Don’t you think this is a bit much?, asked Phil’s Stock World. Do we really need Bernanke AND Bush to each have a plan to save the markets from 13,250 today?
Well of course not. But the president will be unveiling his plans in a few minutes time. With large sections of the US effectively closed for business, we could have slipped quietly into a long weekend (well, except us Brits).
But points out Yves Smith at Naked Capitalism sometime the lack of a real audience is a virtue, after reading reports that the President was going to step in to aid homeowners.
No wonder Bush chose the deadest Friday in the summer for this announcement. There’s much less here than meets the eye.
The plans to allow the Federal Housing Administration to guarantee loans for deliquent borrowers is largely cosmetic, adds Smith, with the estimate that this will help an “additional 80,000 homeowners qualify for refinancing in 2008,” according to the WSJ’s story.
Barry Ritholtz at the Big Picture chimes in.
80,000 homeowners? That’s a drop in the bucket of the millions of resetting sub-prime ARM mortgages. Very very small impact, at least as far as housing is concerned.
But it’s the timing that’s got Ritholtz interested - the sheer PR chutzpah of it all. If this is a major new initiative, why throw it away on the eve of a long weekend. Why, come to that, do it on a Friday? No one reads Saturday papers. But the move diverts attention from Ben Bernanke’s speech - which was always going to disappoint an over-eager market - and creates the illusion of action, without really doing very much at all.
Ritholtz concludes:
Todays “news” struck me as an exquisitely timed, very clever PR stunt. Not to be cycnical, but this appears to be much more politics than policy, and a lifeline to the big investment banks on the last day the month and (some of their) fiscal years. I suspect Hank Paulson had a major hand in the timing.
