What it will achieve, is that some dots in the 20-30 yrs part of the yield curve will jump up a weird 0.1-0.5%, no one will be there to smooth it, so long-term rate indices will go up may be 0.2% for the first half of 2009.

And so new fixed-rate mortgage rates will go up by the same amount (also some 20% of ARM who thought they were tied to a secure, non volatile rate index). And that will further depress the equilibrium point of real estate prices by 5%. The market will just never adjust if the target keeps moving. Add in the recession... As real estate keeps tanking, banks will keep sinking, etc, and the spiral turns the recession into depression.

Pierre