It has been reported that Laurence Fink, the chief executive officer of Blackrock Inc, the biggest US public money manager, believes that the US governments asset relief plan, will result in more mortgages becoming available to stimulate the housing market.
It was interesting to hear Henry Paulson, speaking on television, mention something to the effect that government action would help while the correction continued. That would seem to suggest a realistic approach and indicate an understanding that the market had in fact been overheated.
According to the S & P/Case-Shiller home Price Index US house values have dropped 18.8 per cent since their July 2006 peak.
Fink believes that a recovery is on the way and has already begun. He said, "Coupled with lower house prices and now a lower mortgage rate, affordability for housing has changed dramatically over the last 18 months."
It has certainly been an astonishing week with Wall Street dominating the news. Lehman Brothers filed for bankruptcy, and Merrill Lynch was sold to Bank of America. The American International Group, which is the biggest US insurer, was saved when the US government pledged $85 billion, to help with their debts.
It's been a real roller coaster, with dramatic and sometimes frightening headlines, that affect just about everybody in one-way or another. Japan got the jitters, but not perhaps quite as much as in Moscow where dealings were suspended due to wild swings in share values. In London, the major British Bank HBOS was in trouble, but was rescued when a merger with Lloyds was announced, presumably with the blessing of the British Prime Minister. By Friday share prices had almost recovered to the levels at which they started the week, but phew, that was the week that was!
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George Bush emerged from the White House to suggest that it was essential to sort out finances first, to deal with the problem, and look into the question of blame later.
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mortgage market on the move
mortgage market on the move
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