There should be riots on Wall Street. It is as if the U.S. Military has driven tanks right down into our financial center and has taken over our free markets, reeking chaos and havoc on corporations that have overleveraged themselves in mortgage backed securities. The government has become punch drunk in it’s efforts to rescue the financial system and it is and will continue to effect the way that our markets work.
Let’s recap what has happened over the last few weeks. The government nationalized Freddie Mac and Fannie Mae, and then it did the same with AIG. Uncle Sam further plans a $700 billion fund to buy, well, whatever types of assets it wants. Originally envisioned as a repository for soured mortgage bets, as late as Sunday night, the Treasury Department reportedly revised plans to include what it terms "troubled assets." Those could be student loans, credit-card debt, non-U.S. assets, or anything else that happens to strike Paulson's fancy. You couldn't design a more inherently corrupt and arbitrary policy if you tried (smartmoney.com). This is in addition to policy that wants to step in and aid “struggling homeowners” who bit off more than they can chew when purchasing home they can’t afford.
This coup d’etat by the Fed has rushed in so quick to bail everyone out that everyone’s heads are spinning. It is like going to bed in L.A. and waking up in Venezuela the next morning. In a span of a month it seems that we have abandoned all free market principles that this country was built upon. I have no words to express how bad this feels right now, it is as though we are shifting to a model of economic socialism where the free markets can not operate how they are supposed to except when they are doing well. It actually rewards risk by large corporations since they know that the Fed will be there to bail them out if they get into trouble.
I also was hoping to see home prices correct further so I could purchase a home in West LA by next year, I seriously can’t foresee that happening with all of this market manipulation on the economic and housing level.
