seem to require less compensation for the risks inherent in lending over a longer term or of supplying credit to borrowers who usually have a greater chance of defaulting. in this environment, the likelihood that major credit problems will develop would seem limited, and that limited risk makes it not unreasonable for private bond premiums to be at the low end of their historical range. still, investors seem to expect short - term interest rates to remain on the low side of historical averages for some time. these subdued expectations may reflect a belief that underlying global demand will remain damped and that the world will continue to be willing to invest heavily in the united states. a second observation concerns the housing market, which you have already discussed. a couple of years ago i was fairly confident that the rise in real estate prices primarily reflected low interest rates, good growth in disposable income, and favorable demographics. prices have gone up far enough since then relative to interest rates, rents, and incomes to raise questions ; recent reports from professionals in the housing market suggest an increasing volume of transactions by investors, who ( along with homeowners more generally ) may be expecting the recent trend of price increases to continue. even so, such a distortion would most likely unwind through a slow erosion of real house prices, rather than a sudden crash. moreover, experience suggests that consumer spending would respond only gradually to any loss in wealth - an important consideration because a gradual adjustment in spending would give offsetting policy actions time to work. in any event, i take some comfort from the continuing disagreement among close students of the market about whether houses are overvalued, and, given the widespread press coverage of this issue, from my expectation that people should now be aware of the risks in the real estate market. finally, there is the exchange rate. the inability of anyone to predict movement in the dollar accurately and consistently has been evident. presumably, the dollar ’ s value is based partly on market expectations about future interest rates, trade flows, and portfolio preferences, among other things. there is no particular reason to think that these expectations are substantially distorted. certainly no investor out there buying dollar assets could be surprised to learn that the united states has a growing current account deficit! and, i do not anticipate a marked and persistent downshift in u. s. productivity growth that would greatly reduce the expected returns from holding dollar - denominated assets. governments who have been accumulating dollar assets also would seem to have no

achieving the objective, particularly in areas and among populations where biases and negative perceptions may have contributed to market failures, helps people improve their financial standing, regardless of their current economic status. for nearly four decades, numerous policies and programs have been implemented with the intent of increasing economic opportunity. a variety of management and funding strategies have been implemented, ranging from federal government appropriations to debt and equity financing from private sources. despite the broad spectrum of programs, the length of time they have been in place, and the array of funding participants, empirical research quantifying their impact is rare, regardless of whether government agencies, nonprofit organizations, or private entities sponsor the programs. the lack of empirical data is particularly regrettable in the case of government - sponsored programs, because quantifying the impact of these programs is crucial to the legislative process. when a bill is proposed in congress, the nature of the problem and the factors presumed to be contributing to that problem typically are explicitly stated. and generally included is a projection of the outcomes that would indicate success. this process of problem diagnosis, program justification, and projection of results, if fully embraced, provides a framework for assessing a program's value. the program can be judged worthwhile when the data demonstrate that the benefits exceed the costs, including the opportunity costs of any investment. even with such a framework, conducting research on community development and economic empowerment programs can be challenging, in part because the effects these programs intend to achieve are often quite difficult to measure and may not become apparent for relatively long periods of time. initiatives aimed at addressing complex economic and social problems that were decades in the making most likely require many years to achieve their goals. also, virtually no specifically defined standards exist for monitoring the value of social and economic improvement programs. for community development researchers, the challenge is to develop parameters for objectively assessing the value of their programs. for example, the measures that affordable - housing organizations use could illustrate the extent to which their programs have, or have not, increased homeownership rates and property values, reduced crime, improved school performance, or spurred new private - sector investment in a disadvantaged neighborhood. research must isolate the variables that best convey the impact of a program, define the specific data that must be collected, and develop a system for maintaining and retrieving the data over time. in other words, the challenge is to quantify the marginal effect of a program. the value of such a system is clear. so too, however, is the