You're going to get hammered.
In the last few days there have been a handful of people -- including Richard Fisher, former Fed President -- who have pointed out in public what I've been saying for a long time: The issue is fiscal and until Congress cuts it out rates are not going to go down and in fact will be higher for longer because if Congress is not essentially backed into a corner the nation will be destroyed.
Congress has proved over the last couple of decades that it is incapable of being fiscally responsible without being forced. Since external force can only come through cost or violence and the latter is obvious undesirable the former is all that's left between us a descent into Argentina-style Hell.
Do not kid yourself about what the latter looks like, and its the best-case scenario (Weimar is much worse, obviously; we all know where that wound up.) Not only did Argentina go through a cataclysmic bout of violence on a civil and social level, some of which is still going on, while it may look "sort of ok" today the fact is that basically zero credit is extended anywhere in the economy.
Think about your life if you had zero credit available. You go to work, you earn and then shortly spend, so the connection between earned and spent can be maintained (and if one goes up from inflation the other immediately can follow.)
But there is effective zero lending, short or long-term. If you want to buy a house, you literally come to the closing with a stack of money. There are no car loans. There are no credit cards. Borrowing for corporate purposes doesn't happen either. Yes, people go to the cafe and get a coffee or lunch but they earned the money yesterday to pay for it and cannot (because nobody will lend said money) pay for it with money to be earned tomorrow since nobody knows what the money will be worth tomorrow.
How many people today shove a credit card in the gas dispenser? That ends.
How many use a credit card at the grocery store? That ends.
No buying cars on 8 year loans because there are no eight year -- or even one year -- loans.
There are no college students taking out loans to pay for it because there are no loans for even one or two, say much less four or ten -- years.
And certainly no buying of houses on 30 year mortgages.
Oh, you need medical care? You can't pay for that over time either -- you pay in cash or you don't get it.
Medicare and Medicaid? Gone.
Social Security? Gone.
SNAP? Gone.
Section 8? Gone.
That's the benign future and only after the nasty that Argentina went through which included "redistribution" by those who didn't have through force, including plenty of armed robbery and other forms of violence, almost-none of which was punished as there was no money to pay for cops and jails.
Everyone is looking for ways to prevent this sort of decline in asset prices. Think about the lie you always hear in the mainstream media about housing prices: Higher prices mean better outcomes for you over time.
Its false.
If you own a house and prices for houses go up generally how can you profit from that? If you sell your present house you need a place to live, so you wind up selling at an inflated price but also buying at an inflated price. The only people who make money on this are those -- surprise, surprise -- who have a percentage fee structure of some kind on the transaction -- that is, Realtors and Bankers, mostly. Further, if you "stretch" by using an adjustable-rate note on the new place you are now taking on risk you didn't have before if you came from a fixed-rate product!
You can only "win" one of three ways: Significantly downsize in your market, move to a much lower-cost area, or die. The latter is of course of no value to you but your heirs might find it quite lucrative.
Meanwhile with each transaction you get asset-stripped by the fees and those who currently are not in the market but come in risk top-ticking it and getting monkey-hammered.
Now let's think about the other side of it: Who loses from, say, a 50% decline in house prices?
Well, your heirs if you die; they get half as much. Is that your primary concern? I doubt it.
But let's say you need to sell and move. Do you lose? No, because your new place is also half the price so while you "lose" on the sale you pay less for the new place, and thus it is a wash. You still have a place to live. If you could afford $2,000 a month before the same $2,000 a month gets spent now for the same relative amount of house. Since you must have somewhere to live what have you lost?
If you overpaid or cash-out refinanced and thus have no equity you're in trouble of course. But not in any more trouble, assuming you can sell (e.g. your equity isn't negative) than you are if you sit. If your equity goes from 50% to 20% it still is 20% if you move somewhere else; your situation has not changed.
Realtors, of course, do lose since the lower price means a lower commissions as most of them are percentage-based. So do Bankers, since interest charged on $200,000 is less than interest charged on $400,000. Boo hoo cry me a river.
Who screams the loudest about this scenario and tries to convince you it would be a "catastrophe"? Those two groups. Its not hard to figure out why, is it?
In the meantime who wins? The young couple who can't afford the house at $400,000 but can at $200,000. Even if the difference is imputed value due to rates (thus the monthly amount is roughly the same) 20% down on $200,000 is half that of 20% down on $400,000!
Ditto for all the stocks that were jacked on valuation not because of actual earnings but financial engineering through issuing effectively "free" debt. Those firms are in trouble; the ones with actual operating cash flow who didn't lever up will survive but their stock prices will go down -- quite a lot. Those that did foolishly lever up and cannot pay off the debt when it comes due nor can they afford to roll it over at today's rates will blow up and be zeros. This sounds bad -- but is it? Someone who can buy the facilities they had at 10 or 20 cents on the dollar and thus produce whatever they made for far less doesn't think so and neither will you as a customer when what you want to buy from said firm that replaces the blown-up one is cheaper -- and it will be!
The ripple-through effects of this, however, are not going to be small. Government in particular, along with basically everything government-linked, particularly health care, is going to undergo a massive dislocation. This cannot be avoided.
For more than two decades we have cheated on the laws of economics. We have hurtled from bubble to bubble with no small part of it being a "peace dividend" from the USSR's collapse. Rather than actually invest that we've divested our manufacturing into other nations and pumped asset values, especially in real estate, as if this is some sort of "good thing." IT IS NOT as it drives higher costs of living throughout the economy -- not just in housing but also through higher spending at the state and local levels, all of which the rest of the economy must pay for.
The Fed's statement didn't really change anything; the market is assuming The Fed is done but that's false unless Congress takes about a quarter of its spending and bins it -- which there is no evidence for at the present time.
