re: credit bubble vs house prices

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Normally I’d agree with that assessment, but this is an election year with a president who is almost Jimmy Carter bad (those memories stay with you).

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I think he's worse than Carter, the only thing keeping him from that mark is a complicit media soft-shoeing, then forgetting, his horrible handling of just about everything. But that's all an aside to the topic at hand...

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There’s no bad decision they won’t be willing to make to try and win the election.

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I am on the fence about that (JPow playing politics with the rates). Prior to last year's rate hikes I would have absolutely agreed, adding in that he was pussy-whipped by Wall Street to the point where any negativity in the market meant keeping rates low. Over this time period he's put on his big-boy pants while trying to use the lightest language feasible to keep the markets from throwing a fit.

We likely needed another .25 in Q4, but that didn't happen because he's determined to prove he can thread the mythical "soft landing" needle. This has allowed inflation to not just remain sticky, but slowly begin increasing again. So now he faces the following choices:

1. Leave rates alone and let inflation continue to slowly creep up until we hit a Recession (which may or may not happen before Election Day).

2. Leave rates alone until after Election Day, then raise or lower them.

3. Raise rates before the election, slowing the economy even further thus making it worse come Election Day.

4. Cut rates before Election Day, causing the growth of inflation to increase at a higher pace.

The only one that wouldn't hurt Biden's re-election chances is option 4, getting him into his lame duck term, but that's only if inflation growth didn't continue or speed up between the cuts and Election Day.

A lot of what choices he has available will depend on what happens between now and the end of the September meeting. If Unemployment continues to rise (or rise faster), inflation my begin to slow down or reverse again thus giving a better argument for a cut in September. If inflation continues to rise regardless, any argument for cuts becomes more and more difficult.