WASHINGTON (AP) -- A December reading of U.S. homebuilders' sentiment remained at a record low for the third straight month.
The National Association of Home Builders said Monday its housing market index, which gauges builders' perceptions of conditions and expectations for home sales over the next six months, came in at 19 in December. The number was at the lowest level since the index began in January 1985.
Index readings higher than 50 indicate positive sentiment. The seasonally adjusted index has been below 50 since May 2006, and declined for eight straight months this year, and has been unchanged since October.
Tighter lending standards, rising defaults among borrowers with weak credit and a sense of worry about the housing market's future have meant fewer buyers for hard-hit homebuilders such as D.R. Horton (DHI, Fortune 500), Pulte Homes (PHM, Fortune 500) and Centex (CTX, Fortune 500).
NO being in the home building industry - the usual bottom is in january/february. april is when things start going again. so, the opening of 2008 is looking very very bleak.
but - this is how it is every year. our company is now down to the size it was in 1995. really has little need for me to run the network I am running. but, the bosses (which we also dont need 3 of anymore) love the instant communication. even tho, the only thing communicated anymore is clips from yuotube....
"Instead of taking action, President Bush says the economy is safe and sound," said House Democratic Caucus Chairman Rahm Emanuel. "Middle-class Americans and economic experts all agree on something the president still refuses to admit: the economy is struggling and families need real help."
Keep listening to those in charge, they know what their doing.
I seem to remember you having a cow when Bush hammered out a deal to lock interest rates on the arm loans a few weeks ago and save the "families" you can't have it both ways Steve.
Stores hiring fewer holiday temps The seasonal job is a classic way for retailers to respond to the heavy shopping period, but this year holiday jobs are way down. Will lack of service turn off shoppers? By Suzanne Kapner, writer
NEW YORK (Fortune) -- Like the holiday fruitcake and mistletoe, another staple of the Christmas season is the temporary retail job.
But less so this year. Faced with one of the toughest holiday shopping seasons in recent years, retailers are keeping a tight lid on hiring. Some 509,000 retail jobs were created in the October-November period, a 9 percent decrease over the same period last year, according to Challenger, Gray & Christmas, a Chicago-based staffing firm.
Unless there is a big upswing in December, the number of temporary jobs created by retailers this year is expected to shrink for the first time since 2001. "Retailers are being very cautious about staffing," said John Challenger, the firm's chief executive.
When times are lean, retailers look to cut expenses, and one way to keep costs down is to hire fewer seasonal employees. But the strategy may have unintended consequences. Stores that are too short-staffed risk turning off shoppers with spotty customer service.
And some believe such walk-outs are happening more. A record number of shoppers said they walked out of stores recently, because they couldn't find a sales clerk to help them, said Brit Beemer, founder of America's Research Group, who regularly surveys about 1,000 consumers to get a read on holiday sales trends. Nearly one-quarter of those surveyed said they walked out of a store without buying anything, because there was no one to help them, up from 22 percent who said so last year.
Some companies come to regret hiring cutbacks. Home Depot's (HD, Fortune 500) customer service plunged to all time lows after former chief executive Robert Nardelli, in a bid to save money, replaced knowledgeable full-time workers with inexperienced part time staff. The company has since embarked on a program to hire more experienced employees, such as retired plumbers and electricians, to better serve customer needs.
The last big drop in seasonal retail hiring occurred in the months following the Sept. 11 terrorist attacks, when temporary sales help shrunk by 26 percent to 585,000 workers, the lowest level in a decade, according to Challenger, Gray & Christmas, which parses data from the Bureau of Labor Statistics. Seasonal hiring has grown every year since 2003, amid stronger-than-average holiday sales gains.
This year, however, the National Retail Federation expects holiday sales to grow 4 percent to $474.5 billion, the slowest pace since 2002. To get customers shopping, retailers have offered big discounts and extended store hours. Macy's (M, Fortune 500) said this week, for instance, that it would keep seven stores, including its Herald Square flagship, open 24-hours during the pre-Christmas weekend.
