Notes from Lynda Startzman………………October 14, 2008
All twenty nations in the major financial markets were involved in a meeting this past weekend to come up with solutions to ease the borrowing and lending squeeze all nations are experiencing.
On Monday, October 13th, banking giants, and leading economist and investors were called in to the Treasury for input.
Today, October 14, 2008, $250 billion of the $700 billion “bail out plan” was spent to purchase stock in the banking industry. Looking at the stock market and at the value of the dollar it did help quite a lot. This was but one step with many still needed.
The Treasury is now working on a comprehensive financial rescue plan. There is talk of allowing taxpayers to withdraw $10,000. from their 401K without penalty. (You would still pay tax on the withdrawal, as it was untaxed money.)
There is also talk of several other areas involving small business and job creation. (Nothing concrete in those areas today.)
The stock market soared over 1,000 points on Monday after European markets rallied due to banking changes from their governments.
The hope is that the stock market will have a steady increase, as opposed to a rapid increase and then a sharp decline.
I guess my biggest disappointment is Fannie Mae and Freddie Mac. Most of my elder clients in the past seven to ten years have had one of these in their portfolio due to the tax free properties in them.
Fannie Mae and Freddie Mac did not have proper regulations and rules and have committed some gross errors as well as problems in the lending market taking unprecedented risks with borrowers.
Be very careful in the stock market as some “hedge funds” could still “dump” if investors request their money, and the banking industry as well as the auto industry still have a lot of details to work through.
The talk of a Second Stimulus Packet will probably not mean another “check in the mail”.
Treasury Secretary Paulson should come out each day for the next few days with how the $700 billion is being used and also any new plans.
Thank you,
Lynda Starzman
