The general arguments concerning the bailout have gone something along the lines of

"The taxpayers should not have to foot a 700 billion dollar bill to bail out Wall Street"

"But if taxpayers do not bail out Wall Street the economy will fall apart and those same taxpayers will be hurt"

If we could be sure the bailout would work the second argument has some merit. While the bailout will certainly help the banks, the problem is we have almost no guarantee the bailout will help the real estate market and the general economy.

First let's look at some recent history of how the Fed has tried to help the troubled real estate market. The Fed usually attempts to lower mortgage interest rates to help the real estate market. By lower mortgage rates houses become more attractive. In addition, with lower mortgage rates home buyers can buy more expensive houses with the same monthly payment. Therefore lower rates can help stop falling prices. So it was not surprising in early 2008 the Fed cut the Fed rate. In normal markets lowering the Fed rate helps banks and causes them to lower mortgage interest rates. And after the fed cuts mortgage rates for a period of time dropped to 5.50. If they had stayed down there we might have averted some of the problems with the current housing crisis. But instead a few weeks later rates had jumped backed up to 6.2. Basically banks said thanks for the lower fed rates but we are not going to alter our rates. In fact, over the next few months mortgage rates rose all the way to 6.6. The next big move was acquiring Freddie Mac and Fannie Mae. This was one of the largest government takeovers in US history. The move was risky because the government was providing insurance for trillions in loans. And it initially had a positive effect on the housing market. But a few weeks later AIG ran into financial problems. It was almost as if the government takeover of Freddie Mac and Fannie Mae never happened.

So the previous moves the federal government has made to stop the financial crisis have not worked. Should the 700 billion dollar bailout be different? It could certainly help the markets. But it might not. Lets look at why.

One of the benefits of the 700 billion dollar bailout has nothing to do with banks. It has more to do with perception on Main Street. The hope is that the bailout will restore confidence in the real estate market on Main Street.

In politics people often talk about news cycles covering up the last news cycle. Basically the last piece of news stays in people's minds until the next piece of news comes along. The Fannie Mae and Freddie Mac news cycle (and the billions the government will spend on it) only lasted until the next piece of news, which was about a week. While the 700 billion dollar bailout should restore some confidence into the real estate market, that confidence might only last until the next piece of news. And with things happening so quickly that news cycle might not last very long and given the current market the next piece of new is likely to be negative.

The other benefit of the 700 billion dollar bailout is that the government is hoping to influence banks to start lending again. The idea is that by taking billions in toxic loans off the books for banks they will start lending again. The problem is that their is no guarantee this will happen. In fact when the fed lowered rates banks said thanks but decided that prospects for the housing market looked negative and continued to add restrictions to lending. In a similar fashion banks could say thanks for the 700 billion but we continue to see negative prospects in the housing market and therefore we will continue to have strict lending practices. But thanks for the 700 billion taxpayers.

Escapeso real estate is a small brokerage in Austin Texas. Their realtors works with clients looking for Austin real estate. Their site offers a free search of the Austin MLS along with current mortgage interest rates.

So it has been a week since the feds came in and took over Freddie Mac and Fannie Mae. While it will obviously take some time to know the long term repercussions I wanted to look at some of the immediate reactions to the move.

First let's look at the reaction from the media and the general public. One would expect there to be some political fallout from the largest takeover in government history. But because of the election and Hurricane Ike the reactions have largely been muted. There have been of course the expected positive reactions that this was a shrewd move to help the real estate market and negative reactions that the government should limit its involvement. But for the most part their has not been a big reaction one way or another. I have actually seen more stories about the reactions on the takeover from the presidential candidates than stories simply about the takeover.

While the media reaction has been muted the reactions in the financial markets have not been. Not surprisingly, the stocks of Fannie Mae and Freddie Mac plummeted after the announcement. The government said before hand that the common shares of Freddie Mac and Fannie Mae would lose most of their value in the event of a government takeover. So following the news of the takeover the share promptly lost 80% of their value.