Another way retailers could sooth shoppers' frazzled nerves (and boost their own sales) is by having enough trained staff on hand to fetch different sizes from the stock room, answer questions and make suggestions about holiday gifts. Andrew Buss, director of the retail and consumer practice for Archstone Consulting, points to Apple (AAPL, Fortune 500) as a good example. Despite the crowds, he said, it is never difficult to get assistance. "If you want to get the sales," Buss said, "you've got to have the help." To top of page
51% of consumers polled said they would be giving gift cards. A store doesn't tally those as sales until redeemed at the teller. Sales will be higher in the early months of next year then before x-mas.
51% of consumers polled said they would be giving gift cards. A store doesn't tally those as sales until redeemed at the teller. Sales will be higher in the early months of next year then before x-mas.
I'm not sure what you are getting at but... the last time I bought a gift card I paid cash for it. If I'm not mistaken that is a sale and it goes on the receipts for that day. In other words I spent 100 bucks at the store to get a card so someone else can pick out the merchandise I "already" paid for later on. I suppose it depends on how those gift cards are counted.
I'm not sure what you are getting at but... the last time I bought a gift card I paid cash for it. If I'm not mistaken that is a sale and it goes on the receipts for that day. In other words I spent 100 bucks at the store to get a card so someone else can pick out the merchandise I "already" paid for later on. I suppose it depends on how those gift cards are counted.
Nope stores don't count those sales until the card is redeemed. That way when you only use 96 out of that 100 dollars there is a majic extra 4 dollars on the books.
But then the housing mess isn’t affecting anyone else but those who were stupid enough to get an ARM.
US Foreclosure Filings Up 68 Pct in Nov. 
Wednesday December 19, 6:55 AM EST
LOS ANGELES (AP) — U.S. homeowners increasingly failed to keep up with their home loan payments in November, as the number of foreclosure filings surged 68 percent nationwide compared with the same month a year ago, according to a mortgage research company. In all, 201,950 foreclosure filings were reported last month, compared with 120,334 in November 2006, Irvine-based RealtyTrac Inc. said Wednesday.
Hey Ace, have you sold your house yet? I wonder just how much you will have to drop your price to sell with the housing prices going down the way they are.
This is affecting everyone, and not in a good way.
------------------ Technology is great when it works, and one big pain in the ass when it doesn't. Detroit iron rules all the rest are just toys.
My neighbor bought 6 years ago a house similar, but less square footage, no fireplace and stucco, not brick. He bought for $135,000. A year later he got a $25,000 home improvement loan. After that evil real estate commission, he can't afford to sell for less than $160,000. _____________________________________________________________________________
I can go to a pretty low price with selling my house. Or I can rent it out at a price that will easily cover my mortgage, insurance and taxes. I've been living in two different locations for 5 months now. My wife can move down here and get an average paying job to pay rent down here while still paying a mortgage on an empty house. We can still live at our current lifestyle and spending.
Yes, this is still the effect of those dumb enough to get an ARM mortgage they couldn't afford. The rise in the foreclosures are with the ones that recently (past 5 years ) got financed into a mortgage that they knew deep down they couldn't afford when that interest rate jacked up on a house that was waaaaay overvalued to begin with. Someone would have to be nuts to buy my house for $235,000! Someone would probably be nuts for paying $210,000 for my house (Double in less than 10 years and I didn't put in more than $30,000 in improvements/renovations.) The market is correcting itself and that is killing the fools that bought the over-priced house hoping it would go up in value to flip it or figuring they'd be making more money to pay for that mortgage when it went up.
It's not like what you'd like to believe, Steve.............People with 10-20 years with their mortgage saying they can't afford their mortgage anymore and it defaults. That is a VERY MINUTE percentage of the foreclosures.
Actually........It's not on the active market, Steve. I don't have it on the market right now as it isn't going to sell right now. I can finish up the remodelling in the basement, and I can list it March 1st as a new listing.
Would I have liked it sold this summer? Yes
Would I have liked it sold and closed on before December 31st? Yeah
Would "I" like it sold tomorrow? Yeah, but we don't want to pull the kids out of school and we don't want to be moving and buying a new house in the wintertime.
