Long time

Time to catch up. Big NEWS!

On contract for a house, closing July 31st. Going to set me back about $210K and I've been scrambling to get inspections, mortgages, and lawyers.

Recent economic improvement and then subsequent further news about declines has been wrecking havoc with mortgage rates.

When I started looking, 30-yr mortgage rates were around 5.00% and then started to creep up to 5.6%. In the last week, the rates are starting drop and come down to around 5.4%. Hopefully within 1-2 weeks, I can lock in right around 5.00% again.

That's it for now. Be back tomorrow with some thoughts on the economy.

Networth Update

Wow, looking back, it's been a good two months since I've posted a networth update.

On the whole, things are going pretty well. Now that the stock market is back, my investment account and 401(k) are both steadily rising, while no new major expenditures have helped keep me heading toward the break-even point.

As of May 31, 2009, my networth is -$5,569.23. My networth increases about $610 a month with a 62.3% probability. I'm trying to increase that probability month to month by sticking closely to my budget.

Is the dead cat bouncing?

As I blogged before, there's plenty of belief out there that the last month's worth of bounceback in the stock market is just a momentary uptick during an otherwise downward trend.

One big economic statistic driving the market down today was the release of foreclosure data, suggesting last month was a record high level of foreclosures. Then you have retail sales data below expectations and a round of negative earnings from insurance companies, and we're back to where we started.

So do I think we're in a dead cat bounce? I still don't believe in it. I think in general, investors are behaving rationally as economic data comes. The horde mentality and the wild swings are gone. Drops are within regular variance in the stock market.

What we need now is a more solidified banking sector and a final decision on the failing US auto manufacturers, and we can start digging ourselves out of this mess.

Up day counter to bad news

Investors seem unmoved by news of the swine flu pandemic and worse than expected GDP news released this morning.

Sentiment seems to have shifted to the positive, as everyone believes we have hit or are close to market bottoms, especially after successfully going through 1Q earnings reports from the major banks and the changes around mark-to-market accounting rules.

However, the late afternoon saw a quick pop and drop due to the Federal Open Market Committee statement:

In light of increasing economic slack here and abroad, the Committee expects that inflation will remain subdued. Moreover, the Committee sees some risk that inflation could persist for a time below rates that best foster economic growth and price stability in the longer term.

In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and anticipates that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period.

It looks as though the FOMC thinks the economy could still get worse, but they are willing to stay actively involved in keeping the fed funds rates at an effective 0%.

New Credit Card Rules

Finally, our elected leaders are doing something that should help the average consumer, passing new rules on credit cards.

Yesterday, the House Financial Services Committee approved new (although borrowed heavily from previously released Fed Reserve guidelines going into place July 1, 2010) legislation that help counter heavy-handed and unfair credit card company practices.

Some of the benefits, quoting from MarketWatch.com's article:

• Prohibiting rate hikes on existing balances, except in certain circumstances.
• Requiring 45 days notice for interest rate increases and significant contract changes.
• Prohibiting "over-the-limit" fees when cardholders have set their own credit limits.
• Prohibiting "double cycle" billing, a practice in which interest is charged on debt that has already been paid on time.
• Prohibiting fees for payments made over the phone or Internet.
• Prohibiting payments from being applied first to a consumer's lowest interest rate balance.
• Establishing standard definitions for terms such as "fixed rate" and "prime rate."

Industry advocates, as they often do, claim that these new rules will prevent access to credit and higher overall fees.

This is highly dubious.

Already, prior to regulation, credit card companies have CHOSEN to remove credit lines from many customers, and increase interest rates on good credit. I have a credit score over 740 and two of my credit cards saw interest rates shoot up to 19% from 9%.

It is time to get some of these "fine-print" practices removed.