FED’s New Exit Tool
All markets are up. Stocks are benefiting from the holiday season buyers.
Bonds are down, and you will be the payer of higher interest rates in the future. The FED is pulling back on their support of interest rates.
The Dollar rise has stumbled, and is now looking for new direction. Gold is still falling after a slight recovery upwards.
Oil and gasoline have risen significantly, and are something to worry about.
In the news today…..
Mortgage Rates – are low right now, but won’t be for long. The FED is stopping their mortgage purchase plans, and the future of money for Freddie/Fannie mortgages will come from private investors – and they will want more interest. So, if you are thinking about a refinance, or getting a new mortgage, do it now. Interest rates will probably jump up to 6% or more by the end of 2010.
FED – plans a new “exit tool” for the money they’ve lent to banks so far. Today, the FED allows banks to give the FED their money “overnight” and the FED pays them interest on it. The new tool is the ability for banks to park money at the FED for a few days to a year – sort of like buying a CD from the FED. This will be a boon for banks as they can lock in good money, and the FED and drain money from the system at the same time. We’ll see how good it works in practice.
AIG General Counsel – Anastasia Kelly is quitting AIG. Why? Because her pay was cut by the Obama Pay Czar. So what, you say??? Well it turns out she has a contract with AIG, and that contract says if her pay is cut significantly, she can leave and AIG must pay her millions of Dollars. Pretty good – huh? Because of the Pay Czar, she is able to enforce a contract that wasn’t worth much before. Well, guess who’s really paying her millions – YOU ARE!!! That’s because YOU own AIG. The Pay Czar was so smart that it’s now costing us money when we CUT the salary of people. One lesson is “Don’t fool with a lawyer with a contract.” Another lesson is “Keep government out of business – they tend to screw it up.”
Here are the last numbers for today:
Dow Jones 30 Industrial – 10,547 (up )
10 Year Treasury Bond – 3.81% (up )
Euro – $1.4428 (up)
Gold – $1107 (up )
Oil – $78.77 (up )
Gasoline – $1.99 (up )
