Paul McFadden

Good morning! I was just thinking about the state of our economy and the worldwide economy for that matter. Today the Dow Jones Industrial Average is down over 400 points and broke the 10,000 point barrier for the first time in a while. Obviously, the $700 billion governement bailout did very little to assuage the public's fears.

It appears we're in for a bumpy ride. Credit remains tight and corporations are laying off workers. Still, I think it's important that we hang in there and support each other. We may have further bad news before things get better, but eventually they will. And those of us who stick it out will be handsomely rewarded.

My prediction? Expect a slow rest of the year and possibly into the first half of next year. We're going to have to get used to a new President and it's obvious the banks need time to solve their ills. I still believe that next Spring or Summer will reward us in the real estate business. I'm hearing good news in certain parts of the country (think Los Angeles and Las Vegas) as far as home sales go. Statistically we've been down for close to 2 years now and an upward trend is just around the corner. Will it be a big move up? No, but we will welcome the uptick. For those of us left, there will be numerous opportunites as the playing field has diminished greatly.

So hang in there! Let's all encourage each other to keep going. After all, an acquaintance of mind mentioned over a year ago that "people are always buying and selling real estate. So true. Have a great and prosperous day today!

Paul

Hey all: As many of you know, the House of Representatives passed the $700 billion financial bill designed to prop up the economy. It's ironic that the stock market proceeded to lose over 100 points on the day. It makes one wonder if the bailout hadn't passed, would the results have been worse?

I think what this shows us is that economic recovery is going to take a while. Warren Buffett was quoted as saying the bailout was needed but positive results wouldn't be felt right away. He's a wise old sage. I still expect better news next year at some point. We need to work through higher unemployment, lower factory orders and tighter credit before the economy will improve.

On another related matter, I was reading an article from the New York Times today. The article was dated September 30, 1999 and talked about how Fannie Mae and Freddy Mac wanted to open up the market to more mortgages; meaning allowing less-than-perfect borrowers (think subprime) to buy a house with little or no money down. Almost ten years later, the chickens are coming home to roost!

I wish you all success as we move forward. We're all aware there are always opportunities out there. It's just a matter of keeping our heads and chins up! Have a great day!

Paul

Hi all: I attended a seminar yesterday sponsored by Bernstein Capital in Seattle yesterday. The one statistic that relates to us was the one about how much mortgage debt has been written off and how much more is left.

So far a total of over $500 billion dollars has been written off by the financial institutions. There is another projected $200 billion left to go. This is good news in that we are over 80% through the carnage. After this, there is no more. It does mean we still have a ways to go but I believe next year will be a transitional year as we recover.

It will be interesting to see how this all plays out. As I write this, the stock market is off almost 300 points in spite of the anticipated government stimulus bill of $700 billion. That's due to continuing economic news that include increased unemployment and reduced factory orders. I'll keep you posted. You're welcome to comment! Have a great day!

Hi all: I just finished watching Barney Frank in an impromptu news conference talk about how the negotiations for the $700 billion government bailout had broken down. Frank claimed that conservative Republicans walked out after adding pieces to the President's bill that made it unacceptable.

It appears there's more work to do. The biggest holdup is who pays for this bailout? The bill as originally presented would have us (think taxpayers) footing the bill. Some lawmakers would rather have the banks pay for their follies since they're deemed to be at fault.

I still think a deal will be brokered but perhaps for less money (Chairman Paulson has already agreed in principle to a tiered payout based on need) and not all on our backs. In the mean time, expect Wall Street to fall precipitously tomorrow unless they can work something out before the market opens. The wild ride continues. I just read Wa. Mu. will be acquired by JP Morgan. Wow! What a year. And I thought last year for our business was interesting. Stay tuned. As always, I encourage your thoughts. Have a nice evening!

Paul

I'm curious if you feel the government bailout of Fannie Mae/Freddy Mac/ AIG, etc., etc. will really help. What do you think? I think something had to be done. But being a free-market guy, I just wonder how much it's going to cost you and me.

Granted. we may have been headed for panic in the streets and this wouldn't have been good. I'm glad someone is finally recognizing the seriousness of the situation. And with the stock market down almost 400 points again today, it's becoming increasingly clear we've got a way to go.

I still think we'll turn the corner sometime next year. It was always a matter of digesting all the "kool aid" (as some of my esteemed colleagues refer to it) we drank. Be sure to weigh in with your thoughts. This is definitely a live one that won't be going away antime soon.

Paul