It’s not all about real estate. “It’s the economy, stupid.” Real estate is commonly credited with keeping the economy afloat during the last decade. Now we have to wonder whether the economy can save real estate.
NEW YORK (AP) — U.S. stocks headed for a sharply higher open Monday after the Federal Reserve and the Treasury Department outlined steps aimed at shoring up confidence in mortgage financiers Fannie Mae and Freddie Mac.
Shares of the government-chartered companies have tumbled over the past week as investors have fretted over whether they could survive losses in their mortgage portfolios.
The Fed said in the plan announced Sunday it would lend to the two companies “should such lending prove necessary.” Secretary Henry Paulson said the Treasury is asking Congress for quick approval of a plan to expand its line of credit to the two companies and to make an equity investment in the companies, if necessary.
Wall Street is on edge about the well-being of the companies because Fannie Mae and Freddie Mac hold or back $5.3 trillion of mortgage debt, about half the outstanding mortgages in the United States. Worries over their future led to a volatile session Friday in which the Dow Jones industrial average dipped below the 11,000 mark for the first time in about two years before paring its losses.
According to Bankrate.com:
KGW at 6:45AM- Stock Market up 94 points. But is that enough? It is a sign that there is some confidence in the moves by the Fed or bargain hunters doing what they do best?