Uncertainty abounds in the financial markets. It seems like we are in one of those periods similar to the Bear weekend in March. While there is denial of the Fed opening the discount window to Fannie and Freddie, you get the feeling that anything can happen. Whispers are growing stronger that the government is planning some sort of contingency plan to bail out Fannie and Freddie, who in addition to Lehman Brothers have battled through a gory week of innuendo, speculation and stock depreciation reminiscent of the run on Bear Stearns just a few months ago. While everyone who is someone is in denial, I would figure that it will be a busy weekend for the fed. In my opinion, the fed is likely to open the discount window to these 2 mortgage lenders that hold nearly half of the nation's mortgages. I would also speculate that Lehman could possibly face the same fate of Bear Stearns, facing a buyout at less than desirable terms to shareholders.
While all this is sheer speculation on my part, I am just calling it as I see it.
What we are really missing here is leadership. Congress and the current administration are way behind the curve on what is happening in the real time economy. Being reactive rather than proactive is costing our economy and the taxpayers more and more every day. The meteoric rise in oil prices is only exacerbating the problem. Yet, there is no leadership on the issue. Clearly tensions in the Middle East are largely responsible. The current administration's stubborn "my way or the highway" mentality is costing us Billions at the pump and across the economy. Given that it is an election year, uncertainty of future leadership is also a problem.
It is time to get proactive. First, we must diffuse tensions in the Middle East and immediately dedicate substantial funds to alternative energy. It is absolutely clear that all of the major players in the Middle East have to sit down and negotiate. In conjunction with a substantial commitment to alternative energy, such a strategy would take the air out of oil prices and breathe some life into consumer spending. Second, the Bush administration and the 2 candidates to succeed him must acknowledge that we are in an economic crisis and that inaction could make things substantially worse. I would suggest an unprecedented move. Bush, Obama, and McCain should sit down together to hammer out a consensus plan to move America forward. The three of them should decide now on a Treasury Secretary and an economic council that will serve regardless of who is elected. Personally, I'd be calling Bloomberg right this minute.
I know such ideas have zero chance of being implemented and are far fetched, but creative solutions are necessary. Hopefully our leadership, for once, will lead.
Now, back to Real Estate......