned . . .

*Economics recognizes the diminishing effect ever-lower interest rates have; the phenomenon is referred to as a “liquidity trap.”

And you wondered why economics is called “the dismal science” (or, maybe you didn’t).

About the author

Ross Kaplan has 19+ years experience selling real estate all over the Twin Cities. He is also a 12-time consecutive "Super Real Estate Agent," as determined by Mpls. - St. Paul Magazine and Twin Cities Business Magazine. Prior to becoming a Realtor, Ross was an attorney (corporate law), CPA, and entrepreneur. He holds an economics degree from Stanford.

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