Property Grunt

Monday, September 03, 2007

Here comes the cavalry?

It seems that the stock market make any excuse to have themselves a rally.

The first punch came from Bush

Mr. Bush, in formally announcing administration proposals that had been outlined the day before for a handful of news organizations, said the measures were intended to help families keep their homes through a mixture of actions, legislation and persuasion. But he said the administration would not bail out “speculators” in the housing industry.

“The government has got a role to play, but it is limited,” Mr. Bush said. “A federal bailout of lenders would only encourage a recurrence of the problem. It’s not the government’s job to bail out speculators, or those who made the decision to buy a home they knew they could never afford.”

Then Bernanke jumped in with his pledge

Ben S. Bernanke, the chairman of the Federal Reserve Board, declared on Friday that the central bank “stands ready to take additional actions as needed” to prevent the chaos in mortgage markets from derailing the broader economy.

Mr. Bernanke avoided any specific promise to lower the central bank’s benchmark federal funds rate at its next policy meeting on Sept. 18. But he acknowledged the dangers posed by the twin storms in housing and mortgage lending, adding that conditions are changing quickly enough that the Fed might act even before then if the next batch of economic data looks unfavorable.

In all honesty, this doesn't give me a warm fuzzy in my stomach. First of all our Commander Chief's track record in saving the day has been, well, it sucks.

Remember the Tsunami? It is a really bad sign when your father and your predecessor have to do a PSA to get money.

And Katrina? Well, let me put it this way. If you have a major American city reduced to a third world country after a hurricane, well you have a problem.

Currently the Army is now offering 20K bonuses for people to enlist.

And now we have people like Nick Sloan who are risking their lives to get out of debt.

All this milk money is coming straight from Uncle Sugar’s teet. In fact our fearless leader is planning is asking for more money for the war.

Do you think foreclosures are going to be a high priority on his list of thing to do before he leaves office?

As for Bernanke, he stated
“stands ready to take additional actions as needed” to prevent the chaos in mortgage markets from derailing the broader economy.

What are these additional actions going to be? I am sure whatever they are won’t be painless, at least for the little guys.

Also what is definition of prevention? I am sure it is helluva lot more different than ours.
And according to the New York Times it maybe too little too late.

But the Fed’s main weapon for restoring confidence — reducing its benchmark federal funds rate on overnight loans between banks to 5 percent or less, from 5.25 percent now — would have little effect on fears about credit quality.

“The reason there isn’t a market for these credits is that people don’t know what price they should be trading at,” said Edward E. Leamer, professor of management at the University of California, Los Angeles, who presented a paper during the weekend at the Federal Reserve’s symposium in Jackson Hole, Wyo. “That’s not going to be affected by a small change in the federal funds rate.”

As far as I am concerned the storm isn’t over yet.