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Stocks only went down on 128 pts on Friday; Bush has created a new rescue plan.
With all due respect my husband says "you're delusional". He also says "put your money where your mouth is and invest all your money in the stock market on Monday".
I say- you can't keep adding another band aid and expect it to fix everything.
Stocks only went down on 128 pts on Friday; Bush has created a new rescue plan.
No way! The stock market might rebound, but who really knows. The damage has been done and it's effect on all of us might not be known for many more months. I fully expect a long and deep recession at the very least.
Rescue plan? The only rescue plan the Dictator "The Decider" has is how to protect himself when he finally makes his escape out the back door of the White House.
We've only just begun, and it has a long, long way to go...probably well into 2010 would be my guess. When you see interest rates start moving back up it will be a good indicator that the bottom was (past tense) seen at least a quarter prior to the increase.
During the [housing] building boom interest rates (consumer credit if you will) "should have" been 15% or higher to find an equilibrium for [house] values versus the cost of consumer credit to buy [houses], however our friendly (and very stupid) government kept rates artificially way too low, which prevented equilibrium being sought. Therefore we had runaway [housing] values because consumer credit was too cheap. If the Fed goes back to using sound economic principles (what is correct and proven to work in the past) in the future this won't happen in the foreseeable future again. In the meantime [house] values will continue to decrease until they find a value level where they "should have been" if the Fed had done it correctly in the first place.
Basically, housing starts is one of the leading economic indicators. A higher-than-expected increase in housing starts triggers economic growth and is considered inflationary, causing bond prices to fall and yields and interest rates to rise. Likewise, decline or declining trend in housing activity slows the economy and can push it into a recession, causing yields and interest rates to fall. That said, when housing starts were very high the value of houses continued to increase, but instead of interest rates rising to offset inflation they remained [artificially] too low. Throw in a heavy dose of easy credit and 100% financing along with a Fed mandate (thanks to Barney Frank and his many Dem buddies) to easily put high-risk people in houses (many of which couldn't afford it) and it was just a matter of time before everything fell apart and came tumbling down. That is exactly what must continue to happen (house values tumbling down) and finding a level of true value before things can ever get turned around and start operating correctly.
If the Fed uses some phony props (rules, financial aid) to keep house values higher than what they really should be, they have not corrected the situation...and we will face yet another implosion sooner rather than later.
With all due respect my husband says "you're delusional". He also says "put your money where your mouth is and invest all your money in the stock market on Monday".
Um, no, your husband is the delusional doofus. The market is closed on Monday, since it is a holiday. Anyone with half a brain would know that.
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