Real estate values in Manhattan Beach and the Beach Cities have held up fairly well compared to other parts of the nation and the state over the last few years. However, make no mistake, we are headed for some rocky times if the FED can't figure out the right way to solve the current financial crisis. No question Treasury Secretary Hank Paulson along with FED Chairman Ben Bernanke and New York FED President Tim Geithner did their best to find a reasonable solution to a major disaster... the question is whether or not the solution is going to work.


A lot has happened in the last week as credit markets scramble to deal with some massive changes... Fannie and Freddie got a lifeline, Lehman is toast, AIG is saved, BofA got a whole lot bigger, while Goldman Sachs and Morgan Stanley are no longer investment banks and instead have opted for the relative safety of becoming commercial banks. The government is trying to set in motion a new entity to buy up the bad debt that is sucking the life out of our credit markets. The thought went that the bailout would solve everything and settle the economy... however today's stock market doesn't seem to agree.

Contrary to the hopes of boys in D.C. the stock market didn't see the bailout in the same rosy terms as the administration... the dollar fell, oil shot up to over $120 a barrel, gold is over $900, financial stocks are down and the market lost all the gains from Friday... it was a pretty crummy day for all.


As with all things when dealing with the FEDS the devil is in the details. The government is conveniently forgetting that it played a major role in this little debacle. First by pushing the concept of home ownership at any cost to individuals who should never have bought homes and then by allowing Wall Street to create nebulous products to fund a precarious social experiment. Now the boys in D.C. are scrambling to try and fix what they broke.


Part of the reason the market is bouncing around today is because we still don't really know the extent of the problem. There are big questions about how the actual program is going to work... and if it even has a chance of working. While there may be a need for some speed in passing the legislation in order to stabilize markets, Congress should be leery about putting all the country's eggs in one basket with little or no oversight. ... Paulson may be the man for the job but he should not have carte blanc without public scrutiny as is proposed by the current administration. That's what got us here in the first place.


On the other hand this is not a time for Congress to try and squeeze in a bunch of political junk. You can't save people who can't be saved. Sounds a bit convoluted but the bottom line is that the subprime fiasco that started this slide was based on loans made to people who didn't qualify for them in an effort by the government to make everyone a homeowner. Guess what... most of these people still don't qualify and throwing money at them will not solve their lack of financial stability... it's like trying to put water in a bucket full of holes.


So grab your hats and hang on to your wallets ... this ride is going to be very bumpy... even in Manhattan Beach