Could that be some light, just a little light at the end of the tunnel?

It seems as if, in recent weeks, there has been a steady drumbeat of bad economic news all traced back to that original subprime mostgage crisis.

The near collapse (okay, some may argue it was an actual collapse) of Bear Stearns was like a thunderclap heard around the world, alerting financial institutions that things may get a lot worse before they get a little better.

And, that is probably still going to be the case, many so-called experts think. The Bush administration plan to more closely monitor various financial institutions (commercial banks have long had tons of regulations)doesn’t seem to be going over all that well. And, even the officials whose plan it is are saying they do not expect any action till probably after Bush leaves office.

So, where’s the good news promised?

Now,let me just say upfront, no one should get too excited by the good economic news out in the early part of this week. As we should know by now, in the financial world, things can change (and in the case of Bear Stears, they did) literally overnight.

Nonetheless, consider some of the evidence.

There is a foreclosure relief bill making its way through the Senate.

The Federal Reserve, for better and maybe worse, came to the rescue of not only an investment firm, but possibly this country’s (world’s?) financial system. We can argue the merits later, but as an emergency measure, it seemed to do the trick.

Wall Street managed a big rally to kick off the second quarter–all the major indexes climbing more than 3 percent on Tuesday.

And, by many accounts, it appears as if there is a growing sense that the credit crunch may just be moderating?

But, heed the warning I gave up top. Things can change drastically. Experts can be wrong (no??). And, there are historical and political forces at play that can’t be controlled by any government or group of financial institutions.

So, enjoy it while you can. There does, indeed, appear to be at least a trickle of light at the end of the tunnel. But, if I were you, I’d make sure my flashlight batteries are still fully charged.

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Tags: bear stearns, dow jones average, Economy, investment banks, jpmorgan, president george bush, subprime, u.s. treasury, Wall-Street

How about some good news for a change about real estate, mortgages, credit, jobs, consumer confidence, Wall Street stability, the future of civilization as we know it?

Sorry, not gonna get it here.

Evidence is evidence and though some may like to engage in wishful thinking, the evidence is not good at all.

Goldman Sachs is actually forecasting that credit losses around the world caused by the current near panic in financial markets will hit some $1.2 TRILLION!!!!!

The same report predicts that U.S. banks, brokers,hedge funds, etc., stand to lose around $460 BILLION in credit losses.

SCARED CONSUMERS

Very scared, in fact. Consumer confidence has hit a five year low; people are nervous about their jobs, their homes, their credit, their lives.

But one example of why the worry: From January 2007 to January 2008, the price of existing single-family homes dropped some 11 percent.

And then, there’s

Bear Stearns

Yeah, JPMorgan Chase upped its bid increasing the value of Bear Stearns, but the new offer still remains some 88 percent below what the stock was worth only one month ago, according to a Reuters report.

Was all of this mess really caused by subprime mortgages?

Well, yes and mostly no.

Yes, in that the subprimes certaintly pulled the trigger on this now global credit crunch.
No, in that the ammunition was stocked by various lending institutions and brokerage firms, all motivated by nothing but pure greed. They rammed these mortgages down the throats of people who wanted to own homes but really couldn’t afford them, and now they are being vomitted back up.

The subprime mortgages were bundled into investments that no one really understood or understands to this day..including officials at the Federal Reserve.

As some have pointed out, in recent years, this country has developed a sort of shadow banking system, one immune from the post-Depression era restrictions slapped on commercial banking institutions to maintain some form of economic stabilty.

It is this shadow banking system that is what is behind this terrible mess. And, the trouble is, much of it remains in the shadows which is why people are running scared.

Tags: bear stearns, consumer confidence, credit crisis, federal reserve, jpmorgan chase, subprime, subprime mortgages

This week has been an extremely volatile one in the world of real estate and the economy. We’ve seen Gold at $1,000 an ounce, a collapsing dollar, oil skyrocketing, an much more. Of everything that has happened, probably the most shocking is what came out of the Fed this week . . .

According to the The Daily Telegraph, “The US Federal Reserve has taken the boldest action since the 1930s, accepting $200bn of housing debt as collateral to prevent an implosion of the mortgage finance industry and head off a full-blown economic crisis.” Tim Bond, a strategist at Barclays Capital remarked, “The market was starting to question the solvency of bodies that stand at the top of the credit pile. These agencies together wrap or insure $6 trillion of mortgages. They cannot be allowed to fail because it would cause a financial disaster. The fact that this sector has blown up has caught everybody’s attention in Washington”

At Least President Bush is Confident in the Economy!

It seems like everybody but the President, who continued to dodge questions about the economy until a press conference today where he expressed his “confidence” in the US economy. I’m glad that he is confident, but he’s doing little to stem the collapse of the dollar and the looming current recession.

To make matters worse, suffering investment bank Bear Stearns today was given a bailout by J.P. Morgan Chase and the Federal Reserve Bank of New York. From the Wall Street Journal:

The intervention by J.P. Morgan and the New York Fed shows Bear “didn’t have enough money to turn the lights on this morning,” said Carl Lantz, strategist at Credit Suisse. “And in a big picture sense, this isn’t that comforting.”

This news turned a somewhat positive market (inflation report wasn’t as bad as expected) upside down once again, and at the time of publishing this post, the Dow is down 300 points and Bear Stearns is off 40%.

Talk about an economy we should be Confident in!

Tags: bear stearns, dollar, Economy, Euro, fed, federal reserve, George Bush, monetary policy, president bush