The 19th Sept 2008 (last Friday) has seen an 8% rise on the FTSE-100. The biggest rise since its inception on 3 January 1984. This was the reaction to US, Bush backed plan to pump $700bn into the markets http://news.bbc.co.uk/1/hi/business/7628144.stm. Even thought this plan still needs congress approval (which it is expected to get next week, before the pre-election break commences), it has immediately spurred immense optimisim within investor circles.
A 700bn fund that promises to buy out a lot of bad loans and CMOs, CDOs, ... is a pretty hefty rescue package. It is a real strategy / plan rather than tactical ad-hoc case based interventions that we have seen up to this point.
A couple links to nice educational videos about the products behind the mortgage/debt crisis are below:
- Mortgage Backed Securities - http://www.youtube.com/watch?v=DHLcD405VsI&feature=related
- Structured Securities - http://www.youtube.com/watch?v=-Ycjn8xzszA&feature=related
- Asset Backed Securities - http://www.youtube.com/watch?v=3_pRi0BThJM&feature=related
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