Man, are these tumultuous times or what?  You have Hurricane Ike laying waste to Texas and the Gulf Coast and a tsunami of a different kind raging on Wall Street.  Lehman Brothers, who have been in existence for over 160 years were unable to find a white knight over the weekend and were forced to declare bankruptcy (update, it seems Barclays is picking over the bones and acquiring some of Lehman’s assets).  Merrill Lynch, another Wall Street white glove firm, dove for cover in a shotgun merger with B of A.  The list is getting longer - Countrywide, Bear Stearns, IndyMac not to mention Fannie and Freddie.  The future seems pretty grim for Wamu and AIG also.

There is no question that lending standards have tightened up.  Very few stated income programs left.  Very few “interest only” programs left.  There is still plenty of appetite for fully documented fixed rate loans.  Interest rates dropped considerably last week after the government propped up Fannie and Freddie and they are even a little better this week. 

The myth of “too big to fail” has been debunked in spades.  There has come to be an awareness that the Federal Government is painfully overextended with its multiple commitments to the financial system.  As I said last week, the auto companies are now clamoring for a government bailout of their own.

Inflation numbers improved today.  The CPI actually went down a bit, mostly due to the lower crude prices  (isn’t it ironic that crude dropped from $143 to $92 but the cost at the pumps went up - due, as we are told, to lack of refined gasoline because of the storms).  The Fed Open Markets Committee left rates unchanged which suprised a lot of people but did strengthen the greenback.  Once the refiners get back on line, we should see some easing of prices at the gas pump (moderating inflation worries) and the Fed might be inclined to actually drop the rates a little more.

One thing that you have to take solace in, admist all of the turmoil on Wall Street, the financial system is still open for business.  You can still get a great mortgage (albeit with a reasonable down payment and decent credit), you can still obtain insurance, you can still trade stocks and you know your families checking account is still safe at the local FDIC member bank. 

Stay Calm - Peace Out!