That’s gotta be the best news I’ve heard in the last 4 years. First of all, someone with some huge credibility and influence in the real estate market is finally admitting there is a huge crisis. I hated hearing all those other “real estate” pros who sell real estate for a living or have a vested interest in the market doing well keep touting that the worst is over and that it will start to turn around now. Finally, a realist speaks, and he definitely has an interest in what happens to the market. When the president of the National Board of Realtors says that things are not that bad, it’s because he has to say things that are optimistic to keep all the realtors from leaving the industry and leaving the realtor association.
So why is the CEO of Freddie Mac willing to make this statement today when it could very well hurt the real estate market even more? It’s because he needs to protect his own interest now. People will start to really scream when they hear that mortgage interest rates have GONE UP! Even after the Federal Reserve and Central banks have released $200 Billion dollars yesterday to make it easier for banks to get and loan out money. Most of the American public will not understand his decision until they see the quarterly earnings report. He’s simply saying this to back himself up to his stock holders when he says they’ve taken a hit worth millions and his strategy is to keep the interest rates high to offset the loses.
Personally, I don’t really care what his reasoning is for saying it, I’m just glad he did. It was really upsetting me to hear so many others be unrealistic in saying that real estate was about to start turning around.
***MARKET THOUGHT OF THE DAY*** Same as yesterday, continue watching the financial institutions closely. As soon as they start to turn downward, jump in short or buy some puts. The ride down will be fast and hard! Yesterday’s crazy jump was because of the flood of funds by the Fed and Central banks, but it will have nothing to do with strengthening the banks position in stimulating the economy and people will begin to realize it as news gets worse and worse about this credit crunch. The BIG banks will NOT fail with the government trying to help them, but they will still hurt from all the bad loans they put out there.***Disclaimer: I am not a “professional” and do not have a license to give advice and could be totally wrong in all my predictions or my feelings. If you decide to take my advice without doing your own research, that is not wise, and not recommended. Trade at your own risk and know that most individual investors (something like 90% +) lose money investing in the stock market.***
One last added thought. I found a pretty good article on how all this is cycling through and it gives a basic idea of what is going on. Take a look at this article on yahoo. It’s called “How the Credit Mess Squeezes You.“