The mortgage markets have reacted very favorably to the news. Considering the Fed has cut interest rates multiple times this year mortgage interest rates have remained relatively high. The reason for this was that banks were unsure about the financial stability of Freddie Mac and Fannie Mae which provides insurance for about half of the residential loans issued in the United States. This risk has now been lowered since the government takeover. Consequently mortgage rates have plummeted in the last week. 30 Year mortgages have dropped from 6.35 to 5.93. This is after rates have moved down from 6.63 to 6.35 partially on expectations that Fannie Mae and Freddie Mac were going to be taken over. I have seen some reports that this is lowest rates have been in the last 4 months. I think this understates how low rates have come down. Besides two brief drops at the beginning of 2008 this is the lowest rates have been since 2005.

The lower interest rates should have a positive effect on the real estate market. Lower rates pull down the mortgage on a house and tend to have a positive effect on real estate values and market activity. In another positive sign although their has not been too much media coverage the coverage that has come out has been mostly positive. To be honest I was a little surprised by this. I would have expected the coverage to be a little more mixed. But regardless the favorable media reaction combined with lower interest rates should help the real estate market. And based on what I have heard from different realtors their does seem to be an upswing in activity. But we won't have any hard data on this for a month or so.

So, at least in the short term, it seems the Feds have accomplished their goals of helping the real estate market with the Freddie Mac and Fannie Mae takeover. We will of course have to wait over the next few years to see if this move turns out to be wise. But for now the Fed has finally been able to push down mortgage rates.

Ki is a real estate broker working in the Austin real estate market. He maintains a website with a Austin MLS search and a frequently updated Austin real estate blog.

So on Friday it was leaked that the government is taking over Freddie Mac and Fannie Mae. On Sunday it was official. Freddie Mac and Fannie Mae have now been taken over by the federal government. But what does it mean for the real estate market, mortgage interest rates, and the US economy.

First let's look at what it means for mortgage rates. I would expect that the government takeover will result in lower mortgage rates, possibly a full point lower. Why? Basically the Fed has been struggling to lower mortgage rates for the last year in an attempt to assist the troubled real estate market. The Fed has lowered prime rates several times in an attempt to pull down mortgage interest rates, with mixed success. Now with full control of Freddie Mac and Fannie Mae (which provides insurance for most mortgages in the US) they will have much more control over the mortgage market and mortgage rates. As long as their objective stays the same, we can expect lower rates.

What does the takeover say about the current situation in the real estate market? This should have been obvious from all the events that preceded this but the takeover shows that the real estate market is in serious serious trouble. The federal government doesn't just take over large companies on a whim, especially an administration with a Republican president that believes strongly in free markets. This is not simply a government takeover. This is the largest takeover in US history. Basically the takeover happened because it was believed if nothing was done we were headed for economic catastrophe.

How is this going to effect the real estate market? Although the takeover is a bad sign about our current situation it should have a positive effect on the real estate markets moving forward. First lowering mortgage interest rates should be quite a boon for the real estate market. Lowering rates lowers the effective cost of a house. And historically lowering rates has a positive effect on real estate values.

Additionally, if the Fed is smart they will reduce some of the mortgage restrictions Freddie Mac and Fannie Mae have created in the last year. While I would not like to see the mortgage market return to the free-wheeling lending of a few years ago, some of the current rules are bizarrely restrictive. The lending environment typically works like a pendulum moving from one extreme to another. Currently lending restrictions are not just stricter than what we saw during the real estate boom a few years ago but they are more restrictive than anything we have seen in the last 15 - 20 years. Hopefully a federally controlled Fannie Mae and Freddie Mac can help return us to normal as far as lending restrictions.

Lastly the government takeover could put taxpayers in the lurch for billions in loan losses. In the short term the government is going to have to infuse money into Freddie Mac and Fannie Mae. They have been losing money for quite some time and that is not going to change overnight. If the market improves over the next year or two, which was likely before, and the takeover improves the outlook for the real estate market, the government will have to infuse maybe a total of 20 to 30 billion into Fannie Mae and Freddie Mac to get them back to financial solvency. That sounds like a lot but to put the number in context, the cost of the Iraq War has been running at about 100 billion a year for the last 7 years. So a 20 billion dollar expense is an unpleasant but manageable expense. But if real estate market gets a lot worse over the next two years, I can't think of the adjective to describe how expensive things could get.

