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But whether the bust is national, as opposed to just regional, may depend as much or more on our Chinese benefactors as on the Fed.
The chain of causation is somewhat perverse: The Fed's recent decision to at least pause in its tightening campaign has put downward pressure on the dollar, which is forcing the People's Bank to buy dollars to protect the "crawling peg" with the renminbi, said dollars then being reinvested in the Treasury market, which drives long-term yields down, which pulls mortage yields down, too.
As long as that particular windfall lasts, the prospects for a soft landing to the national real estate bubble look reasonably good -- that is, as long as the regional real estate busts, plus the overextended state of the American consumer and the mysterious reluctance of U.S. firms to funnel their bloated profits into capital spending, don't tip the national economy over into a recession.
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