According to the Washington Post, the Federal Housing Administration (FHA) has now dropped below its federally mandated 2% reserve level and will need to begin sucking money directly from the Treasury to keep afloat. The mortgage problem does not seem to be over and the more money that gets shoveled into that hole has additional implications for the budget deficit, interest rates, inflation, and the U.S. dollar.
In other words, lots of things are interlinked, sometimes in ways so intricate that they are impossible to figure out beforehand. Rather than trying to forecast what might happen, it is often best to let a flexible, adaptive approach deal with the environment as it changes.