Fannie Mae and Freddie Mac provide insurance for 5 trillion in loans or about half of the residential loans in the United States. Because of the takeover, the federal government now provides insurance for 5 trillion in loans. If we are just on the cusp of severe real estate problem that means that the federal government is on the hook for 5 trillion in loans. That's more than double the entire federal budget for 2007 and 10 times what the US has spent on the Iraq War. So as taxpayers we should hope things improve soon because if the rate of foreclosures skyrockets over the next 2 or 3 years, we are basically going to be paying for it.

Does this mean the federal government is insane? It depends on how you look at the issue. This was certainly a risky move. But on the other hand allowing Fannie Mae and Freddie Mac to fail would have devastated the US economy and likely lead to a severe depression. So doing nothing was equally risky. And while taking over Freddie Mac and Fannie Mae was a risky move for taxpayers, in a depression those that keep their jobs have to make up for all the lost tax revenues for the large number of people that lose their jobs. So in summary the federal government found itself in a tight spot and decided to bet the farm they can fix the real estate market and for our sakes, let's hope they are right.

Ki lives and works in central Texas. He provides a search of the Austin MLS on his site along with current information on the Austin real estate market. His site also provides a tool that show current trends for mortgage interest rates.

Rising gas prices along with general increases in cost of living across the board are forcing many people to tighten their budgets and cut excess spending. In order to maintain a certain standard of living, people everywhere are looking for new ways to stretch their paychecks and make ends meet. While most people cannot realistically cut the cost of gasoline from their budgets, millions are finding ways to creatively cut back on fuel costs. Here are just a few ways you can help minimize your gas usage and save a few pennies at the pump.

1. Ride a bike
Studies have found that the average car trip is less than three miles. In most areas, this distance cane be covered on a bicycle without any trouble in fact, many urban areas are seeing a sharp increase in bicycle commuters. While a bike is not the most practical mode of transportation for every situation dropping the kids off at piano lessons, for example (unless everyone can ride their bikes, and you don't mind waiting until they finish to ride back home together) you might be surprised at just how efficient it can be. A trip to the grocery store is infinitely manageable, though you'll likely have to go more often and buy fewer items each time (bikes, sadly, lack trunk space). But think of the exercise you'll get, and the money you'll save on gas plus, you'd be hard-pressed not to find parking.

2. Take public transportation
Many areas offer reliable public transportation at a fraction of the cost of a tank of gas. While this type of transportation may be a bit less comfortable than driving yourself, and will likely take longer, think of the benefits no stress of maneuvering through traffic, no added pollution (on your part, anyway), more time to read or listen to music (that you would otherwise spend driving), and a significant drop in your transportation spending.

3. Drive smarter
If and when you do drive, limit gas expenditure by driving the speed limit and staying with the flow of the other cars on the road especially in traffic. Stopping and starting again and again quickly burns up gasoline. So does speeding. Also, whenever possible, consolidate your errands. Sit down and map out your errands for the week (or month) and schedule them to get as many done at once as possible. This will help you save both time and money. You'll also be less likely to buy things impulsively if you have a full schedule of errands to run (also a money-saver). There are other, smaller things you can do, too. Always remove unnecessary items from your car (particularly the trunk), as the added weight can minimize your fuel efficiency and burn gas faster. Don't fill your gas tank during the heat of the day, because you'll actually get less gasoline for your money than if you fill the tank in the morning or evening, when the gas is cooler and more dense (this won't save you a lot of money on the spot, but over time those pennies add up). Skip trips that you don't really need to make, like going out for no particular reason there are plenty of ways to entertain yourself that don't waste gas.

The bottom line is, even little everyday things can have a big impact on your fuel usage and spending over time, so carefully consider your options and think before you drive your budget will thank you for it.

Ki works as a real estate agent in Austin. His site provides information about Austin real estate along with a free search of Austin MLS. He also provides monthly statistical updates on his Austin real estate blog.

