Reading the Tea Leaves of the Power Players

We think the one article that you probably didn't read but really should is the New York Times story about an investment firm (Lone Star Funds) taking advantage of a down market to buy mortgages at bottom basement prices. Lone Star Funds is interesting for a couple reasons: 1) They bought Merrill Lynch's mortgages at fire sale prices; and 2) they made money during the Savings and Loan debacle years ago.

Here's why you care: As we've said before, right now is like an after Christmas sale for the financial and real estate inclined. That can mean Lone Star Funds, or other firms we've pointed to in the past. What they all have in common is that they saved their pennies, and didn't get soaked when the bubble burst. If more of these actors are coming on the stage then hopefully it means things are getting back on track.

A sign they are not? Well, that would be the Federal Reserve's move to extend until January the ability of Wall Street firms to get emergency overnight loans. Basically, this is what the Fed did because of Bear Stearns. (We pointed out a great explainer piece on the Fed the other day). They say if things get better before January, then they'll pull back. Why you care is because it helps Wall Street feel a little more confident given the trouble waters.

And here's why you care again: If you have investors picking up the scraps, and the Fed helping the banks - those are both good signs given your property value.