Am I concerned that it's more difficult to sell? Yes. Every month I have that house it's like losing money.
Am I losing sleep over it, having marital problems over it, etc? No.
[This message has been edited by aceman (edited 12-19-2007).]
All those with the educations say this is not going to end anytime soon. Prices are going down, not good for anyone. No matter how long ago you bought.
------------------ Technology is great when it works, and one big pain in the ass when it doesn't. Detroit iron rules all the rest are just toys.
All those with the educations say this is not going to end anytime soon. Prices are going down, not good for anyone. No matter how long ago you bought.
I already stated that I'm going to get a reasonable return on my investment, Steve. Even if I sold for $160,000, I will make a 25% return on my investment. Even if I sell it for $130,000 I walk away with money in my pocket. So no matter how you look at it, I'm not in a desperate situation. I can rent it, keep it listed "forever", sell it below market value. Any way you look at it, I'm not hurting. I can hold out until the "not anytime soon" ends.
the housing slump sucks. yes. terrible time to sell. great time to buy. but, guess what? normally, you buy & sell at nearly the same time anyways. so...if its a great time to sell, guess what? its a sucky time to buy. that end of it is silly to even talk about. do you want to get the most for your home, or do you want to get the most home for your $$$? right now is THE time to relocate - if thats in your cards. you will get the most home for your $$$. yes, you dont get much for your existing home - but - so what? it is relative to what you are buying, after all - AND - you get the low interest - AND - a low mortgage.
Steve, If I listed my house for $140,000 right now, I guarantee you that it would be sold in a couple of weeks.
I'd still be making a profit. My breakpoint is $125,000. The house 2 doors down (less sq footage and wood, not brick) went for $150,000 1 month after they listed it for $165,000. They wanted it dumped fast and didn't care about a profit (House paid off). I don't think I'll even ever break even on a house I've owned for 9 years.
I can hold the house, let my family live in Minneapolis and stay a geographical bachelor, if I wanted to. Or, I can sell for that $160,000 price to get rid of it quickly. Plus, I'm going from a market that the average house sells in my suburb for $175,000 to a market that the average house sells for $150,000. I'm not hurting Steve.
I bought at 108 10 years ago and am looking to sell at almost 300. Would that be hurting? At the peak I could have sold at just over 300. And thats for a condo. Is that 10k swing really a big deal?
In his defense of my pointing out his hypocrisy of having a cow about Bush hammering out a deal for locked interest rates on the arm loans, he writes at the start of his post.
quote
Originally posted by 84fiero123: But then the housing mess isn’t affecting anyone else but those who were stupid enough to get an ARM.
An ends his post with this beautiful 180 spin.
quote
Originally posted by 84fiero123: This is affecting everyone, and not in a good way.
Why bother even responding to this kind of nonsense, I don't think even he understands his own argument.
um, people on fixed incomes are NEVER doing well. well, unless they managed to get themselves a NICE fixed income. but, the reality of prices going up (not inflation ) is always present.
and, while I dont see them as rose colored - you do see things thru different glasses than he does. not sure what color his are either....
to subjective.
thats what money is for. if you dont make it - someone else will
um, people on fixed incomes are NEVER doing well. well, unless they managed to get themselves a NICE fixed income. but, the reality of prices going up (not inflation ) is always present.
and, while I dont see them as rose colored - you do see things thru different glasses than he does. not sure what color his are either....
to subjective.
thats what money is for. if you dont make it - someone else will
oops, why am i backwards?
Maybe because they go for the last two "arguments" immediately now because everyone yells BS on the first two.
Wow.. dont hold back, tell us how you really feel.
December 19 2007: 10:21 AM EST
Analysts in fantasyland Despite years of reform, the latest numbers show that Wall Street prognosticators are every bit as deluded and inaccurate as they ever were. By Geoff Colvin, senior editor-at-large
NEW YORK (Fortune) -- Maybe Wall Street analysts are more honest and less compromised than they were pre-SarbOx, but recent events show that they're still awful at their most important job: predicting bad news. They haven't lost their habit of falling in love with the companies they cover and refusing to face unpleasant realities until everyone else has already done so. Now, eight years after they were inflating the bubble, we again have to question whether analysts do retail investors any good.
