November 2008

The economic downturn has been fraught with pain, uncertainty, and fear. It also contains a number of valuable lessons in money management. Homeowners are re-evaluating how they use their home equity, especially regarding investments and debt consolidation.

Don’t expect budget relief from falling gas prices; your bank is standing in line to pick up the slack.

The Federal Reserve and US Treasury have announced another bailout, this one theoretically for consumers and small businesses. This plan involves another $800 billion.

The Financial Services Roundtable and the Consumer Federation of America have joined forces to promote a credit card debt settlement plan involving debt write-offs and extended repayments.

Housing prices drop 11.3 percent, that largest descent in 40 years. One might expect that to bring on a bargain home buying frenzy. No such luck, potential home buyer are staying put. The National Association of Realtors (NAR) reported existing housing sales taking a similar decline, down 3.1 percent, continuing to increase already bulging housing inventories.

The portfolio of mortgage-related assets acquired from Bear Stearns by the U.S. government is dropping in value, creating unrealized losses for taxpayers.

Despite urging from the White House and the Treasury Dept., banks aren’t lending. Instead, they’re hoarding money to bolster their own balance sheets. That’s not helping consumers or the overall financial situation, and in the absence of consumer credit, the economy is stuck in reverse.

Following Friday’s 60 percent plunge of Citigroup stock, the Federal government again works through the weekend to avert disaster. The stock market took Citigroup on a plunge to $4 per share, leaving Citigroup with a $160 billion lose in value from a year ago.