The March 12th Congressional hearing on mark-to-market (Financial Accounting Standards Board's (FASB) favorable vote to relax accounting rules), which will help to warm up the frosty credit markets, Stocks have risen 23% just on the speculation a change could be coming. And just one short day after the FASB mark-to-market ruling, there were stories of banks already saying they may not need to sell assets to raise capital, as they will no longer have to take massive paper losses by pricing their assets to the "fire-sale" comps that were created in some of the illiquid markets. Capital ratios are now more in line for many institutions, which will also help their ability to lend - in turn helping consumers and businesses alike. Yesterday's ruling is a dramatic step towards unwinding the negative spiral created by mark to market, and in fact, the ruling on mark-to-market accounting could well go down in history as a turning point in the US financial crisis.
While Stocks were buoyed by the Mark-to-Market announcement and optimism that the G20 meeting in London will lead to an agreement on ways to pull global economies out of the current recession, Bonds were unable to hold onto recent gains. As a result, Bonds and rates ended the week .125-.25 percent worse than where they began. Therefore interest rates for loans may start to creep upward.
Are we nearing the bottom? Do we all see that light ahead? It is the end of the tunnel?
Are you optimistic about Real Estate values in the future now?
Keith
310-398-0821
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