Systematic Crisis?

From Bloomberg this morning as stocks tumble:

“This is a systemic financial crisis, there is no end to it,” Nouriel Roubini, professor of economics and international business at New York University, told Bloomberg Television. “It’s a vicious circle between a contracting economy and greater credit and financial losses feeding on the economy.”

President Bush reminds us that the system is “basically sound”:

WASHINGTON (AP) – President Bush urged lawmakers on Tuesday to move quickly in putting into force legislation designed to help prop up mortgage giants Fannie Mae and Freddie Mac while declaring the nation’s financial system to be “basically sound.”

My thoughts?

Well – I don’t think the government should move too quickly on the Fannie and Freddie bailouts. I don’t trust them to get it right this quickly. Too many variables, too many unknowns. Take a deep breath, try to really understand what the best solution is to this problem. The last thing you want to do is panic. At the end of the day it’s investors who are losing money right now – and that’s the game they play, and the government can come in at anytime in the future with a more sensible plan and rescue the market. I just want to caution against hastily put together plans.

Late afternoon update (4:12PM):

Fed Chairman testifies on the Hill (Marketwatch):

Fed uneasy about inflation, growth, Bernanke says

But he also spoke candidly about the weak economy and fragile financial markets. “The possibility of higher energy prices, tighter credit conditions, and a still-deeper contraction in housing markets all represent significant downside risks to the outlook for growth,” Bernanke said.

Volatile Week Ahead for Mortgage Rates

If you think last week was a turbulent and volatile week for mortgage rates then brace yourself for the coming week. There are many important reports coming out this week, here is a sampling:

  • Monday January 28th: New Homes Sale
  • Tuesday Jan. 29: Durable Goods Orders
  • Tuesday Jan. 29: Consumer Confidence
  • Wednesday Jan 30: Chain Deflator
  • Wednesday Jan 30: Fed Announcement
  • Thursday Jan 31: Personal Consumption Expenditure and Core PCE
  • Thursday Jan 31: Employment Cost Index
  • Thursday Jan 31: Chicago PMI
  • Friday Feb 1: Hourly Earnings
  • Friday Feb 1: Unemployment Rate

See the full calendar on Yahoo! Finance.

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