Eventually, the Fed is going to stop its purchases of mortgage-backed securities, a move that would choke off cash to the still-beleaguered housing sector.
So what’s the game plan after that?
Actually, the hope is that foreign investors will rush back in. According to The Washington Post, senior officials at both the Fed and The White House are counting on a rush of foreign money to help prop up this market.
Of course, this seems like a dicey proposition. Word is that China is already encouraging its state-owned investment vehicles to dump anything that’s not explicitly guaranteed by the US government. And generally speaking, there’s just no good reason for foreign investors to rush headlong into housing assets that burned them in the past.