First Act of 2010-Raise rates

The S&P finished 2009 up around 20%.  After losing 40% in 2008, up 20 sure feels a lot better.  Of course, another + 20 won't get us back to even, it just brightens our attitude when we look at how the 401k has recovered or the 529 account gained back a few bucks. 

Like or not, we need the FED to hike rates.  They caused much of the housing bubble with the cheap money.  The FED can argue otherwise, but that was the main issue.  And unlike the meltdown in the stock markets in 2000-2002 when investors could always find a buyer, real estate buyers were nowhere to be found in 2008.  Some would argue 2009 wasn't all that different.  It'll be tough medicine for all the HELOCs enjoying prime rates at 3.25.  Kep in mind prime has been at 3.25 for over a year.  Regrettably, this could make it tough on real estate through much of 2010.