Nothin' to see here...
So Freddie lost a couple billion. Four bucks a share. Whatever. Pikers. Fannie did better than that. Nothing to worry about, because the gobn'ment has a plan to make things better. An awesome plan
They'll fix the problems with bad debt by borrowing more and backing larger debts from Americans who've done the same thing. Pretty good plan, I think. I know lots of Americans who have that $100-plus K stashed away, just waiting for a break on their jumbo rates because, let's face it, everyone deserves a half-million-dollar home, or better. It's what makes America great.
Let those worrywarts and Moodys bite their nails over Fannie's debt. What's the worst that could happen? A downgrade? Ha. We'll just have our legislators tell Moody's to stuff their debt rating, and continue loaning them money at low, low rates, backed by good old taxpayer money.
And, as a final one-two punch (plus three and four). The Fed is gonna just keep cutting rates. After all, the solution to a financial problem caused by an pile of cheap money and bad lending must be -- you guessed it -- more cheap money. What about the bad lending? This time, I'm sure the capital will be deployed more wisely, right?
So stop worrying about that raging inflation. It's just gas and food! It doesn't really count! Home prices dropping like rocks? They'll probably rebound right away. That's what happens with prices, right? They just suddenly reverse from double-black-diamond-steep drops and move back up? As soon as the nasty press out there stops talking about economic problems, and allow pent-up demand to make the Toll Brothers a few hundred million more?
What do you mean Mr. Toll said the exact same thing last year in June?
Pent-up demand is going to turn around the housing market, insists CEO Robert Toll of Toll Bros. He said demand will be driven by buyers who are biding their time waiting for better incentives or lower prices.
"Once the natural balance is restored in the market, you're going to see prices go up again. Prices are going to go up quite a bit," he said.
OK, so he did. So he got that one horribly, 180-degrees wrong. I'm sure he's right this time around, right? And the politicians too. Right?
Invest cautiously, everyone. There are deals aplenty and more on the way, but it's no time to let your eyes glaze over and play the "everything is wonderful" game.