First, there is no way to k now if Ebola will really matter to the US economy or not. The incredible incompetence shown by the Dallas hospital management, CDC, and the White House initially, does leave us all wondering if these people know what they are doing, and it reemphasizes the inability of the White House to show early leadership. So what does Obama do- appoint a political spinmeister to head the effort. It is now clear that the medical community woke up and it is highly unlikely there will be any epidemic in the US, even though it is pretty clear tens of thousands may die in Africa. Maybe Obama will order a travel ban after the election since he clearly is treating a ban as a racial discrimination issue and not a health issue. The things to watch for is if anyone on the Frontier flight, in that airport or the cleaning crew on the plan gets sick. If that happens then the travel and hotel industry will get slammed. If nothing further happens, maybe this will pass with no major impact. Problem is we don't know, and fear is not controllable and appointing an unqualified political operative is not helping that.

New Issue. While I believe the Fed must remain independent of Congress or the White House, it is now a situation where the Fed has moved well beyond it normal powers and is disrupting the economy in ways we cannot yet know for sure. It is far from clear that QE really mattered to stabilizing the economy. What it did do is inflate assert prices to unrealistic levels beyond where they otherwise would be if interest rates had been left to the market. What is also clear is that while there may have been some early boost to housing, it is likely nowhere near the impact of severely depressed prices and the forming of large funds by Blackstone, Colony and others to sweep supply out of the market thereby driving up prices well beyond where they might be had these funds not been mass buyers. Between the Fed and the funds, the housing market has been seriously distorted into one which is not real. Therefore, once mortgage qualifications rules were raised so much, and once the funds dropped out of the market for the most part, buyers were not really there, prices began to stabilize and in some cases decline, and were it not for building of multi, the housing market would otherwise now be in a weak state. So QE was really now what drove the rebound in home prices and maybe it had little real impact.

As to stock prices, it is clear they rose on the back of QE as did the value of other non productive assets. Many of my real estate industry friends tell me they are buyers of assets because how can you not buy when the cost of debt capital is essentially nil. Once CMBS came back, and you could borrow 65% or more at a 4 handle or less in many cases, how could you not be a buyer while prices were depressed and distressed. Now that the distressed game is close to over, and asset prices have been driven to excessive levels because of the Fed forcing unrealistic low capital costs, the rise in values is maybe near over, but is not realistic if one assumes a normal interest rate market. So the Fed drove up real estate prices but that did nothing for the general economy nor the middle class. Maybe middle class home owners feel better now that house prices rise, but they can't monetize that value in any meaningful way because if they sell now they maybe have a small profit but then they need to buy another house. While home equity loans at B of A exceed first mortgages, the proceeds in many cases is being used to fund college for the kids or to pay off other debt. It is not being spent on consumer goods in most cases. The Fed and Congress imposed unrealistic qualification rules, and Eric Holder drove the big banks out of the market with political fines, so the big banks have largely reduced mortgage lending on homes dramatically. So much so that housing has suffered. So again, QE had nil impact, and whatever impact it did have was undone by Holder demanding obscene fines from the big banks. It is interesting to note that this week the feds decided that housing was going nowhere so they suddenly decided to ease the regs on mortgages. It is not likely to matter a lot. Holder and over zealous politicians who did not understand the mortgage market, pushed by Elizabeth Warren, another uninformed zealot, destroyed any incentive by major mortgage lenders to jump back in.