You are Fed Chairman Ben Bernanke. It is 6:00 pm on a Thursday. You get a phone call from Bear Stearns, a major investment bank, saying that they are experiencing a lack of liquid funds and will have to declare bankruptcy unless something is done by the opening of markets tomorrow. Taxpayers are already furious with the economy, and bailing the bank out would incite even more rage. HowÂever, letting the behemoth fall would begin an unstoppable unwinding in the already fragile financial [...]
With tax season upon us, individuals who own vacation condos must be certain they are able to claim every tax credit and/or deduction allowed them by law. The following is an excerpt from my book, Condo Living: A Guide to Buying, Owning & Selling a Condominium and is part of a tax credit series for the condominium owner and investor. "There are specific limitations on the allowable business deductions available to a taxpayer who uses a vacation home for both personal and rental purposes. [...]
It was a surprisingly quiet week, given that it was the final week in the 1st quarter of 2008. Typically, markets tend to be quite fidgety as fund managers and investors shift their cash around to make their balance sheets look nice. However, we saw a decline in volatility across both stock and fixed-income markets with very few earth-shaking events.  February's existing home sales numbers came in 2.9% better than January's read, implying to some that we may be nearing a bottom in the[...]
The Fed has flexed some serious muscle in the last week and a half, and I am feeling very positive about the outcome thus far. Here's the play-by-play: Bear Stearns suffered a liquidity emergency (kinda like what would happen if everyone in New York flushed at the time to water, only with money), ignited by some Wall Street whispering about looming balance-sheet problems. Everyone tried to get their money out, and Bear simply didn't have the cash or collateral to cover it. So, JP[...]
A National Association of Home Builders quarterly index that measures builder and developer confidence in the condo market dropped 11 points in the final quarter of 2007 compared to the same quarter in the previous year. The Multifamily Condo Market Index, based on a survey of builders, stood at 18.8 in the fourth quarter on a scale of zero to 100. A score below 50 indicates more negative responses than positive responses. Sounds bad right? It is - if you're a builder. But if you're in the [...]
"You put down 20% and get a 30-year fixed-rate mortgage at today's rate of 5.5%. Monthly principal and interest come to $994.31. Let's say that 12 months from now the same house goes for 10% less, or $197,010. But by then the recession is history and the Fed is jacking up rates to stem inflation. If mortgage costs rise just half a point, to 6%, your monthly payment would be $994.94 and you'd have saved nothing. Meanwhile, some prices might steady and sellers might become less willing to [...]
I was watching the local news today (as I have been known to occasionally do) and they seemed intent on drilling the frightful idea of $4.00/gallon gas into our heads. It seems that newscasters don't take very long to get on my inflationary bandwagon and start trying to freak everyone out. These concerns are coming on the back of crude oil hitting $100/barrel again, a level that was once looked on as a market novelty. Now, economists are divided on whether oil will recede or move to all[...]
A ton is going on in the world, all very relevant. Seriously, I could write a novel about the last two weeks. So, in the interest of time, I'll keep this one as short and sweet as I can.Preliminary Gross Domestic Product numbers came in at a meager +0.6 for 4th quarter '07. Not the thrilling growth that our country has come to know and love, but also not indicative of a full-on runaway recession. Initial Jobless Claims came in at 356,000, higher than expectations of 340,000. The[...]
In our last episode (newsletter), we find our hero (me) saying:  ‘Wall Street bloodhounds are sniffing around for an emergency rate cut from the Fed. I don't see it happening. Emergency cuts evidence panic from the higher-ups, and maintaining a veneer of confidence is more important than ever. If the investing populace isn't convinced that the Federal Reserve has a handle on price stability and growth, mob mentality will set in and bad things will result.'  Boy, I [...]
Let there be no confusion: we are in the thick of an economic slowdown. Wall Street seems to be reacting very emotionally to all the doom-sayers and their recession dirges. Today marked another 300+ point drop in the Dow Jones Industrial Average, coming on the coattails of other triple digit losses earlier in the week.So why all the hub-bub, Bub? Ben Bernanke gave a strong speech on the economic outlook of our country to members of ConÂgress today. In this speech, he cited a [...]
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