Believe it or not the bailout of Fannie Mae and Freddie Mac by the federal government is actually good news for the stock and housing markets. It is bad news for Treasury bonds. It also increases the chance that your taxes are going to go up in the future.
This is a good time to start to get into the market again. Keep putting away money into a variety of funds just a little bit at a time but do it often.
And don’t put it all in one place. That is the quickest way to lose it.
Don’t listen to the talking heads on t.v. Stick to your plan if you really want to make money.
The best time to buy homebuilder stocks was earlier this year. At the time they were at rock bottom prices and nobody wanted them. Now the shares are a third more expensive and they are starting to attract attention.
What about the financials? Well, this is still a very unstable area. The shares are about 40% more then July levels. It has become very clear especially this year that these banks, their CEOs and directors have no idea what is on their loan books.
Chairman of the FDIC, Sheila Bair, warned that the smaller banks outlook also remains grim. The troubled loan problem is still rising with 117 banks now on the problem list. The highest level seen since 2003.
The federal bail out of foreclosures and struggling homeowners is about to start. The new 30-year mortgages secured by the federal government will help many of those in trouble. Today’s news might bring down mortgage rates. That gives a boost to the problem. The majority of the housing problems are in only about a half dozen states. When the market clears away the sellers who were forced into selling their homes will either sell or receive their bailout. After that occurs, stability will return.
Of course the bailout of Fannie Mae and Freddie Mac will be billed to the taxpayers. How much? Well, both organizations had $6 trillion in liabilities. This one could really hurt the taxpayers.
Before Friday the entire national debt of the U.S. was at 9.75 trillion dollars. There was also debt of the public and overseas debt which totaled 5.7 trillion dollars.
