Although private capital must surely be part of the reform effort, there may be limits to the amount of risk that we can credibly expect the private sector to insure. It is extremely difficult to appropriately price the insurance of catastrophic risk—the risk of a severe, widespread housing crisis.
The outlook for inflation is shaped by a number of factors, not the least of which is the course of energy prices. The spot price of oil has moved up significantly further in recent weeks. Futures quotes imply that market participants expect petroleum prices to roughly stabilize in coming quarters; such an outcome would, over time, reduce one source of upward pressure on inflation.