Christmas has arrived early for the U. S. Auto companies as their CEO's all express their gratitude this morning in their press conferences to the President for the Pre- Christmas cash cheer loan to keep them alive until March.  How much has Santa given them - 13.4 Billion.   The news has helped the stock market open in positive territory, however our bonds market is worsening on this news.   Mortgage backed bonds are now down 11/32nds or about .375% for the 4.5% Ginny bond.  No other economic releases will be made today.

The 10-year yield hit a record low of 2.066% Thursday morning, with the 30-year yield also approached the record low of 2.58%. Mortgage rates have lagged, of course, given the uncertainty about mortgage-backed securities. Yes, the government will buy them, but with foreclosures only temporarily on hold and the big drop in rates, with more expected, investors are unsure about where mortgages should actually trade. Historical relationships between home loans and mortgage bonds shows rates should be at least half a percentage point lower - but that was then and this is now. And remember that jumbo mortgages are one-step removed from the vanilla product being securitized, and at this point are being held by large investors. (Hence some of the great rates for jumbo loans at the branch level.) The title of one e-mail that I received yesterday from a Wall Street firm said, "MBS have completely disconnected from Treasuries."

Bloomberg yesterday had an article on the reasons mortgage rates have not kept pace with the falling treasuries.  Here is the link if you would like further information.

http://www.bloomberg.com/apps/news?pid=20601213&sid=aA7j1HR.9wpM&refer=home

Obviously the downturn and recession will cause efforts towards conservation. One of those efforts is developing for conserving fresh drinking water, a number of conservation groups are now calling for an end to toilets that flush. To which gas station owners have said, "We are way ahead of you. We've been doing that for years."

We have had similar periods of duress and expanded government in our past history. Andrew Carnegie, the brilliant industrialist who lived through monumental change and still managed to make billions in steel on the upside of his career (giving most of it away to institutions and personal causes later in life, such as Carnegie libraries throughout the country and the Hague Peace Palace for leaders to meet to talk rather than wage war, etc.) usually had something interesting to say. Here are a few of his quotes:

All honor's wounds are self-inflicted.

And while the law of competition may be sometimes hard for the individual, it is best for the race, because it ensures the survival of the fittest in every department.

As I grow older, I pay less attention to what men say. I just watch what they do.

Concentrate your energies, your thoughts and your capital. The wise man puts all his eggs in one basket and watches the basket.

Concentration is my motto - first honesty, then industry, then concentration.

Do not look for approval except for the consciousness of doing your best.

Do your duty and a little more and the future will take care of itself.

Every act you have ever performed since the day you were born was performed because you wanted something.

People who are unable to motivate themselves must be content with mediocrity, no matter how impressive their other talents.

Surplus wealth is a sacred trust which its possessor is bound to administer in his lifetime for the good of the community.

The 'morality of compromise' sounds contradictory. Compromise usually is a sign of weakness, or an admission of defeat. Strong men don't compromise, it is said, and principles should never be compromised.

Interesting man who lived during very interesting times.  As we are as well.  Take advantage of these low rates and where you can, help out your borrowers to get low rates of lifetime.  Once this is over, it will not happen for a very long time.  Enjoy your weekend.  Mike