The latest evidence: Analysts have only just discovered that corporate profits in the fourth quarter aren't going to be nearly as strong as they had supposed a month or two ago. The consensus view going into the quarter was that S&P 500 profits would go up 12 percent to 15 percent, a large jump coming on top of the 20 percent rise in last year's fourth quarter. In light of the credit crunch, the housing collapse, and the towering price of oil, that forecast seemed highly - one might say insanely - optimistic. This it proved to be, but only after the quarter began did the consensus view finally lurch into the real world. Their growth forecast is now about 1.5 percent and still falling.
It has been obvious for many months that profit growth would have to slow way down simply because it couldn't continue at recent rates. Profits have been rising sharply the past few years, which makes sense after the hole they fell into in 2001 and 2002. But by early this year they had grown to 12 percent of GDP, way above their historical average of 9 percent. Analysts knew all this, and in case they didn't, various commentators (including Fortune's Shawn Tully) were insistently pointing it out. But the analysts, ever hopeful, chose to believe that U.S. companies would perform magic.
They still believe it. To see the stubbornness of Wall Street's Pollyannas, look at new data from Merrill Lynch. The firm's chief North American economist, David Rosenberg, regularly and realistically forecasts S&P 500 profit growth. He cut his 2008 forecast sharply (to zero growth) in June, even before the credit crunch. He has since cut it twice more, and it's now -3 percent.
But Merrill's analysts hold a far different view. Add up their 2008 profit growth forecasts for individual S&P companies, and you get 14 percent. In analyst-land, 2008 is going to be another knockout year, with profits yet again growing several times faster than the economy. What's more, Merrill's analysts have actually been increasing their 2008 growth forecasts in recent months. In their bizarre world the logic goes like this: Since we must now admit that 2007 profits will be much lower than we expected, and since we're still certain that 2008 will nonetheless be totally fabulous, then the percentage increases will be even bigger than we thought.
How these nonsensical situations arise is no mystery. Each analyst can accept that the future may be tough overall while still believing that the companies he or she covers are special and will beat the trend. The analysts individually think they're being reasonable, but in the aggregate, they're crazy.
It's similar to what happened in subprime mortgages in recent years or stocks in the late 1990s: Many players realized the situation wasn't sustainable but figured they were especially perceptive and would get out ahead of the pack.
In the days of the market bubble, when many analysts failed to cut their earnings estimates until the collapse was underway, we blamed their motivation. They were afraid their firm's investment-banking arm would lose business. That problem has at least been reduced by SarbOx and by fear of public scrutiny. But if analysts are still predicting fantasy earnings, who cares why? Individual investors are no better off than they were.
Not every analyst gets it wrong. It's always possible in retrospect to find some who hit bull's-eyes. The trouble is, you never know who they'll be. Of course, you may be tempted to believe that while analysts in general are poor, the ones you're relying on are special and will ... no, wait. We know how that turns out. To top of page
Deflating the value of the U.S. Dollar even more....
Fed to lend $20 billion to banks Central bank, in a bid to ease credit crunch, gets strong demand for short-term funding. Wall Street shrugs.
Fed Chairman Ben Bernanke and fellow central bankers said the Fed was lending $20 billion to banks.
NEW YORK (CNNMoney.com) -- The Federal Reserve announced Wednesday that it was lending $20 billion to banks in the first of four special auctions designed to help alleviate the credit crunch on Wall Street.
The Fed said that it received requests for $61.6 billion in loans from 93 bidders - illustrating strong demand by banks that need short-term funds. The winning bidders will receive their loans, which will mature in 28 days, on Thursday.
Stocks seesawed throughout the day Wednesday and finished mixed. The Dow and S&P 500 fell while the Nasdaq rose slightly.
Why don't you just save all your energy Bill and post when we have negative growth in the GDP in a quarter. Then post when it has a negative growth for the 2nd consecutive quarter. Then we'll all know that we're on the brink of a recession and then the next post would be that we're in a recession and a bad economy.
