I'm back! It was quite a refreshing week, but now it's back to business. While I was travelling the fed took agressive action to stunt the liquidity crisis on Wall Street. The fed is making up to $200 Billion available to banks and brokers in the form of 28 day paper, which the institutions will be able to borrow using some of the much-maligned mortgage backed securities as collateral. Just a couple of months back, the fed announced a $30 Billion dollar plan, which, at the times was seen as dramatic, so $200 Billion is truly huge. The stock market reacted with it's largest gain in 5 years, yet, it should be considered that such a huge scheme on the part of the fed is indicitive of a huge problem in the markets. I met several bankers from UBS on my trip, one of them put it quite succinctly: "this is a major fuck-up of epic proportions", and that his firm was "getting it's ass handed to us". As for our local market, which has largely weathered the storm thus far, my greatest concern is the creeping up of mortgage rates in the face of numerous fed cuts. This is a direct result of the freeze up of credit markets. Hopefully the fed's plan helps stoke liquidity which would bring down mortgage rates significantly and benefit our market. Will this happen? The jury is out.
Breaking: Spitzer Expected To Resign This Morning (NY Times-No Link Just Headline)
Fed Injecting $200 Billion (NY Times)
Update On GM Building Bidding (NY Post)
Solow East River Vote Today (Curbed)