Do you want the good news or the bad news? Here’s both…
October 3, 2008
Today the House passed the bailout bill and President Bushed signed it into law. The markets reacted positively initially, but the Dow still fell almost 160 points on weak jobs numbers. 159,000 jobs were lost in September.
The bailout is probably a good thing. But it is hard to tell for sure because if it ends up avoiding some catastrophe, obviously that catastrophe won’t happen and we won’t know definitively why it didn’t. My take is that the whole thing was a “best guess” on the part of policy makers. Probably more risk in in-action than action, so they acted.
The jobs numbers are certainly a bad thing. They indicate that the economy is slowing further. So while the bailout may have avoided some unattractive outcomes, it has not and will not cure the economy.
To end on a positive note, mortgage rates may improve next week. Giving banks an opportunity to part ways with their worst assets should eventually make room for them to buy new mortgage bonds. When they start buying, rates should improve.