NEW YORK (CNNMoney.com) -- Bear Stearns swung to its first quarterly loss ever Thursday and said it was taking a $1.9 billion writedown due to bad bets made on risky home loans, becoming the latest Wall Street firm to deliver disappointing quarterly results.
The company posted a net loss of $854 million, or $6.90 a share, in the fourth quarter - a first in the firm's 84-year history.
In the same period last year, the company reported a profit of $563 million, or $4 a share.
Bear's top line took a big hit. The company reported negative revenue of $379 million for the quarter, versus $2.4 billion a year ago
[This message has been edited by 84Bill (edited 12-20-2007).]
Commerce Department reports: showing that the pace of GDP growth for the quarter was unrevised compared to the preliminary estimate. .
The report showed that GDP increased at an annual rate of 4.9 percent in the third quarter compared to the 3.8 percent growth seen in the second quarter.
The GDP growth in the third quarter marked the fastest pace of growth since the third quarter of 2003, when GDP surged up 7.5 percent.
The report showed that the pace of consumer spending growth was revised up modestly to 2.8 percent from the preliminary reading of 2.7 percent growth. This represents a significant acceleration from 1.4 percent in the second quarter.
The Commerce Department also said that its reading on core consumer prices, which exclude food and energy prices, was upwardly revised to show 2.0 percent growth compared to the previously reported 1.8 percent growth.
Including food and energy prices, consumer prices rose 1.8 percent in the third quarter, which represent an upward revision from the preliminary estimate of 1.7 percent growth.
Growth is still chugging despite macroeconomic mess, dollar devaluation, and inflationary issues. These are weird times.
Leading indicators were supposed be be released today... This is all I could find
CONOMIC REPORT Leading indicators point to weak winter growth U.S. leading indicators off 0.4% in November versus October's 0.5% By Ruth Mantell, MarketWatch Last update: 10:30 a.m. EST Dec. 20, 2007
WASHINGTON (MarketWatch) -- Weak economic growth may be on tap for this winter, the Conference Board said Thursday, reporting that a gauge of future economic growth fell 0.4% in November. Analysts had expected a decline of 0.3% for the index of leading economic indicators. In October, the index fell 0.5%. Only 3 of the 10 components making up the leading indicators rose in November, with the largest positive contribution coming from vendor performance. Stock prices were the largest negative contributor, a reflection of recent turbulence that has roiled the markets.
From May to November, the leading index declined 1.2% -- the largest six-month decrease in six years, according to the report. The leading index has also declined to its lowest level since mid-2005. The coincident indicator index, which measures where the economy is at present, has shown some signs of yielding to "unrelenting pressure" from factors such as the housing slump and energy prices, according to Ken Goldstein, labor economist at the Conference Board.
There could be some "consistent declines" after the New Year, Goldstein said. Elsewhere Thursday, the government said the U.S. economy grew at a 4.9% annual pace in the third quarter, the fastest growth in four years. However, looking forward, economists expect slower growth in consumer spending, business investment, exports and inventory building, and see little or no improvement in the housing market. See full story.
Also Thursday, the Labor Department said first-time jobless claims rose in the most recent weekly data. Economists said the news shows that the U.S. labor market is coming under pressure.
Initial jobless claims rise 12,000 to 346,000 Number receiving unemployment benefits rises to highest in nearly 2 years By Ruth Mantell, MarketWatch Last update: 11:40 a.m. EST Dec. 20, 2007
WASHINGTON (MarketWatch) -- Seasonally adjusted first-time jobless claims rose in the most recent weekly data, the government reported Thursday, and economists said the news shows that there could be weak job growth ahead. Initial claims rose 12,000 to 346,000 for the week ended Dec. 15, the Labor Department reported. Economists watch claims closely because an increase could be a leading indicator of a slowdown. David Greenlaw, an economist for Morgan Stanley, said the latest data indicate that labor market conditions are "beginning to show noticeable deterioration."
