Help Is On The Way
Issue: 8/31/07
The Stock Market went up 119 points today because President Bush announced help for some homeowners who are in trouble with their mortgages. The fine print said those homeowners had to have good credit and only be a little behind in paying their mortgage.
Here are the details behind the speech. There are about 2,200,000 mortgages out there that are predicted to default and end up in foreclosure. President Bush’s help through the FHA is stated by the FHA to help about 80,000 households. You do the math. The President’s announcement is nothing more than political rhetoric.
Bernanke, speaking at the Fed’s annual conference in
What this all means is that the “market” is still waiting for the Fed to act by reducing the Fed Funds rate. I have been warning that there is no real reason for the Feds to do that. They have already acted to provide “liquidity” to the market. Illiquidity was the crisis. Reducing the Fed Funds rate is a tool in the Fed’s toolbox to avoid a recession. The Fed can only increase or decrease interest rates, or “print” money. That’s it.
The Fed doesn’t meet until September 18, so the rollercoaster market should continue until then. The self interests of the financial community is beating the drums for the Fed Funds rate cut because it will help reduce their loss. Let the market act.
Here are Today’s closing details:
DJ30 – 13,358 (up 0.9%). All that movement, and the market stays about the same for the week.
10 year US Treasury Bond – 4.54% (Up .04)
US Dollar – $1.3624/Euro. Slightly down for the Euro and other currencies.
Gold closed at $682 per ounce. (Up $8) Is gold making a move?
