With all the recent holiday running around, I somehow missed this: PIMco’s Paul McCulley joins team MEW:
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click for larger graphic
Recall we referenced previously the nice analysis of this by Calculated Risk last year.
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Source:
MEW Drag
Paul McCulley, Fed Focus
PIMco | December 2005
http://www.pimco.com/LeftNav/Late+Breaking+Commentary/FF/2005/FF+December+2005.htm
Looks like few made it past the socratic dialogue with the bunny.
I am surprised at how small the MEW is in terms of total disposable income. This came as something of a relief, <7%.
I feel like we can relax knowing that the adjustment is so small. Those new homeowners counting on MEWs to finance their next home (or their children's) can just put their feet up and wait a couple of years while their investments grow in other areas.
Those folks in the housing market can just go back to school and retrain.
Maybe for socratic interviews with McCulley. The bunny has got to go.
Something still quite puzzling! For morgages, the prepayment option for the morgagers is an opposite term more familiar than the MEW. But it seems that it does not help the real estate and the whole economic system also? Why? Any rationale behind this?
After all, credit financing is not totally a bad idea. At least we can have some bubbles. That is the widsom of Greenspan somehow. But… he has to retire. Hope the data of the New Fed King can help more!