The Econominc Week in Review……

17. August 2007 by Ana Connell.

And what a week it was!

We saw housing starts and permits fall to their lowest level since 1996!  Then Merrill Lynch put out a report suggesting that Countrywide Financial Corp., the biggest U.S. mortgage lender, could go bankrupt, naturally they lowered the stock rating to a sell.  Next day, Countrywide had to tap it’s $11.5 billion dollar bank line to finance it’s operations.  Not good news.

Today the Fed took action to lower the discount rate by .5% to 5.75% and infuse dollars into the system to try and counteract the liquidity squeeze that we are seeing.  This was viewed as an extraordinary move as the Fed has not reacted this way since 2001.

This action by the Fed did serve to stem the market losses for the week and give us the biggest rally in four years for the S&P 500.

The subprime fallout is still surging through the markets……we’ll see what or who gets hit next.

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