The Mexic-Arte Museum is the Official Mexican and Mexican-American Fine Art Museum of Texas, as designated by the state legislature. Although focused primarily on the arts from Mexico, their scope includes Latin America as well as Latino arts, both contemporary and ancient, as well as Chicano art. Its diverse and eclectic collections, exhibits and programs reflect the heritage of the area, which was once Mexico. The population of Texas remains heavily Hispanic, and the Mexic-Arte museum celebrates this culture.

Located in the heart of historic downtown, the Mexic-Arte Museum offers a modern, contemporary space through which over 75,000 visitors a year travel. The main gallery is normally used by traveling exhibitions of traditional and contemporary art from Mexico and other Latin American countries as well as for national, local and regional Chicano and Latino artists. One of the few museums to support fresh talent, their back gallery provides space for emerging artists to exhibit their works.

The museum's Permanent Collection has developed with the intent of showcasing the rich and diverse art and culture of our unique region. The collections include prints from the Taller de la Grafica Popular/Workshop of Popular Graphics, a collection of etchings, linocuts, lithographs and silkscreens created by prominent artists as part of a populist art movement in Mexico. The Ernest De Soto Collection was named for the first Mexican American Master Printer, and consists of contemporary Latin American and American lithographs, fine prints, and etchings by renowned artists. One of the most colorful and attractive exhibits is the Masks from the State of Guerrero, a collection of traditional ritual masks made by Nahua Indians. Over 200 silkscreen prints by regional artists comprise the Serie Print Project.

Traveling exhibitions have included Retablos: Miracles from the Border, Embracing Chaos by young Latino artists, and La Caja Museo Contemporáneo de Arte / The Box Contemporary Museum of Art. The diversity of the arts is clear when exhibitions include Aztec mummy movies as well as The Aztec and Maya Revival exhibition, which illustrates a fusion of Pre-Columbian visual patterns with modern Mexican material culture.

The museum's flagship event for over a quarter of a century, and one of Austin’s favorite celebrations, falls every year near Halloween. Dia de los Muertos (Day of the Dead) is traditionally the day when Mexicans remember their loved ones who have passed on. The Mexic-Arte Museum celebrates with music, entertainment, and food in downtown Austin on 5th Street, between Congress and Brazos. Altars adorned with traditional offerings including candles, flowers, and images of calaveras (skulls) are on display, as a lively procession of people dressed in skeleton and Frida Kahlo costumes join other revelers for dancing and fun.

Educational outreach is paramount at the Mexic-Arte, which offers after school classes, free guided tours, and an entire program in anticipation of the Dia de los Muertos celebration. A corner of the museum is designated an Interactive Family area, and they host highly regarded scholars in a gallery lecture series. The Mexic-Arte Museum is located at 419 Congress Avenue in Austin Texas.

Escapeso Austin Real Estate is a small company working in central Austin. They run a website with information about Austin real estate. Their site also has information on Austin foreclosures and a search of the Austin MLS.

You would probably have to have been living on a remote desert island for the better part of two years to not see any signs of the slowdown in the economy of the United States. Since August of 2007, the real estate market has been reeling from plummeting house prices, due primarily to increasing defaults on sub-prime mortgages. While these mortgages were issued to millions of borrowers with patchy or relatively poor credit ratings over the past several years, interest rates remained unusually low before the Federal Reserve began to increase rates over 2005-2006.

Up until late 2006, this process was self-reinforcing, mainly due to the delayed impacts of interest rate changes, not to mention encouraging profits for lenders, who would often repackage the loans into securities which could be sold to investors globally. Many analysts called it a new era in risk management, justifying the arcane nature of many of these new investment entities with ever-larger profits.

But just as higher interest rates began to take their deflationary effects on the larger economy, millions of sub-prime mortgages began to reset, their rates immediately dependent on available credit. Moreover, many borrowers were not made aware of the insidious nature of their home loans.

Often, their interest rates are artificially low for some period of time, usually one to two years, and then change to reflect market rates afterward. These "teaser" rates were designed to lure more potential homeowners, and they worked: all estimates of the amount of sub-prime mortgages number in the millions, and many consumer advocacy groups have decried the skyrocketing incidence of "predatory loaning" leading up to the credit crunch. Defaults have continued to increase, which has forced the financial institutions which invested in mortgage-backed securities to write down billions, eventually leading to the spectacular collapse earlier this year of Bear Stearns, formerly Wall Street's fifth-largest investment bank.

