The Veridian Blog

Have you ever seen a market like this? Not sure what to say when triple-digit swings in the market are now the norm and we are witnessing first-hand monumental changes in Wall Street.  I had to bite my tongue several times last week and refrain from blogging every time there was a shift in the market place - because news started changing on an hourly basis. 

I am now advising all clients to submit loan applications and assertively position themselves in “lock-ready” mode because we will not know how long rates will last when they do drop. Last week, the low rates lasted about 2 and ½ days; in May, it lasted about a week and in January, the low point was available for a mere two hours. That is 2008 in a nutshell. Until today, I was a little wary about the Treasury’s reference to a Resolution Trust Corp – news that helped start the S&P soaring nearly 7% in the last 1 and ½ days of trading last week.

This morning, Treasury Secretary Paulson unveiled a $700 billion plan to purchase “troubled assets” from financial institutions, with the primary focus on mortgage-related assets. I think the Treasury’s action is swift and on point. But be forewarned – they don’t create this money out of thin air without some sort of taxpayer consequence somewhere down the line. The economic hole is deep, but I am confident now that the government understands its severity and is taking the appropriate steps to repair it despite a certain prolonging of the housing slump. In time, surely we will all share in taking the brunt of this crisis and hopefully learn to form a more solid housing economy based on authentic housing values and bona fide mortgage securities.