At first, when I heard that the government is considering to buy so-called “commercial paper,” my reaction was rage. But I’ve calmed down and thought things through a little bit. This might be a needed action on the part of the Fed.
But first, a brief tutorial:
Commercial paper is basically an unsecured loan that businesses make to each other. It’s like when you get out the credit card toward the end of the month to smooth things out as they get a little tighter. Basically, a company says, “I need $500 million to make payroll this week, but income has been …read more

The U.S. government is planning to put Fannie Mae and Freddie Mac under conservatorship (thanks, markzero, for putting me on to this). This means that, unlike the takeover at Bear Stearns, the government is straight taking over the ailing mortgage lenders, rather than merely guaranteeing the transaction. Any losses that come from Fannie and Freddie will have to be completely absorbed by the taxpayers now. And the investors in the two companies probably won’t even get the nominal compensation the Bear Stearns investors received.
Of course, it’s kind of a necessity at this point. After all, with Fannie and Freddie responsible …read more

There are many opportunities for yielding wealth and using good personal finance sense all around. One of the most recent opportunities in disguise is the subprime lending crash.
There are many lessons to be learned from the subprime lending crash. One of those is that you should be carefully of what kind of mortgage loan you get. Another is that good credit can be invaluable.
The fact of the matter is that if you have good credit, there you can still get a house, despite the tightened lending standards. And, you can take advantage of lower mortgage rates, since the mess …read more