Well, here we are on Friday again. Are you getting motion sickness from all of the news and rumors that are flying back and forth? Wow has it been another week to forget, hasn’t it?
Here are the topics we’re going to talk about today: The Bailout/Rescue Plan, some very weak economic reports, the credit markets and do bankers really trust each other?
First, there were several economic reports that came out. None of them were good. Here’s a rundown of them:
1. Jobs – the jobs report came out this morning and showed that 159,000 jobs were lost in September. While the number was lower than what the markets expected (they expected 200,000), it was a very weak report.
2. Factory orders came in down 4%. That’s not the direction we’d like them to go.
3. Car Sales fell off a cliff in September. Ford’s sales dropped 35%. Ouch.
4. A couple of reports on personal incomes, personal expenditures and the like came out and they weren’t good.
If these were the only issues that we had, we’d have our hands full and we’d see mortgage rates drop due to the increased weakness in the economy.
But that’s not all. The credit markets have taken a major hit in the last week. What’s happening with that? A couple of brief highlights:
1. Banks are very concerned about running out of money (capital). Wachovia (more on this later) and Washington Mutual have been “bought out” to keep them from going under. Other banks are concerned that the losses they are experiencing will not enable them to keep their capital ratios where they should be. Due to that, there is an increasing reluctance to lend to commercial customers and to lend to consumers. How bad is it? I’ve heard a variety of conflicting reports. What I can say from personal experience is that for people (consumers, not businesses) who have the following: 1) Some equity in the Read more