Come on in, the water's fine!

Basically the message the markets seem to now be getting, with the announcement of the government takeover of Fannie Mae and Freddie Mac.

WIIFY, you may ask? (that's "What's in it for you" by the way)
Well, if you own stock in one of the companies, not much I'm afraid... but Uncle Sam (or more accurately Treasury Secretary Henry Paulson) decided it was the best course to restore public confidence to the battered companies and the economy. And of course, there's the fact that several major banks are heavily enough invested in the "preferred stock" of Fannie and Freddie that were the two companies to go under, they'd almost definitely pull the banks under, and the banks would pull their investors under, and we're looking square in the face of a world depression. Or so they say...

The short and long of it...
It's difficult to say what will happen next, although the conspiracy theorist in me wonders if this isn't just a ploy to get me to think that something was horribly wrong with Fannie and Freddie and now Uncle Sam has come in to save the day. But if these were "Government Sponsored Enterprises" (or GSEs as they are... or were... often referred to) in the first place, isn't more like their covering their own you-know-whats?

Here's my two cents, and you can give me change back if you'd like: as I've been predicting for a few months, this increase in perceived supply will likely drive interest rates... wait for it, wait for it..... UP!

SO GET OFF THAT BIG COMFY FENCE WITH YOUR EASY CHAIR AND YOUR UNIVERSAL REMOTE! At least flip over to the Reality Channel and see that rates will soon be a-climbing and a .5% increase will drop your purchasing power by 5%! Not so comfy anymore, eh?

Give me a call to chat: Operator is standing by! 425-501-4749.

As always, thanks for reading!