If the Fed doesn’t ease and truly allows the market to fix itself, I think the dollar is done going down. A credit crunch is a deflationary monetary event. I believe the dollar has already started rallying against foreign currencies. Home prices, as well as the prices of other assets, will come down if the Fed doesn’t ease here. I hope Bernanke has the balls to stick to his guns.
And not everything is FDIC insured. There is nothing I can move my 401(k) money into that is FDIC insured. I’ve put my money in the Fidelity money market associated with my 401(k), but, as near as I can tell, up to 25% of that money market can be invested in the MBS market. I think it is restricted to investing only in Fannie- and Freddie-backed securities, but there’s no federal guarantee on Fannie and Freddie either.
My brokerage account is also not FDIC insured. There is something called the SIPC that protects that account, but I don’t believe that is a federal government entity.
The amount of exposure I have personally to this disaster actually caught me off guard. Potentially, my 401(k) money market account and my brokerage account could be wiped out. It really sucks that, although I’ve been very responsible with my money, I could still lose money based on what idiot bankers and brokers have done.