Initial claims were at 319,000 during the same period a year ago. Last week's result was revised up 1,000 to 334,000. This week's figures get special scrutiny because they correspond to the week the government canvasses business establishments and households for the December employment report, due out Jan. 4. Greenlaw's preliminary estimate for December payrolls is an increase of 25,000 to 50,000. In November, the U.S. labor market was slightly stronger than expected, as the economy added 94,000 nonfarm payroll jobs. See full story. Ian Shepherdson, chief U.S. economist with High Frequency Economics Ltd., said in a research note that the growth in claims is large enough to suggest a "meaningful slowdown in payroll growth" in December. He expects growth of 50,000 or less.
"If claims keep rising, payrolls closer to zero will soon become a real possibility," Shepherdson wrote. "Companies' behavior is fundamentally changing; a hiring freeze is no longer enough." The four-week moving average for initial jobless claims rose 4,250 to 343,000, according to the Labor Department. That level is the highest since Oct. 22, 2005.
Continuing jobless claims also gained 12,000, reaching 2.65 million for the week ended Dec. 8. The four-week moving average for continuing jobless claims rose 23,000 to 2.63 million -- hitting the highest level in almost two years.
Analysts say the four-week average is a better indicator of the labor market because it smoothes out one-time events such as holidays or strikes.
The insured unemployment rate, representing the portion of all workers covered by unemployment insurance who are collecting benefits, remained at 2.0%.
Initial claims represent job destruction, while the level of continuing claims show how hard or easy it is for displaced workers to find new jobs.
Initial claims ranging from about 300,000 to 325,000 are consistent with healthy job growth, economists say. Readings consistently higher than 350,000 would signal significant weakening in the labor market. End of Story
WASHINGTON - Consumers put aside worries about slumping home sales and soaring gasoline prices and headed to the malls in November, pushing spending up by the largest amount in 3 1/2 years.
The Commerce Department reported Friday that consumer spending surged by 1.1 percent last month, nearly triple the October gain. The gain reflected various promotional efforts by retailers such as heavy discounting and longer store hours at the start of the holiday shopping season.
The November advance was the biggest one-month jump since a 1.2 percent rise in May 2004 and was significantly above the 0.7 percent analysts had expected. Incomes were also up last month, rising by 0.4 percent, double the October increase but slightly below the advance that had been expected.
WASHINGTON - Consumers put aside worries about slumping home sales and soaring gasoline prices and headed to the malls in November, pushing spending up by the largest amount in 3 1/2 years.
The Commerce Department reported Friday that consumer spending surged by 1.1 percent last month, nearly triple the October gain. The gain reflected various promotional efforts by retailers such as heavy discounting and longer store hours at the start of the holiday shopping season.
The November advance was the biggest one-month jump since a 1.2 percent rise in May 2004 and was significantly above the 0.7 percent analysts had expected. Incomes were also up last month, rising by 0.4 percent, double the October increase but slightly below the advance that had been expected.
very misleading. see what they did? October sucked. bad. so, they report the jump into a normal november black friday by saying its the hugest increase ever. even tho the actual spending is not. just like our current economy is "normal" - its just the fall from the mighty economy of the clinton years making it look bad - this is normal november, just looks great from bleak bush october
Okay you say 20 billion wasn't enough??? bahhh make it 58.. why not 100 billion... it aint our money anyway...
Fed lends another $20B to ease crunch Federal Reserve, in round 2 of new effort to help banks, says it received bids for $58 billion and pledges more.
WASHINGTON (AP) -- The Federal Reserve, working to combat the effects of a severe credit crunch, announced Friday it had auctioned another $20 billion in funds to commercial banks at an interest rate of 4.67 percent.
Fed officials pledged to continue with the auctions "for as long as necessary."
The central bank said it had received bids for $57.7 billion worth of loans, nearly three times the amount being offered, indicating continued strong interest in the Fed's new approach to providing money to cash-strapped banks.
Pain Street USA: '08 housing outlook The forecast is for a longer, deeper home-price slump than previously expected, with double-digit declines in many markets.
EW YORK (CNNMoney.com) -- The United States is deep in its worst housing slump since the Great Depression, and according to a new report, it's not going to get better any time soon.
