Financial March Madness

NCAA Basketball March Madness is underway and going strong. I think the Financial March Madness that occurred this week is even more dramatic.

Here are some of the events:

1) The Congressional Budget Office calculates that the budget deficit will reach $1.85 Trillion this year, yes in 1 year.
2) AIG bonuses were paid worth $165 million, absolutely crazy.
3) The reason AIG executive bonuses get the money is because of a last minute change to the Stimulus Bill drafted by the Treasury Department and agreed to by the Senate Banking Committee, especially Senator Chris Dodd. The House, Senate, and President then approved the bill without properly reading it, since it exceeded 1000 pages in length, even crazier. Quality of legislation is much better than quantity.
4) As any good politician would do in response to public outrage, attempt to place the blame on others. Congress rapidly drafted and passed legislation aimed at AIG, having a tax rate of 90%, without knowing the ramifications of the legislation, even crazier.
5) Former Merrill Lynch executives get $3.5 Billion in bonuses, 20 times greater, without outrage.

It would have been a lot better if our leaders would have written a very short Stimulus Bill giving each citizen $2,600. The AIG bonuses would have been avoided and each of us would have enjoyed spending the money. Instead, newspaper stories exist of how our money is being spent on projects, decided by local politicians, such as on the street outside of Lowes Motor Speedway.

In all of this craziness something WONDERFUL happened, The Federal Reserve agreed to purchase $300 Billion in Long Term Treasury Bonds. This will keep the lid on lower mortgage rates and should reduce rates even further creating a great opportunity to refinance mortgages saving you money. You need to prepare to refinance your mortgage especially if your rate is greater than 5.5%.

These actions taken by the Federal Reserve this week is another positive step in the economic recovery process. This reduces the risk of loss by investing in the US stock market. Next week other positive steps will be taken aimed at the credit crisis and the handling of toxic assets on the balance sheets of financial institutions. This future action makes buying stock in financial institutions much less risky.

If you did not get money directly from the Stimulus Bill, you can get it second handedly by investing in the stock market. As our economy improves, stock prices will improve giving investors capital gains. Bottom Line: NOW is a great time to invest. Contact me if you want help with investing.