Well folks, last time I spoke about 4 of the top 6 banks being bailed out. This week, the last two finally realized they all have the same fate.

The last hold out was WaMu (Washington Mutual) who has just announced that it’s assets have been sold to JPMorgan Chase & Co.

On a lighter note…

Financial experts say we are entering a new chapter for the American economy. I believe it’s Chapter 11. -Jay Leno

I believe that pretty much sums up what’s been going on in the last few weeks.

Congress is still trying to push through their $700 Billion bail out package, but they seem to be getting much opposition.

I liked Warren Buffet’s comment. “If I had $700 Billion, would I buy some of the best real estate deals in the country? You bet! Unfortunately, I’m a little tapped out at the moment.” This coming after his annoucement to invest $5B in Goldman-Sachs.

So the richest man in the world sees this as a golden opportunity and thinks if the goverment does this correctly, they may see a reasonable profit before turning things back over to the investment banks.

Personally, I think that’s a might big IF. Maybe if they create a new branch of the IRS to handle the collecting of mortgage payments. That would certainly give people incentive to pay. “The IRS just called. They say we missed a mortgage paymen this month. They’re siezing our house tomorrow.”

Well, as I read the emails from the various lenders today, it seems this perverbial crap is hitting the fan. Everyone is raising their rates AND VRM products are switching to PRIME (no discount).

Look out folks. it’s going to be a fun ride.

I have that song running around my head for some reason. Maybe you know it. “And now the end is near…”

For those that missed it, more trouble in the market over this past weekend.

I would have updated sooner, but my ISP had other plans for my site.

Back to the news… Lehman brothers, estimated to be the 4th largest mortgage lender in the US cried out for help, along with AIG (THE worlds largest insurance company) and oddly enough this made the markets a little nervous. Monday saw a huge drop in all the major indecies around the world.
I wont say the economists agree, but I’ll say a vast majority aren’t saying a whole lot of good things about what’s going on in the US.

I was listening to the radio yesterday and they had an econimist on saying that he’s never seen anything like this in the 35 years he’s been in the business. My immediate thought was he’s only about 45 years shy of seeing something that’s happened that you could equate to what’s happening today.

Several years ago I remember reading a few books talking about the “major” stock market crash coming sometime in 2008-2012. Their thinking was it would be the boomers retiring and drawing money out of the market that would cause this. They were saying that the market goes in cycles (which within reason it does if you look at 5, 10 & 20 year spans). The biggest cycle they say is the 80 year cycle, naturally coinciding with the upcoming decade reflecting back to the depression of the 30′s.

There was also another book, by J. Paul Ghetty that had a slightly different twist. After the crash, Ghetty, decided that this was quite possibly the BEST time to invest in the market. Certainly it wasn’t going to go any LOWER. Everyone told him he was crazy to invest in the market after the crash. Crazy like a fox maybe.

Ghetty also invested in oil and driling rigs (physically worked on the rigs) when everyone else was saying there’s no money to be made any more in oil. Certainly wasn’t an overnight success (many months, many wells and nothing to show). If I recall, he was down to his last dollar when they finally struck oil.

Back in those days they didn’t believe in going into debt as we do so easily today in order to continue to fund a project. Hm. How interesting. The source of today’s problem is the whole mortgage problem and the collapse of the housing market in the US. Everyone is in debt (including the US goverment to the tune of several trillion) and suddenly the value of everything drops dramatically. Now we have debt on an asset that is worth 10% of its original value.

Can we say house of cards?

Today in the news, I see that the Fed is mulling over a rescue plan for AIG and that Lehman brothers have been bought by by Barlcay’s for 1$.75B.

The markets are starting to rebound and in one analysts report “this too shall pass.”

I think we have at least another year to go before the really bad news stops, but these certainly are “interesting times.”

The BIG news this week has to be the the US Treasury annoucing the taking over of Fannie Mae and Freddie Mac.

Who the heck are Fannie & Freddie and why should I care?

Simply stated combined these two institutions own or guarantee… wait for it now… more than HALF (i.e. > 50%) of the mortgages in the US. Yikes!
Their stocks and debt are widely held by banks and investors all over the world.

The annoucement came on a Sunday and not surprisingly the world markets took a sudden rise on Monday. Call it a collective sigh of relief.

So now we have the Federal Reserve in charge of well basically well over half the mortgages in the US. If you’ve been following the saga, the 6th largest bank was bailed out several months ago & then just recently the 4th largest bank. I guess you could argue that this is the largest mortgage “bank” in the US.

The move is designed, the analysts say, to stabalize the market. The goverment it seems doesn’t have any liquidity problems and can continue injecting funds into the market for some time to come. If the housing market recovers, the government might even pull out of this with a profit.

No sooner to I start reading about this bail out then do I see a story talking about the US debt climbing to over $75 Trillion. One has to wonder how far they can let this go. Both presidential canditates are on record for increasing spending. At least 4 more years, unless Ron Paul pulls off some kind of coup and convinces the majority that now is the time to look at this crisis.

Well that’s the fun for this week.