What, you say? AIG and what Asteroid? Well, using my friend Jeff Brown’s analogy (read it here), today has sort of played out like a horror movie. The world was coming to an end (at least the financial world was). We were teetering on the brink of financial armageddon and wondering if the markets were going to do a total meltdown (as opposed to the sunburn it got on Monday).
Our stars, Super Hank and Bountiful Bernie, at first said that it was Mission Impossible and they couldn’t save the world (cue the Video below)
But as is the case in all good suspense movies, the good guys decided that even if they were going to get their clothes dirty, maybe even get hurt a little, it was much preferable compared to the world coming to an end.
So what’s this all about? It’s what the Fed and the Treasury did today. Late tonight, they came out with a “bailout” plan that will save AIG and the financial world from financial Armageddon.
Did the Fed blink? Yep, they did. Are they wimps because of it? No, I don’t really think so. The more that I’ve been hearing and reading about what could have happened if AIG had filed for bankruptcy tomorrow, the more comfortable I am with the fact that the Fed did the right thing.
Is it the best thing? Well, the best thing would have been to have our financial markets to be ruled less by greed and ethical lapses and more by financial integrity, but since that seems to be lacking, this definitely was preferable to a total financial meltdown.
I’m not going to go into the specifics of what the plan is about, because others have covered that better:
and
Cover it well.
A couple of additional points:
1. The markets will, I believe, breathe a collective sigh of relief and move on to worrying about other issues (yep, we aren’t any where close to out of the woods on these things).
2. The mortgage market will remain volatile but will probably feel better and I think therefore a bit calmer.
Dodged this bullet, but the bad guys aren’t out of guns yet….
Stay tuned.
Last 5 posts in Uncategorized
- Social Networking: A Virtual Landscape for the Real Estate Market - October 22nd, 2009
- How to boost your credit score – Part 1 - October 15th, 2009
- FTC Video On Foreclosure Scams - October 1st, 2009
- Why you should consider doing everything possible to AVOID foreclosure - September 25th, 2009
- "There Will Be Death Panels Enacted By This Congress" - September 25th, 2009
- Stumble it!
- Categories: Uncategorized
Comments
4 Comments so far
Jennifer Monastero
Tom, I certainly hope you are right! We could use a little respite today.
I’m so confused by the whole bailout ‘thing’. In an ideal world, like you said, corporations would have at least some ethical standards. Greed and the desire for ‘market domination’ have somewhat taken the place of long-term planning and doing the ‘right thing’ to sustain themselves. The same can be said for small-medium sized mortgage brokers and lenders- some liked risky business, snaky business, and downright dishonest business. Where are they now? Hopefully OUT of business. I would feel extremely offended if, let’s just say, the state government of CT stepped in and ‘bought them up’ or loaned them money to get through the tough times. They don’t deserve it! Simple as that. Their business model FAILED miserably. Why it’s ok on such a large level, such as AIG, IndyMac and others, is beyond me. Let the ‘free market’ determine what happens.
Unzipped Mortgage Rates Report: September 17, 2008 | Mortgages Unzipped
[...] mortgage default crisis spread to the world’s largest insurance company, prompting yet another government bailout. Mortgage bond traders are starting to think that the [...]
Pasadena Mortgage Rates Report: September 17, 2008 | Pasadena California Real Estate Market Resource
[...] mortgage default crisis spread to the world’s largest insurance company, prompting yet another government bailout. Mortgage bond traders are starting to think that the US [...]
Pasadena Mortgage Rates Report: September 17, 2008 | ARTV
[...] mortgage default crisis spread to the world’s largest insurance company, prompting yet another government bailout. Mortgage bond traders are starting to think that the US [...]