The Option ARM reset threat is what's behind the Federal Reserve Bank cutting rates to zero today. They're hoping to keep the default rate down by making it "more possible" to refinance at a low interest rate. I don't know what this will do to incentivize the folks whose equity has been wiped out by falling real estate prices (mainly in California, Nevada, and Florida but metastasizing to a town near you) to stay in their mortgages. Even at 2%, a mortgage for $500K on a house worth $200K is going to be a tough sell to John Q. Public.

If you wonder why I like to spend my nights on drugs and whores, now you know. This is what I worry about all day.