In an op-ed in today’s Wall Street Journal, former hedge fund manager Andy Kessler muses about what’s behind Ben Bernanke’s latest round of $600 billion “quantitative easing”: propping up the real estate market.
“Without another $600 billion floating through the economy, Mr. Bernanke must believe that real estate (residential and commercial) would quickly drop, endangering banks. The 2009 quantitative easing lowered mortgage rates and helped home prices rise for a while. But last month housing starts plunged almost 12% … Commercial real estate values are driven by job-creation and vacancy rates, both of which are heading the wrong way … In other words, real estate is at risk again. But Mr. Bernanke would create a panic if he state publicly that, if not for his magic dollar dust, real estate would fall off a cliff.”
