I wanted to share this with all of our readers. It's an email I received yesterday from a friend at AmWest Home Loans.
From: Norm Hansen - amwesthomeloans.com
Thursday, September 18, 2008 2:30 PM
Deb,
This is a good read…it comes from our advisors back east…
In a bid to ease the credit crunch and restore a sense of calm in the financial markets, the Federal Reserve authorized a $180 billion expansion of its swap lines with other world central banks. The funds, which will be provided by the Federal Reserve, can be injected into money markets through overnight and term loans. Stocks are liking this news so far and this is pressuring Bonds.
Something to think about - The Fed is attempting to be savvy and creative in its ways to help the financial system get back on track. However, there is simply no one who can draw upon past experience to find answers here. This situation is historic...and we are living through it. It is almost comical to hear the utter stupidity that comes out of the mouths of some of the politicians who are paraded in front of the cameras...I can't help but think that we actually elected these people.
There is a lot of panic out there. People are very worried about their life savings. Is money in the bank safe? How about if it is in a life insurance policy? How about in bonds? Unfortunately the answer is no, no, no. Yesterday, the panic reached a level that caused such a demand on Treasuries, that the total return of some short-term paper went negative. That's right...the premium paid was higher than the return provided by the yield. So keeping your cash under the mattress is better than an investment in some Treasuries, and apparently safer than the financial market. Suddenly, guess what may become the most attractive way to protect your money? Think about it...you can touch it, get a tax break, live in it too. Yes, Real Estate is starting to look pretty good, especially since it has become more reasonable priced.