08/20/2007

Discount Shopping

Hello:

Shoppers, we have a blue light special on aisle three...loans from the Federal Reserve Bank to commercial banks, only! Lowering the cost of money to sound financial institutions was a brilliant move on the part of the Fed. Dropping the discount rate on Friday by half a percentage point to 5.75% allows overall healthy banks to continue to do business as usual while the hedge funds try to sort out their messes on their own. We see realistic mortgages still being issued, albeit with a bit more paperwork.

Hedge funds appear to be learning the true meaning of live by the sword, die by the sword. The risks of investing in sub-prime mortgages have caught up with their returns, and the Feds are not showing any interest, at this time, in bailing them out. I guess we'll be seeing more Connecticut McMansions and Lamborghini's for sale on E-bay.

We have expanded our office space in the mountains and can now offer boardrooms in Big Bear and in Newport Beach for your donor's family meetings!

Terri G. Millson, CIMA, CIMC President

Ray Dicius, CSA, GEPC LPL Branch Manager