My earlier suggestion today re the 'trickle-down" impact of the U.S. credit rating decline might impact Freddie Mac and Ginnie Mae has now become fact. Mortgage rates will rise...just what our troubled housing market and distressed homeowners don't need!
As mentioned in my previous comments, instead of the Fed dropping money from the air, why not employ working people to give them back the dignity that "unemployment compensation" steals? Some form of WPA should be examined. The global unrest stems from the lack of jobs. Please ask your Congressional rep if they have examined the Work Progress Administration approach as a possibility.
Reflecting on the stock market sell-off today,- while I am happy that our clients were re-positioned into bonds in a timely July fashion, I am saddened by the great number of those who experienced the 630+ point landslide decline. Future retirement plans and family growth will be damaged. And, i'm afraid that the carnage is not over. This, in an an economy with the S&P 500 index featuring corporations with average earnings over $100 per share! In a normal economy, the market would be rising.
In the final analysis, history will record that leadership was lacking. Watch what the Federal Reserve does tomorrow in their open market committee meeting... and hope that they don't create even more debt to burden our children by dumping more fiat cash into the global economy. (Princeton Economist Paul Krugman predicted a second dip recession tonight...unless Congress learns how to cooperate with their opposition.) I wish you the very best.
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