U.S. intervention boosts stocks this year, but trend still down

September 8, 2008

S&P 500, year to date

We’ve seen a heavier-than-usual government hand in the form of interventions and rescues this year to steady credit market turmoil, starting with an emergency interest rate cut last fall by the Federal Reserve. But the overall trend for the stock market has remained down.

Feeling lucky? If you think the government intervention in Fannie and Freddie will impact mortgage rates, wager on your prediction here:

Will the 30-year mortgage rate fall this week after the rescue of Freddie and Fannie?


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This is just the begining. Hold on to your hats!!

Posted by Neil | Report as abusive

Certainly mortgage rates will go down.

But what are the long-term implications of this unprecedented move? Will the government be in the mortgage business forever? How will they co-exist with private lending institutions? How will this affect the taxpayer?

Somehow, this does not have a good feeling to it. Best case, I think we’re in for a long malaise, like the 1970s.

Condolences to all Fannie and Freddie shareholders. And condolences to our next President, who will inherit this mess, along with Iraq.

Posted by Chuck from California | Report as abusive

At what level on the S&P will the authorities be called on to bail out 401(k) plans? Stay tuned….

Posted by Peter Adam | Report as abusive

It’s a good move for the legacy of the incumbent president but does nothing for the consumer, or stock owners. Until something is done to protect consumers from ARMs and probably do something about the slicing and dicing of mortgages, I don’t think there will be wholesale surge back into the home ownership market.

Posted by William Lints | Report as abusive

Look, this is interventionist economics. It does not fix the problems in the market, it just delays the pain and potentially drags it out longer.
In a free market a correction should be allowed to happen without hindrance.
How can we continue to fight for freedom of other nations while we nationalize financial institutions at home?

Posted by John | Report as abusive