So it begins

The dramatic action by the Federal Reserve Bank on Tuesday morning, prior to the opening of domestic stock markets, has provided a glimpse behind the curtain on how sub-prime might be resolved.

The immediate purpose of the rate cuts, was to alleviate a panic mentality that was gripping equity and financial markets worldwide. A secondary, but still important benefit, is that banks immediately become more profitable with the drop in interest rates. The drop in rates, will also allow banks to reliquefy, or replace capital lost in write-offs due to sub-prime. With another rate cut expected in the immediate future, this process, will only accelerate.

Low interest rates heading into spring, combined with the government (Federal) putting some money into every one's pocket, is going to equate into a lot of happy home refinancing for currently nervous loan holders come summertime. Heading into the fall, banks will be reporting some impressive profits on their quarterly reports. Any property owner in Hammond who loses their property due to foreclosure in 2008, is likely doing so unnecessarily.

The only thing that remains is how investors in CDO's (collateralized debt obligations), and similarly named exotic derivatives will be treated. If this last piece of the puzzle can be figured out, I believe the "fever" could be broken. If this theory is close to what actually happens, in six to eight months, the light at the end of the tunnel should be pretty large.

A resolution of sub-prime would set in place the second leg of my three legged stool. The first leg being the continued decline in interest rates. The third leg being property tax reform. This last leg, looks like it will be the hardest to "fit".

If a way to finance government (taxation), which is equitable to homeowners, property owners and business owners can be achieved, the value of Hammonds strategic location could be more readily realized. Creating an increase in value and jobs that would dwarf the loss of municiple employment incurred through the stream-lining of government. Over the course of time, quality of life would increase, median family and household incomes would rise, as would property values.

Do we have anyone on the other side of the valley checking to see if "prospects are good", or do we have a bunch of malcontents circulating in the crowd saying "this sucks"?