2010 what next?

Well what do you think 2010 will bring?

Will the government leave the market alone this year? That's probably the biggest question mark looking ahead. We had something of a stabilization last year but nearly all of that was due to massive government intervention in the market. This year much of that intervention is due to end. The MBS purchases by the fed that are keeping the interest rates low is due to end in late March. The tax credit ends in late April. The Tarp program will have run its course for the most part (and a dismal failure it has been so far). So what will happen when all these programs end and the market is left to fend for itself?

I don't want to even throw out a guess after last year. It's just too hard to figure what the government will do next. Personally I think the poo will hit the fan without more intervention. But what they will come up with next is beyond me. Once all the government life support ends the market could do just about anything. My personal feeling is, at this point they have all but assured a Japan style decade of price declines or stagnation at best. We may see some blips of recovery but I feel the overall trend will be negative for many years ahead. The only way around it is to let the free market fix it. Foreclose on the bad loans, book the loss and sell them in a free market. There's more than enough money out there to fix this market quickly if they would only let it happen.