In a new survey, Moody's Economy.com says many metro areas will record losses of 20 percent or more during the downturn, with the national median price for single-family homes dropping 13 percent through early 2009. Factoring in discount offers from sellers, the actual price decline would be well over 15 percent.
Eighty of the 381 metro areas covered by the report will record double-digit losses, according to the report. Most of the worst-hit markets are in once high-flying areas, such as California and Florida.
The steep losses were bound to arrive sometime. Throughout the housing slump, which began in the summer of 2006, experts kept expecting prices to tumble, but it wasn't until recently that they dropped substantially, according to Mark Zandi, chief economist for Moody's Economy.com.
Circuit City chief: 'Very dissatisfied' Electronics retailer reports a wide loss and weak sales. Company blames slack demand for gadgets and internal problems. Investors see red.
NEW YORK (CNNMoney.com) -- Circuit City shares plummeted Friday after the retailer reported a much wider-than-expected third-quarter loss that it blamed on its ongoing store reorganization and double-digit sales declines of gadgets like camcorders and DVD players.
By MARTIN CRUTSINGER  (AP) President Bush shakes hands with Sen. Debbie Stabenow, D-Mich., left, after signing the Mortgage... Full Image
p {margin:12px 0px 0px 0px;} WASHINGTON (AP) - After a slow and stumbling start, official Washington is scrambling to try to prevent the unfolding mortgage crisis from pushing the country into recession during an election year. There is a strong feeling, though, that the government will need to do more to avert a financial disaster. One former Treasury secretary advocates temporary tax cuts and emergency spending on the order of $50 billion to $75 billion. Such action could help the U.S. from slipping into what Lawrence Summers, who served under President Clinton, fears could become the worst downturn since the steep 1981-82 recession. Some Republicans are worried, too. From both Martin Feldstein, who was President Reagan's top economic adviser, and former Federal Reserve Chairman Alan Greenspan have come calls for deeper government intervention to deal with the threat. ',300,250,-531926,1043579,'1','326',1,-1,'');}else{setTimeout('if(document.pradi26F83D9DB6BD42AE872D3A66C7BDEC00){document.pradi26F83D9DB6BD42AE872D3A66C7BDEC00.onload()}',200);}" border=0 name=pradi26F83D9DB6BD42AE872D3A66C7BDEC00
Before it is all over, the government may have to resort to measures last used in the savings and loan crisis of the 1990s. Back then, it was a new agency to take over failing thrifts sunk by bad loans. Today, it could mean a government agency to buy up billions of dollars of mortgage-backed securities that investors are shunning.
But estimates are that only about 250,000 people will end up getting a rate freeze - a fraction of the 3.5 million home loans that could go into default over the next 2 1/2 years.
These efforts may help at the margins. They do not, however, address one of the biggest threats to the economy: a spreading credit crisis triggered by the soaring defaults on subprime mortgages. Some of the biggest names in finance have suffered multibillion-dollar losses as a result, and critical segments of the credit markets have frozen up. Banks and investors fear making further loans or buying securities backed by debt because they do not know how many more loans might go into default.
So even thought the government and just about every economist in the country has said we are in bad shape. Do you still insist that we are fine?
------------------ Technology is great when it works, and one big pain in the ass when it doesn't. Detroit iron rules all the rest are just toys.
Mortgage mess has government scrambling A look at the moves needed to ward off recession and foreclosures in 2008
WASHINGTON (AP) -- After a slow and stumbling start, Washington is scrambling to prevent the unfolding mortgage crisis from pushing the country into recession during an election year. There is a strong feeling, though, that the government will need to do more to avert a financial disaster.
Former Treasury secretary Lawrence Summers advocates temporary tax cuts and emergency spending on the order of $50 billion to $75 billion. Such action could help the U.S. from slipping into what Summers, who served under President Clinton, fears could become the worst downturn since the steep 1981-82 recession.
Some Republicans are worried, too.
Both Martin Feldstein, who was President Reagan's top economic adviser, and former Federal Reserve Chairman Alan Greenspan have called for deeper government intervention.
So far, the Bush administration has opted for less dramatic measures. In fact, the administration came reluctantly to its biggest step taken - the "teaser freezer."
