Countrywide’s Buyout: No Silver Lining

Posted by: Henry B. | Jan 14,2008


So much conflicting information, so little time.  Last Friday, stocks fell, sparking fears that we are just about on the edge of a recession.  Now there’s talk that Bank of America’s buyout of Countrywide is going to ease the pain of the housing crisis.  I’ll give analysts credit.  Just as many are saying that the credit crisis is too large to be entirely eased by one buyout.  As this article says, “That view was echoed on Wall Street, where the Dow Jones industrial average sank almost 250 points as investors focused on the latest batch of evidence pointing to softening consumer spending and a darkening economic outlook.”

It just doesn’t appear that these bandaids (a 4 billion dollar bandaid) are going to have that positive an affect on the economy.  They’ll help certainly, but “easing” a crisis is not the same as changing course.  In some way, the Presidential election could not have come at a worse time.  As Wall St. will flutter up or down like the weather, the uncertainty of which party, which candidate, and which economic outlook is going to enter the White House is going to make Wall St. uncertain for all of 08.  

So take any good news you hear with a grain of salt: such as the title, “Countrywide deal may ease credit crisis.”  Again, “easing” the credit crisis means that the credit crisis still remains, even if it is potentially less of a problem.  I just cannot see the credit crisis, and in turn the economy, making a full 180 in the other direction.  Certainly it won’t happen in 2008.  So even if you see an article saying the prospects of a recession are overblown, this does not mean the economy is in a stable and healthy position.  Even being on the edge of a recession is bad enough because so much is uncertain to consumers and investors.  

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