Panic or writing on the wall? After huge stock market
losses last week Monday’s market opened with gains
higher than any other one day on record. But don’t break
out the champagne yet… because the crisis is far from over.
Monday’s gains brought us back to around Wednesday of
last week in terms of stock index levels. Today we have an
almost flat market so far with mixed indexes, some higher,
some lower. Expect more huge swings and volatility in
coming weeks. Stay cool. Talk with your financial advisor,
but above all, don’t get caught up in emotional selling. This
said, more losses may be writing on the wall into the next
quarter, so plan accordingly.

World banking heads agreed that the global crisis demands
coordinated action. So Monday opened with coordinated
global rate cuts. But the amount ($250 Billion) that the US
plans to inject into our failing banking system is a pittance
of the trillions Europe is already injecting into theirs. This
leads some to argue that gains from the US plan will be
small. Combine this with the prospect of a recession that
lasts 18-24 months, and which some say could be “deep”,
and it looks like additional economic stimulus will be mandated
to turn the tide. I expect we’ll be hearing more about
a new stimulus package before long. The IMF says credit
loses will reach 1.4-1.6 trillion dollars.

In the local real estate market we seem to be experiencing
somewhat flat sales numbers, and continued lowering
of pricing as we seek a bottom. The LIBOR indexes rose
sharply in the past week, so folks with ARM home loans
that are resetting will feel abruptly higher rates, keeping the
refinancing of these notes into fixed rate loans extremely
important. Look for the stimulus package increases to loan
limits to become permanent as we approach year end
(when higher loan limits would expire).

What can you do? VOTE! Perhaps the most important thing
any of us can do is plan to vote for a president who will
bring solutions that work to the table. In the meantime FHA
loans continue to refi subprime mortgages while Fannie
and Freddie loans offer attractive rates. We may also see
more pressure on existing loan servicers to modify loans
voluntarily. The silver lining to this mess right now is low
inflation, thus low mortgage rates, allowing buyers to buy,
and refi’s to pick up speed.