January 7, 2009

What goes up

Krugman:
...I was suspicious of the argument that low interest rates can justify huge price appreciation, because it seemed to me that people were forgetting something: if and when interest rates rose again, the same logic would imply big price declines, and buyers should have been (but weren’t) taking that possibility into account.

Ahh, at least nobody is advocating lower home loan rates as the way out of this... oh, wait, nevermind.

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