As I’m writing this the Dow Jones has fallen again and it currently stands at 7607, down another 243 points. Its the day that President Obama has signed the so-called Stimulus Bill but it doesn’t matter whether you read the big outfits like CNN or Bloomberg or even if you go to smaller sites such as this Stock Market News site called Market Number - it’s difficult to find many bulls out there. Has all of the huffing and puffing of the last week or two in Washington done the slightest bit of good or is it all just macho posturing by people with big egos and not much talent? I’m bound to ask - do the DC politicians even care any more?
Just to set the scene, the 52 week Dow Jones high was 13139 and the low was 7449. I can recall within the past year seeing some television pundits forecasting a 2008 close of 15000 or higher. (By the way, just how wrong do you have to be before the cable channels stop asking for your pundit opinion?).
If you’re like me, the last year or so has seen your net worth decline at an unbelievable rate. I heard one report over the weekend that the average USA household has lost 22%. It seems like a lot more to me personally, but maybe the dark financial clouds that have been around for months now have the effect of making everything seem far worse than they really are.
So what’s the solution? At the moment I can only think that, if the Stimulus Bill is the answer, I don’t even want to think about what the question is. Some experts argue that we’re about to go over the edge of a financial cliff while others are certain we’re not spending enough. Just a few snippets from today’s news items:
$787 billion economic recovery package became law on Tuesday with the simple stroke of Obama’s pen. Knowing whether it’s working? Not so easy
Source: CNN
General Motors, Chrysler Bankruptcies Can’t Be Ruled Out, Obama Aide Says
Source: Bloomberg
Five trillion dollars, that’s what it’s going to cost for the good / bad bank and ballooning stimulus plans.
Source: Marketoracle.co.uk via Stock Market News
Are there any positives out there?
Well, oil is down to around $35 a barrel. The US Dollar remains fairly strong (I think that’s a good thing, but again, opinions vary).
And as far as real estate is concerned, there are some faint glimmerings of hope.
The Orlando Regional Realtor Association latest report shows inventory down by 10% from its 2008 highs. New contracts at 2282 are the highest level since May 2007. And house price reductions do have a silver lining:
The median price of Orlando homes sold in January ($148,274) decreased by 33.06 percent compared to January 2008 while the area’s average interest rate dropped to its lowest point since May of 2005, creating market conditions that further tilt in favor of buyers.
Combined with some more CNN stories (”Final score: $8,000 for homebuyers in the Stimulus Bill” and “Obama’s foreclosure fix on the way”), let’s hope that this really does herald the start of a recovery and work like heck to make sure it does.
And let’s hope that of the two options I posted in the first paragraph, we’re going to benefit from the “slightest bit of good” and not just suffer the big egos. As for the “care” question, I think the jury is still out and will be for a while yet!
Update Feb 22nd: if any real estate help is to come from a lowering of home loan costs, there’s no sign of relief in the latest mortgage trends data.
