First, there is no way to k now ifEbola will really matter to the US economy or not. The incredibleincompetence shown by the Dallas hospital management, CDC, and theWhite House initially, does leave us all wondering if these peopleknow what they are doing, and it reemphasizes the inability of theWhite House to show early leadership. So what does Obama do-appoint a political spinmeister to head the effort. It is now clearthat the medical community woke up and it is highly unlikely therewill be any epidemic in the US, even though it is pretty clear tensof thousands may die in Africa. Maybe Obama will order a travel banafter the election since he clearly is treating a ban as a racialdiscrimination issue and not a health issue. The things to watchfor is if anyone on the Frontier flight, in that airport or thecleaning crew on the plan gets sick. If that happens then thetravel and hotel industry will get slammed. If nothing furtherhappens, maybe this will pass with no major impact. Problem is wedon't know, and fear is not controllable and appointing anunqualified political operative is not helping that.

New Issue. While Ibelieve the Fed must remain independent of Congress or the WhiteHouse, it is now a situation where the Fed has moved well beyond itnormal powers and is disrupting the economy in ways we cannot yetknow for sure. It is far from clear that QE really mattered tostabilizing the economy. What it did do is inflate assert prices tounrealistic levels beyond where they otherwise would be if interestrates had been left to the market. What is also clear is that whilethere may have been some early boost to housing, it is likelynowhere near the impact of severely depressed prices and theforming of large funds by Blackstone, Colony and others to sweepsupply out of the market thereby driving up prices well beyondwhere they might be had these funds not been mass buyers. Betweenthe Fed and the funds, the housing market has been seriouslydistorted into one which is not real. Therefore, once mortgagequalifications rules were raised so much, and once the fundsdropped out of the market for the most part, buyers were not reallythere, prices began to stabilize and in some cases decline, andwere it not for building of multi, the housing market wouldotherwise now be in a weak state. So QE was really now what drovethe rebound in home prices and maybe it had little realimpact.

As to stock prices, it is clearthey rose on the back of QE as did the value of other nonproductive assets. Many of my real estate industry friends tell methey are buyers of assets because how can you not buy when the costof debt capital is essentially nil. Once CMBS came back, and youcould borrow 65% or more at a 4 handle or less in many cases, howcould you not be a buyer while prices were depressed anddistressed. Now that the distressed game is close to over, andasset prices have been driven to excessive levels because of theFed forcing unrealistic low capital costs, the rise in values ismaybe near over, but is not realistic if one assumes a normalinterest rate market. So the Fed drove up real estate prices butthat did nothing for the general economy nor the middle class.Maybe middle class home owners feel better now that house pricesrise, but they can't monetize that value in any meaningful waybecause if they sell now they maybe have a small profit but thenthey need to buy another house. While home equity loans at B of Aexceed first mortgages, the proceeds in many cases is being used tofund college for the kids or to pay off other debt. It is not beingspent on consumer goods in most cases. The Fed and Congress imposedunrealistic qualification rules, and Eric Holder drove the bigbanks out of the market with political fines, so the big banks havelargely reduced mortgage lending on homes dramatically. So much sothat housing has suffered. Soagain, QE had nil impact, and whatever impact it did have wasundone by Holder demanding obscene fines from the big banks. It isinteresting to note that this week the feds decided that housingwas going nowhere so they suddenly decided to ease the regs onmortgages. It is not likely to matter a lot. Holder and overzealous politicians who did not understand the mortgage market,pushed by Elizabeth Warren, another uninformed zealot, destroyedany incentive by major mortgage lenders to jump back in.