A deal with the mortgage industry will freeze the low introductory "teaser" rates for five years on some subprime mortgages - loans to people with spotty credit histories. Otherwise the rates will climb much higher, making the mortgages unaffordable for many.
A freeze could buy time for housing to rebound, making it easier for homeowners to refinance to affordable fixed-rate loans. But estimates are that only about 250,000 people will end up getting a freeze - a fraction of the 3.5 million home loans that could go into default over the next two-and-a-half years.
The administration also is working with Congress to increase the $417,000 cap on the size of loans that the big mortgage companies Fannie Mae and Freddie Mac can handle. This step could help in high-cost housing areas such as California.
In addition, the administration is supporting legislation that would boost aid to lower-income homeowners by increasing the scope of mortgage insurance programs handled by the Federal Housing Administration.
These efforts may help at the margins. They do not, however, address the spreading credit crisis triggered by the soaring defaults on subprime mortgages.
The Fed has cut interest rates by a full percentage point since August. But only the September cut - a bigger-than-expected one-half of a percentage point - elicited cheers on Wall Street.
With energy prices on the rise, if the Fed cuts interest rates to keep the economy out of a recession, it could sow the seeds for higher inflation and increase the risk of "stagflation," in which growth is stagnant and inflation worsens.
In a novel approach, the Fed is auctioning off money to the banks in an attempt to get them to open up their loan spigots. But the $40 billion provided to the banks so far pales in comparison with the $500 billion from the European Central Bank.
Many economists believe the Fed will have to cut its federal funds rate, the interest that banks charge each other, at least three more times and strengthen the wording of its statements.
"The difference between a soft economy and a recession is confidence. If the Fed appears reticent to do what is needed, like they did at their last meeting, that does not help confidence," says Mark Zandi, chief economist at Moody's Economy.com. Tax cuts, new agency possible
A tax cut possibly in the form of a rebate probably will be debated in the coming year.
Also gaining some currency is the idea of a government agency modeled after the Resolution Trust Corp. of the S&L days that would buy up mortgage-backed securities as a way of dealing with bad loans. If the government spent $150 billion to $200 billion to purchase mortgage-backed securities, the thinking goes, it would prevent a fire-sale that would drive prices of these securities even lower.
When the housing market stabilizes, the price of the government-held securities would begin to rise, allowing the government to sell them back to investors.
Whatever approach the government decides to take, economists said it will take time for the current problems to resolve themselves.
"We have the fundamental problem that we built too many houses and we charged too high a price for them," says David Wyss, chief economist at Standard & Poor's in New York. "We have to stop building houses for a while and the prices have to come down."
[This message has been edited by 84Bill (edited 12-25-2007).]
NEW YORK (AP) — U.S. home prices fell in October for the 10th consecutive month, posting their biggest monthly decline since early 1991, according to the Standard & Poor's/Case-Shiller home price index. The record 6.7 percent drop marked the 23rd consecutive month of price deceleration. "No matter how you look at these data, it is obvious that the current state of the single-family housing market remains grim," said Robert Shiller, who helped create the index, in a statement Wednesday. The previous record decline was a drop of 6.3 percent, recorded in April 1991. The S&P/Case-Shiller home price index tracks prices of existing single-family homes in 10 metropolitan areas compared with a year earlier. A broader index of 20 metropolitan areas fell 6.1 percent. Among the 20 metropolitan areas used in the broader index, 11 posted record monthly declines. 
Miami posted the largest decline among the 20 markets reviewed. Home prices in the Miami metropolitan area fell 12.4 percent in October compared with the same month last year, surpassing Tampa, Fla. as the worst-performing city. Tampa posted a year-over-year loss of 11.8 percent. Besides those two cities, Detroit, Las Vegas, Phoenix and San Diego also posted double-digit year-over-year declines.
So those millions of Americans who’s biggest investment in their lives is their home are doing just fine right? Wrong. We all are getting screwed.
------------------ Technology is great when it works, and one big pain in the ass when it doesn't. Detroit iron rules all the rest are just toys.
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