I think the answer is no. The economic data to date is showing a slow down but not a real reason to cut rates. Yes, there are BIG issues with the sub prime lenders but that was just bad business. The mortgage industry basically took advantage of borrowers and ignorantly took a blind eye to the situation - it was just bad business and they got themselves in trouble. Why should the government help them out?

On August 31, Fed Chairman Ben Bernanke said that he was very clear that the Fed is not in the business of bailing out investors. The market is reacting like he will cut rates by 50 basis points and the indexes are running up to near highs again. My opinion is that we will test near highs by Sept 18 and he will surprise everyone by either not cutting or maybe…..cut by 25 basis points. That will send the market down and the broad market should correct by at least 15%.

The sub prime mess is just beginning we have not seen the worst of it. Many loans are near the 2 year mark to adjust so we will see much more pain in Q1 through Q3 of 2008. The real estate market will continue to tumble and prices might settle by this time next year.