Well, it happened sooner than I thought. Stocks around the world shot up Monday as fears of mortgage defaults on US held securities diminished. The US markets have been more cautious, but (with the exception of FNM and FRE) financials and home builders are up sharply.

It's all kind of ridiculous short-term trading as unquestionably this is bad news for economy as a whole and the housing market specifically. Are people really excited about the government running the mortgage industry? As Jim Rogers, CEO of Rogers Holdings, told CNBC Europe on Monday, the U.S. is "more communist than China right now".

I'm re-reading John Talbott's 2003 book "The Coming Crash in the Housing Market". Since his predictions were spot on, I'm particularly interested in his assessment of mortgage giants Fannie and Freddie. My fear is that they ultimately will have to be nationalized and the ensuing debt taken on by the government will ultimately lower the government's credit rating... lowering the value of outstanding bills and bonds and hastening the United States descent into the number 2 spot in global power.

On Monday I moved most of my remaining money from WAMU into Wells Fargo so I can begin the long, painful process of setting up and transferring all the bill pay, auto debit, etc.  
IndyMac bank (founded by Mozilo) failed on Friday. It will prove the costliest bank failure in US history, approach ...

The market was up over 400 points (to 12,150) the other day after the Feds announcement to pump $200 billion into credit pipeline. I think they're running out of ways to juice the economy. The rebates are coming, the next interest rate cut could be the last and I don't know how often they can throw good money after bad.

Now if I can just figure out a way to beat the ensuing inflation...

It was only a year ago that Bernanke was criticizing Greenspan for all his interest rate cuts. Last weeks 'emergency' 75 basis point cut and today's 50 points add up to one of the most aggressive rate cuts in history. Specifically, Bernanke was saying it was a clumsy way to manage things and he favored more subtle approaches. Apparently he's changed his tune. No doubt he inherited a mess, but he's equally guilty in sharing Greenspan's need for Wall Street's approval.

What I've learned:
You can't time the market. I unloaded my last funds the Friday before the emergency rate cut. If that hadn't happened on Tuesday (Monday was MLK Day), the markets would have tanked 100s of point (following 10% declines in Asian markets)

The Future
People will slowly start to realize that the only reason that the Fed has taken such drastic measure is that things are really looking bad. Certa ...

The market's tanking. We're at 12,600 and nerves are rattled. BofA is buying Countrywide for $4.1 billion, but the market isn't happy as it's less than the stock was trading for yesterday.

My prediction is that the market will be volitile, but will break 13K at some point in the not too distant future at which point I'll unload my last mutual fund. This year, the carnage will continue. BofA's purchase will be a disaster as they're taking on 1+ trillion (!!!) in loans serviced by Countrywide and sending their slimy CEO off with a $100+ million parachute. If I had to guess as to how low the market will go, I would say 8K. Recession is a foregone conclusion with the mortgage / subprime mess excacerbated locally by Hollywood's strike, and (most recently) California's proposed budget cuts.

I'm in the process of consolidating all my accounts by getting out of Etrade and WAMU (both companies which might be in bankruptcy soon) and into a brokerage account at ? where I ...

It finally seemed a good time to get out of my mutual funds. The market has been creeping up slowly and broke 13,700 yesterday. Earlier that day I called up my guy at WAMU and told him to sell everything at the end of the day. I figured there would be turmoill today when the fed announced it's interest rate decision (it dissappointed by only dropping rates 25 points). I was also following the old adage of 'buy on the rumor, sell on the news'. 

As (bad) luck would have it, my guy screwed up and only sold 2 of my 3 funds. The market plunged and the value of the money in the remaining fund is down $12K. Time will tell if this really screwed me up, or if there is a short term recovery. Regardless, I'm very upset as I'm having to second guess things and keep focused on the market to find a good time to dump the final fund.

The article explained that home prices are now at 2005 levels and may dip in to 2004... but bottom fishers are coming back into the market so we must not be too far from the bottom.

Wrong! I expect prices to fall below 2002 levels at a minimum. The turmoil in the mortgage market has barely begun. 2008 will be a record year for foreclosures. 

It's been volitile. Should I stay or should I go? I expect more bad housing data and everytime some comes out, the market drops 200 points.

It's universally expected that the Fed will lower rates by at least 25 points by their next meeting (Sept 18th, I think). Bond funds (MFS specifically) have taken it on the chin during the recent credit crunch. I bought at 5.86 and it has been as low as 5.62. In the last week it BOUNCED back up to 5.74 and I expect that to continue as rates are lowered.