(edit/delete)From The Commercial Mortgage, Real Estate and Political Hotline at http://commercialmortgagehotline.blogspot.com

Monday, September 29, 2008
Reading Between The Lines Of The Mortgage Bailout Plan
 
Actions Speak Louder Than Words

In moving from the rhetoric coming from Washington and bringing it to the level of Main Street (a term that our politicians love to invoke), and watching the early stock market reaction to the bailout plan as we know it now, actions are speaking louder than words.

Asian and European markets are down in the 2%+ range, and stock index futures in The U.S. indicate a fairly significant lower open. This situation of lower futures happened several times last week, and the market would end up rallying and finishing in positive territory. The rationale then was typically that a bailout plan was on the horizon.

Is today the typical Wall Street "buy the rumor, sell the news" sell-off, or is it something more? Is it Wall Street responding to the Plan with their feet?

The Plan, The Consumer And Small Business

It appears to me that what the market is thinking when doing its' initial analysis of this plan, is that it may be to little, to late, to keep the economy from moving further into a recession. While the plan will hopefully unclog the arteries of the credit markets (a popular term with pundits and market analysts) and help bank balance sheets, does it do anything to increase consumer confidence and give availability to capital in the very near term for those who need it most?

Things like business loans, car loans, home equity loans, student loans and the all important mortgage loans for anyone other than those with the most pristine of credit credentials.

If not, and this plan does not re-ignite the trust between banking institutions to lend to each other and to Mr. and Mrs. Front Porch, then this bailout plan is one more bullet that has been used, with less and less available in the chamber (yet another common phrase to describe our situation) to get us out of this mess and save our economic situation, at least in the short term.