Yep, it is. The biggest line of shite in the world is that mortgage rates are directly tied to the Fed Funds rate. That's the stuff the Jim Cramer's of the world feed the sheeples, trying to convince them that the Fed can help save them from their bad real estate investments. That's ludicrious. Cut the Fed Funds rate all you want but it still doesn't make investors buy mortgage backed securities if they feel they are too risky an investment. No buyers means that those security prices have to be reduced to get folks to buy them. Drop the price and the banks have to up the interest rates to be able to cover their operating costs. The end result...banks can borrow money more cheaply from the Fed (which Wall Street views as a sign of weakness and then hammers their pps) but they won't necessarily be able to lend it cheaper.
The only way to "fix the problem" IMO is to let Americans feel the pain for their lack of savings and or over-spending (for the first time in 20+ years). The RE market will correct, but in order to do so there is going to be a pull down in prices first. Economics 101. All the Fed accomplished is delaying the inevitable. Sadly, all of this is going to be so convoluted by political spinsters next November that the sheeples will be convinced that none of the recession was in fact their own damn fault. They'll blame Bush, or the Dems, or the banks, or the mortgage brokers, or the Realtors...anything to avoid looking in the mirror and saying, "boy, that was a dumb buy."
"Experience: that most brutal of teachers. But you learn, my God do you learn." C.S. Lewis
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