Many prognosticators (who are different than procrastinators) feel that money managers created the current turmoil by failing to take risk seriously, allowing borrowers with lower credit to borrow money nearly as cheaply as A-paper borrowers. And they feel that it is not the taxpayer’s duty to bail them out. If your 16-yr old recklessly loses $20 playing poker during recess at school, do you give him his $20 back? Will insulating fund managers from the consequences of their mistakes encourage them to take similar risks in the future? One can debate this for a long time, but regardless of the conclusion, no economy can run without a steady supply of credit. And it is the Fed’s responsibility to help stabilize the US economy.

Do you know that feeling in your stomach when the roller coaster falls? Are folks in Las Vegas or Phoenix feeling that? The Case-Shiller House price index, which came out yesterday, indicated that prices in Phoenix and Las Vegas are falling at annualized rates of 35%-40%. Prices in all cities fell in the most recent month: in January, they fell by over 10% year-over-year.

Were your locks up last week? Congratulations – but so was everyone else’s. The Mortgage Bankers Association reported that the volume of mortgage applications rose a seasonally adjusted 48.1% in the week ended March 21 from the prior week. Applications to refinance existing mortgages increased 82.2% on a week-to-week basis, according to the MBA’s weekly survey, and purchase applications were up 10.6%. Overall application filings were up an unadjusted 41.1% from the same week a year ago, the Washington-based MBA said. The seasonally adjusted four-week moving average for all home loans was up 11.3%.

Treasury prices improved slightly overnight (the 10-yr is back down into the high 3.40’s, and mortgage prices are about .125 better). Durable Goods Orders unexpectedly fell 1.7 percent during February and a key gauge of companies’ appetite for investment also shrank. Economists predicted the report would show overall Durable Goods (manufactured items lasting 3 or more years) +0.8 percent in February, rebounding from January’s revised fall of 4.7 percent. This was