Latest Issue of Money and Markets: 'No One is More Powerful than the Market'

Mike Larson takes a closer look at how the Fed is spending billions of dollars in money for bailouts. In this issue of Money and Markets, Mr. Larson discusses that no matter what; no one is more powerful than the market.

Jupiter, Fla. (PRWEB) November 1, 2008 -- Mike Larson takes a closer look at how the Fed is spending billions of dollars in money for bailouts. Mr. Larson discusses that no matter what; no one is more powerful than the market.

Elected officials and the unelected policymakers at the Fed have seen fit to spend hundreds of billions of dollars in taxpayer money to save Fannie Mae, Freddie Mac, AIG, and Bear Stearns. They have handed out $250 billion to everyone from Citigroup to SunTrust, even helping banks merge in transactions partially funded with tax payer money. And yet, by one crucial gauge, the cost of a 30-year fixed mortgage, the government and the Fed have failed to achieve much of anything. The lesson is simple: No one, not even the government, is more powerful than the market and fear is spreading throughout the world.

Mortgage bond buyers are worried about the direction of house prices. They're concerned about the credit quality of U.S. borrowers. This is filtering into the price of mortgage bonds, and keeping yields elevated.

Foreign investors, who used to buy every last mortgage backed security and corporate debt security sold by Fannie Mae and Freddie Mac, appear to be backing away somewhat. Concerns about the precise nature of the government's support of Fannie and Freddie are also driving the two agencies' borrowing costs up. That, in turn, puts upward pressure on mortgage rates.

Another reason for higher rates overall is the concern about the long-term fiscal position of the U.S. The government has committed more than $1 trillion to all of its various bailouts, and the list of companies begging for taxpayer money gets longer every day.

Insurers want the same kinds of government-funded capital injections that banks are getting. GM and Chrysler want government money to help them merge, close factories, and fire thousands of workers. Home builders want fresh tax credits to spur purchases.

"You'd think at some point that officials in Washington and investors on Wall Street would get it. You'd think that they'd understand the only solutions to the credit mess, the deleveraging, and the real estate bust are simple: Time and price. You simply can't cure the popping of a multi-year debt and housing bubble by waving a magic wand, not even a $1 trillion one," Larson exclaims.

To read this issue online, please visit:

http://www.moneyandmarkets.com/?p=27847

About Mike Larson and Money and Markets

Mike Larson joined the company in 2001, and has more than 10 years of experience researching and writing about personal finance, investing, and the housing and mortgage industry. In 2003, Mr. Larson was named associate editor of the company's monthly Safe Money Report. In this role, he is responsible for writing and editing as well as analyzing trading opportunities for clients. Mr. Larson is also a regular contributor to the company's daily e-letter, Money and Markets.

Before joining Weiss Research, Mr. Larson was a personal finance reporter for Bankrate.com, where he wrote extensively on mortgage lending, banking, residential real estate, and Federal Reserve Board policy. His responsibilities included analyzing economic data and interest rate trends for a weekly column and developing rate forecasts for a regular index feature. Previously, Mr. Larson held positions at Bloomberg News and the Boston Herald.

Recognized as an interest rate and mortgage market expert, Mr. Larson's views have been quoted in the Washington Post, Chicago Tribune, Dow Jones Newswires, Reuters, Sun-Sentinel and the Palm Beach Post. He has also appeared as an investment expert to discuss the housing market on CNBC, CNN, and Bloomberg Television. His writing has been acknowledged by both the National Association of Real Estate Editors and the Massachusetts Press Association.

Among the first analysts to call the housing slide, Mr. Larson's new policy paper, "How Federal Regulators, Lenders and Wall Street Created America's Housing Crisis: Nine Proposals for a Long-Term Recovery" has received broad media coverage following its July 2007 submission to the Federal Reserve and FDIC. Mr. Larson holds B.A. and B.S. degrees from Boston University.

Money and Markets (www.moneyandmarkets.com) is a free daily investment newsletter from Dr. Martin Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Weiss Research, Inc. is located in Jupiter, Florida. For more information about our editors, or to set up an interview, please contact Jennifer Moran at 561-627-3300 or visit www.moneyandmarkets.com.

# # #