Fed Chief Evans Says Federal Reserve Should Protect Economy Against Housing Woes

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For those watching the Federal Reserve and how they will address the housing slowdown, Charles Evans, Federal Reserve Bank of Chicago President, has some insights. He says that the Federal Reserve should shield against high risk (insert housing slowdown) events and make sure their policies do not make the situation worse.

`To me, the uncertainties about how financial conditions might evolve and affect the real economy mean that risk- management considerations have an important role in the current policy environment,” said Evans, 49, who became president of the Chicago Fed on Sept. 1. Falling home sales and values may pose “a more serious downside risk to growth” than policy makers expect. Bloomberg.com

Obviously the Federal Reserve is watching the housing market and making sure that the slowdown does not affect the economy as a whole drastically. But as Doug Quance notices in a post on the relationship of housing and the stock market if there is a good chance of a Democratic President, the market will most likely drop a bit as people pull profits out to avoid a rise in the capital gains tax. The last time there was an exodus out of the stock market was following 9/11 and that was when real estate took off.