Senate Done - House Friday?
Posted October 2, 2008
The Senate passed the newest version of the “bailout bill” Wednesday night, setting the stage for another dramatic Friday for the house (it’s scheduled to vote Friday on the bill). The question looming for consumers and businesses alike is… what does it mean to us if it actually gets passed? That is the million dollar question –or in our case, the $700 Billion question.
I often talk about the two mindsets present in business today – Wall Street and Main Street. These are very important because we separate consumers from business, and get to focus on what will help the psyche or mindset of this economy. Whatever the missing components are, they must be present in both categories in order to have a positive impact across the board.
I’ve been saying for many months that the single most important piece of the economic puzzle which is still missing, and must return in order for things to get back on track – is confidence. Confidence on the consumer side – so that main street begins to feel healthy again and is willing to go out to eat, purchase durable goods (appliances), purchase houses and automobiles – all of this to pump liquidity back into our limping economy. Confidence on the business side – so that Wall Street will feel good (and able) to invest in infrastructure, purchase new technology, hire new and additional employees for their businesses – all of this to pump liquidity back into our limping economy.
The other critical piece – at least for the housing and mortgage industries – is to have long term interest rates drop to below 5.00%. Now this is not the magic number by any means, but I know that we have many consumers waiting for rates that low so that it makes sense for them to enter into a real estate transaction on the refinance side– and certainly cheaper access to credit also makes it easier to consider purchasing a new or existing home. All three scenarios would begin to facilitate spending on goods and services for the home – thereby adding oil to the squeaky wheel of today’s economy.
We’ll talk again after the next house move.
Jeremy M. Salemson
Corporate Investors Mortgage Group, Inc.