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September 20th, 2008 11:32 AM

Dear Friends,

This weeks' events in the financial markets could have driven anyone to drink to excess or by inadvertently adding pounds to one's constitution, by munching on 'comfort food'. In order to alleviate the chronic stress of this Wall Street madness, many of us had no choice but to indulge in such discordant habits. The roller coaster we've been on for months has finally crashed and the consequences has created injuries and casualties in its aftermath.

How does someone begin to decipher the trillion dollar headache the US taxpayer will have to pay, in order for confidence and trust in our financial institutions begins to take effect? The government bail outs of FannieMae, FreddieMac, AIG, IndyMac and Bear Stearns among others, has created a cottage industry where corporate greed and incompetence has been elevated to a diffusion of responsibility under the newest definition of accountability. These corporate giants with an accommodation of numerous entities in the financial sector and the US Government, has placed in bankruptcy the future of this country by providing 'imaginary' funds for a problem that has a solution not to our liking.

In order to solve a problem and to have the capability to discern the factors which created it, one must have the ability to look to the past to avoid the pitfalls created in the present. Home grown common sense is sorely lacking in this country as we've become a nation of denial merchants unwilling to grasp the excesses of credit, the urging demand of covetousness and the horrors of an economic system devoid of responsibility.

With that said, our financial house has to be restored at all costs. There was no room to maneuver. Of all the government players in this crisis, Treasury Secretary Paulson took the bull by the horns and helped end the eventual destruction of our financial system by conceiving of a plan to purchase devalued mortgage paper of US financial institutions. Due to the current situation, the likelihood of a full blown global recession or depression was halted.

Mutual funds, mortgages and other financial instruments are now and will be insured by the Federal Government. The complexity of this problem was truly global in scope. While this was a historic week as a crisis was averted, the consequences will be felt for years to come. It is my understanding the Federal Government will purchase non producing, devalued mortgage assets and bundled securities from financial institutions at a negotiated price. The government will sell these assets in the open market, similar in concept to the actions of the RTC or the Resolution Trust Corporation. The RTC you may recall, sold  many of the assets of bankrupt Savings & Loans during the early 1990's.

Congressional leaders from both parties with the guidance of the current administration will provide a new agency to oversee the purchase and the eventual sale of these assets.  I recommend these assets should be sold responsibly, in effect, when the economy stabilizes and when the subject properties themselves begin to appreciate. To 'dump' these properties on the open market at this time, would destabilize the real estate market considerably. There has to be a gradual and concerted plan to sell these assets at the right time for the right price. These actions would help lower the burden and the costs for all taxpayers.   

In our next TEAMBLOG, I will discuss the historical circumstances which generated this crisis and the actions which need to be implemented to avoid another debacle of our financial system. 

Mortgage Rates

Rates went down dramatically during the  beginning of this week. By Friday, the rates climbed and were positioned similar to last weeks. The Bond Market had a wild ride due to the Governments' financial plan of providing billions of new dollars to buy junk mortgage securities from ailing banks and financial institutions. This solution helped reassure the markets. Please check our current mortgage rates and call our office at 323-936-3232 for more details.

Flags In Malibu

Last Saturday morning September 13th, something came over me and I decided to get out of the house and took a drive to the beach. I ended up in Malibu and noticed the display of American flags on the grounds of Pepperdine University commemorating the events of 9/11. I remembered seeing a report on the news the week before, showing one of the organizers placing the flags on the grounds.

There are no words to describe the view in Malibu nor thoughts to ease the pain of the images and events on that sad day in New York. Our nation still grieves.

At The Movies

I circled the date on my calender, September 18th as I was eager to see one of my favorite films at the Aero Theater in Santa Monica, "Harold & Maude".

This film was first released in 1971. I was a freshman in college in 1973 when I first saw the film. Ever since then, I've seen this film numerous times and always came away with a feeling of euphoria!

The plot consists of 2 eccentric characters, meeting by happenstance in the most unusual circumstances with a tremendous age disparity and gradually falling in love. Irrespective of the handicaps imposed by traditional modes of conduct by society, our beloved Harold & Maude bring out the best our gifted souls can muster, in a world of complacency and derision. The music of Cat Stevens injects the spirit with hope, that life is truly worth living to the fullest!

Thanks Again  

Posted in:General
Posted by Jesse Dorado on September 20th, 2008 11:32 AMPost a Comment

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