[Only Waxing]

Largely agree. However, the problem the Fed has here is that they want the dollar to stay down. Remember, there are likely two reasons the Fed has kept the foot on the accelerator this long -- to keep real estate strong, and keep the dollar down. Now, they clearly are concerned about how out of control housing has gone in some areas of the country, and are worried about inflation a bit. However, they don't want to worsen the trade deficit by creating a rally in the dollar.

Quite a conundrum. Their solution -- slow but steady removal of the easing. To this point, they've accomplished their goal of not starting a huge dollar rally, even though it looks like it's bottomed. Unfortunately, they haven't stopped the housing bubble yet.

[cdrw]

I agree. The money they print always finds its way in somehow and, in this case, it was the real estate market. The nice thing about real estate, unlike stocks, is that everyone has to live somewhere. Real Estate drags a lot of jobs and income along with it so they compensated for the high-tech losses by boosting real estate.

I suspect they are trying to "stabilize" things with respect to the dollar and inflationary expectations. A Dollar in free fall would trash our financial markets ( I mean real free fall, not the steady down trending activity we've been seeing). The global media has been in a dollar frenzy lately with all the central banks announcing programs to diversify their foreign reserves (dump the declining dollar in favor of the Euro ...) If the Fed can get the dollar to flat-line and can also keep inflation in check by bringing short rates back up to the "neutral" position it would probably be a good thing.

Yup - conundrum - it's been one for a while now.