“Something funny is happening down at the bank...”

                                        – Jimmy Stewart in It’s a Wonderful Life

•  If you had spent $1 million per day (per day!) since the birth of Christ, it would total just shy of $733 billion.  That doesn't include the days in this year.

•  A Morgan Stanley economist says the U.S. federal deficit for 2009 could go as high as $2 trillion.

•  Let’s see...there are the on-going wars in Iraq and Afghanistan...a $700 billion bailout plan...the $85 billion AIG bailout...this year’s $500 billion deficit...falling tax receipts...more bank ‘recapitalizations’...

•  The FDIC takes over a couple of banks in Illinois and Michigan.  The big banks are not closing, but are being “recapitalized” and must succumb to a laundry list of government demands.  This process is already underway in Britain and continental Europe.

•  Where in the US Constitution is the federal government authorized to go into the banking business?  Don’t ask…

•  File this under unintended consequences: the 10 year bond market is jumping in yield in response to the expected surge in new issuance coming to market.  Mortgage rates are jumping.  Call me for the current rate.

Have we been hoodwinked?  Distracted by the “illusion of democracy”?

It does seem that recent events have placed more power in the hands of Wall Street’s operatives and further marginalized “we the people”.

Paul Farrell has been highly critical of the bailout plan, calling it “disaster capitalism”.  In an article with the subtitle “14 reasons Main Street loses big while Wall Street sabotages democracy”, Farrell suggests that we have been distracted while congress “handed over voting power and the keys to trillions” to Wall Street’s new “Disaster Capitalists”.

What I find most intriguing is that he suggests this event has been planned.  The result of “decades of influence peddling” by lobbyists and an active disregard for the obvious warnings of a coming meltdown have led to and strengthened “a plutocracy run by and for the wealthy”.

For many, Farrell gives voice to a grave concern that has been in the back of people’s minds.

Worst case scenario: America's no democracy and as a result of the meltdown and the surrender of our power to Wall Street's new Disaster Capitalism we are morphing into what one WWII dictator called "corporatism," a "merger of state and corporate power," kind of like what's going on now with Goldman Sachs' ex-boss as de facto president.

I don’t know about you, but I am not comfortable with giving up the America I love.

Remembering back to this past spring who would have thought that we would see gas at less than $3 per gallon this soon again (or perhaps ever).  It was evident today as I drove into Vienna along Maple Avenue and then along Lee Highway to the post office in Merrifield.  And even though mortgage rates haven’t quite reached the lows of 2003, the prime rate is close, making home equity lines of credit and consumer loans less expensive.

Kiplinger’s has developed a list of the 10 things that are going right.  You can find it on Yahoo! here.  And even though we are all enjoying the lower energy prices I hope that we don’t stop the rapid search and development for alternatives to foreign oil.  And with all due respect to the list here are some of my favorites:

1.  Americans are tuned in now and listening carefully to what has been happening and what will likely occur in the near future.  Politics, finance and international events have captured our attention and we want answers and accountability.

2.  The current economic chaos has many of us rethinking our financial outlook and plans.  And if we haven't already, more of us will turn from crass consumerism to saving more of our income and living less on credit.

3.   Things are cheaper especially real estate.  If you are currently renting a home in Northern Virginia or Montgomery County, Maryland, and plan on being in the area for a while you may have to consider purchasing.  Likewise, if you have had your eye on a larger home or a new home in Vienna, now could be your moment.

•  Finally, it's becoming clear to our leaders that what has been the whipping boy in popular rhetoric, the subprime mortgage is not the real problem.  The Associated Press today reports:

The Bush administration is considering taking ownership stakes in certain U.S. banks as an option for dealing with a severe global credit crisis.

An administration official, who spoke on condition of anonymity because no decision has been made, said the $700 billion rescue package passed by Congress last week allows the Treasury Department to inject fresh capital into financial institutions and get ownership shares in return.

There are deals to be had and strategic methods to make this lousy market work for you.  Here is one such story.

Several months ago a client who happens to be a realtor made the decision to go shopping for a new home.  Now, this is not an ordinary realtor as this particular agent specializes in bank owned real estate (REOs) or foreclosures.  And this agent found a great, almost new home in Bristow, Virginia.

It must be said that before looking for this property, this agent did the one important thing he suggests all his buyers pursue prior to actually looking at property.  He made loan application and received a loan commitment.  We spoke at length, discussing his concerns, down payment strategies, seller paid closing costs and the current state of the market for interest rates.

This particular property was offered originally at a higher price, an offer made and ratified.  But that deal fell through and our realtor was ready when the property went back on the market at a lower price.  A new offer was prepared by our client on his own behalf at a price that was less than the list price.  This offer was soon ratified.

Here’s where it gets interesting.  After receiving the appraisal which came in nearly 16% higher than the purchase price, I made a suggestion to my client.  It had become clear during our conversations that our buyer felt rates might be lower in the near future.  I suggested that he allow MetFund to provide him with a lender credit for the closing costs that the seller wasn’t already covering.  If rates dropped as he thought they may, he could then refinance and cover the closing costs when it paid to do so and avoid any costs for the current transaction keeping his cash in his pocket.

As it turns out, rates have dropped and our realtor will soon lower his rate.  The closing costs he pays now will be less than were paid at closing by lender and seller – another plus.  Most importantly the higher appraisal will allow our realtor client to now avoid mortgage insurance because we can use the appraised value instead of the sales price to determine value.  He will not only lower his rate but he will do away with the mortgage insurance premium, for him a non-tax deductible expense.

If you would like to investigate an opportunity like this for yourself, call me.  Our realtor has identified a number of properties that fit this profile.  You will benefit from him having made himself the guinea pig, not you.

•  There are spectacular opportunities out there for first time buyers.

•  That being said, one can't help but be concerned about or question the existing situation.  As Todd Harrison at Minyanville.com explains, "one of two outcomes -- a cancer or a car crash -- is unavoidable and neither is particularly pleasant to discuss."  It is just at these kind of times that one can make very interesting transactions work to their benefit.

•  Any government response should have the following characteristics:  clear guidelines, accountability, culpability, full transparency, staggered, strategic funding and the investigation into those complicit in creating the financial engineering mess that now besieges us.