Nationalization
Stocks see-sawed today and ended up 69 points. The major news was the Fannie/Freddie scare that they “really” need help. (Where have these idiots been all this time – of course, they need help.) Bonds reacted in their “safe haven” role and fell in interest rate.
Oil and gasoline went up slightly today, but not much to talk about; and gold and the Dollar stood fairly still.
In the news today….
Fannie Mae and Freddie Mac dominated the headlines today. There is a strong rumor that Fannie and Freddie will be having a meeting with the Treasury soon to discuss how the Treasury can bail them out of their mess. The markets reacted badly to this news, as existing shareholders could easily get wiped out. Their share prices fell over 20% today, down to a 1980’s low. The real fear gripping the market was that the Treasury would “nationalize” these two institutions. Hold onto your wallet tightly and you will be able to feel the money leaving it.
The Mortgage application rate have fallen 61% from their high point. This is a real disaster to the housing market, and the housing market is having a large drag on the entire US economy. The only way we’ll ever get out of this mess is for the backlog of houses on the market to get back to “normal” levels. With less people making mortgage applications, this will not happen soon. The 30 year mortgage rate is 6.47% and the 15 year mortgage rate is 5.99%; and these are not as low as in the past – so they’re not helping the market either.
Here’s a graph of the real truth in mortgage applications. It’s the RED line that really affects the US economy the most.
Here are Today’s numbers:
Dow Jones 30 Industrial – 11,417 (up 69 points)
10 Year Treasury Bond – 3.80% (down 0.04%) – this was caused by fear of a collapsing financial sector.
Euro – $1.4745
Gold – $816 (down $1)
Oil – $114.98 (up $0.45)
Gasoline – $2.91 (up $0.05)