Since the securities made from these increasingly worthless mortgages have been so widespread, any effort towards recovery must first be focused on stabilizing borrowers, who are increasingly behind on payments. In this respect, the government has taken several different courses of action. In an effort to stop unnecessary foreclosures, the US Treasury has begun an initiative to freeze mortgage payments at current levels for qualified recipients. However, its restrictions make less than 5% of homeowners eligible for the program.

In addition, the Treasury has introduced a plan to reorganize and regulate the lending industry over the next several years, which should help streamline the financial system in the future. However, its greatest effect so far has been to distract from more immediate economic problems.

By far, the greatest player in the recovery effort has been the Federal Reserve, which reversed its previously hawkish view to drop mortgage interest rates multiple times, from 5.25% last summer to 2.25% now, with a further cut of 25 basis points highly likely at the next meeting. They have also taken the unprecedented move of making its "discount window" rate loans available to investment banks. This access has historically only been available for commercial banks up until this point as a matter of last resort, but by bailing out Bear Stearns, the Fed made a commitment to help troubled investment banks weather the credit crisis. A recovery will require a combination of liberal monetary policy, further government intervention on behalf of mortgage holders, and enforceable regulation in order to prevent another bubble.

Ki is a real estate agent in Austin Texas. He runs a site filled with information about Austin real estate. His site provides information on mortgage interest rates along with a search of the Austin MLS.

As Election Day approaches, one of the most publicized presidential races of the past several decades has captivated the minds of people around the world and set records for participation in the US democratic primary system. As the first woman to run as a mainstream candidate for president, New York Senator Hillary Clinton has quite a race in front of her by anyone's standards. Even though equal rights for women have existed in the United States for almost a century, it has been a long time coming for a presidential race between Clinton and her fiercest competitor, Illinois Senator Barack Obama. Although she had led polls initially for several weeks, as the Iowa caucus started to get underway, Obama had the lead. After her third-place finish in Iowa, things were looking a little desperate for Mrs. Clinton, whose campaigning in recent weeks has been relentless. As Obama picked up the pace to match, it seemed inevitable. With the opposition taking double-digit leads in most polls in the days and hours leading up to the New Hampshire Democratic primary, the Clinton camp seemed somewhat resigned. But with an unusual combination of a record voter turnout, the first truly web-capable election, and a newfound global interest in US politics all contributed to Hillary's comeback. The New Hampshire primary had more people voting in it than ever before by a large margin, with a half million strong coming out in the unseasonably warm weather to cast their vote. While Obama took the independent voters and many young Americans, the biggest bloc of Hillary supporters were- surprise!- women, as well as the diehard Democrats, who seemed to take Hillary more seriously. While the "electability" of either major candidate has been questioned, a race that comes down to a black man or a woman for the highest civilian office in the US is certainly not to be overlooked in terms of progress. Yet this factor may have helped win Hillary undue support. While the Iowa caucuses were held openly, the ballots cast in the New Hampshire primary were cast in private, thus begging the question: What other factors besides racism could give one candidate a clear lead in polls, yet give the other candidate the nomination? Well, the power of the web has been somewhat underestimated in recent months, as the first presidential webcast debates have been published-er-uploaded and received millions of hits. A video reposted on Youtube of Hillary speaking to a coffeeshop audience nearly in tears went viral hours before the election, in a brief but rare emotional outpouring that just may have set her apart from the competition in an unexpected way. As often as she has tried to be sincere and make connections to people, Hillary has come off as cold and calculating, a politician to the core. Yet this moment of candidness, combined with the power of new technology that can let any potential viewer (or voter) into her perspective, helped turn the tables in her favor and catapulted her firmly back into the race overnight. Escapeso is a company which helps buyers interested in Austin real estate. They have a search which pulls in homes from the Austin MLS. Their Austin real estate blog also provides insights on the Austin market.