ragerunner

The residential builders and developers I talk to are not very upbeat about this year. U.S. housing starts approach record low Housing starts slump 22.5% "WASHINGTON (MarketWatch) — New construction of U.S. housing units plunged in February, erasing a sharp gain in January and coming close to an all-time-low level. Starts fell 22.5% to a seasonally adjusted annual rate of 479,000, the Commerce Department said. This is just 0.4% above the record low of 477,000 units set in April 2009. The decline in starts in February was the largest since March 1984. January starts were revised higher to a 618,000 pace from the 596,000 previously reported. The 18.4% jump in January was due to an 87.4% surge in apartment starts, which analysts attributed to special factors." http://www.marketwatch.com/story/falling-us-housing-starts-close-in-on-record-low-2011-03-16

Thanks for posting your data.

So, is this type of inflation here to stay until it sinks the US and world economy and everyone falls back into a deep recession? Or is this a short term issue that will reverse itself quickly? Oil can adjust with events, but food appears to be on a long term rise. Import Prices in U.S. Increased 1.4% in February on Oil, Food "Prices of goods imported into the U.S. rose more than forecast in February, led by gains in crude oil and food. The 1.4 percent increase in the import-price index exceeded the 0.9 percent median forecast in a Bloomberg News survey and followed a 1.3 percent rise in January, Labor Department figures showed today in Washington. Prices excluding fuel rose 0.3 percent. Food costs over the past 12 months posted the biggest gain since records began in 1977." http://www.bloomberg.com/news/2011-03-15/import-prices-in-u-s-increased-1-4-in-february-on-oil-food.html

Man, wouldn't it be great if we all could do this. Take all you 'bad' debt and send it some where else and only keep the great credit score that left over. I wonder if one day the FDIC will take receivership of the 'bad' bank? I guess this shows the big boys still have A LOT of bad debt on the books, even after all the FED and taxpayer's have done over the last 3 years for them. BofA Segregates Almost Half of its Mortgages Into ‘Bad Bank’ "Bank of America Corp. (BAC), the biggest U.S. lender by assets, is segregating almost half its 13.9 million mortgages into a “bad” bank comprised of its riskiest and worst-performing “legacy” loans, said Terry Laughlin, who is running the new unit. “We are creating a classic good bank, bad bank structure,” Laughlin told investors at a meeting in New York today. He was promoted last month to manage the costs of resolving disputes stemming from the company’s 2008 purchase of Countrywide Financial Corp. “We’re going to get after this, we’re going to do it the right way and we’re going to put it to bed in the next 36 months,” he said. The legacy portfolio will hold 6.7 million loans with outstanding principal balance of about $1 trillion, according to a presentation to investors today." http://www.bloomberg.com/news/2011-03-08/bofa-segregates-almost-half-its-mortgages-into-bad-bank-under-laughlin.html

The 2008 crash isn’t over, only covered up Commentary: Reaganomics driving us into Phase 2 of meltdown "SAN LUIS OBISPO, Calif. (MarketWatch) — We have hard evidence Washington and Wall Street knew the 2008 crash was coming years in advance. Yes, they could have prevented it. But didn’t. And, yes, the cover-up cost Americans trillions. Was their Reaganomics ideology so rigid, so blinding, they couldn’t (and still cannot) admit they were wrong? Forcing them to lie to America? Cover up the lies? The evidence is clear." http://www.marketwatch.com/story/the-2008-crash-isnt-over-only-covered-up-2011-03-08

Interesting read. This type of information has started to show up more and more in the MSM. It will be interesting to see if more concrete information ever becomes available. Maybe through an audit of the FEDs. Not likely, but you never know. Time for Fed to disprove PPT conspiracy theory Commentary: Analyst charges that government is manipulating markets "WASHINGTON (MarketWatch) -- The massive stock-market rally in the past nine months is mostly due to secret government buying of stock-index futures, a respected stock-market analyst said Tuesday." "Charles Biderman, chief executive of TrimTabs Investment Research, is the latest and most credible person to charge that the Federal Reserve and the Treasury (in league with top Wall Street firms) is rigging the stock market on a daily basis." "In a special report released Tuesday, Biderman said the $6 trillion increase in U.S. stock-market capitalization since March can't be explained by the usual sources of funds flowing into the market -- such as mutual funds, direct retail investment, pension funds, hedge funds or foreign purchases." http://www.marketwatch.com/story/time-for-fed-to-disprove-ppt-conspiracy-theory-2010-01-05

Two different stats. The job creation stat is moving the right direction (postive job growth vs negative job growth). The unemployment stat is artifically dropping, while the real number of unemployed is not really changing at all.

Clearly the job growth issues is headed in the right direction and has improved signficantly from the deepest part of the recession. But, it takes about 150,000+ jobs per month just to consume incoming workforce. Over the last 6 months we had only created enough jobs to take care of that incoming workforce number, nothing left over to deal with the unemployed. As far as the unemployment number going down, that means very little, since the main reason it is currently dropping is do to people exhausting their unemployment benefits and/or have giving up looking for a job. If all these people where add back into the unemployment number it would skyrocket. The next 6 months are going be big in determining if the employment picture is truly improving in the US. It will be interesting to watch. I think this chart shows that we have not even begun to deal with the damage that was done during the core of the recession. The good news is, we are now not adding to that damage and that is a step in the right direction. http://money.usnews.com/money/careers/articles/2011/03/04/graphic-february-jobs-report-shows-modest-growth

This movie is worth watching. Inside Job - Who Maimed the Economy, and How "Meanwhile, some investment bankers — at Goldman Sachs in particular — were betting against the positions they were pushing on their customers. An elaborate house of cards had been constructed in which bad consumer loans were bundled into securities, which, were certified as sound by rating agencies paid by the banks and then insured via credit-default swaps. One risky bet was stacked on top of another, and in retrospect the collapse of the whole edifice, along with the loss of jobs, homes, pensions and political confidence, seems inevitable." "How did this happen? Mr. Ferguson is no conspiracy theorist; nor is he inclined toward structural or systemic explanations. Markets are not like tectonic plates, shifting on their own. Visible hands write laws and make deals, and in this case a combination of warped values and groupthink seems to have driven very intelligent men (and they were mostly men) toward folly. In addition to business and government, Mr. Ferguson aims his critique at academia, suggesting that the discipline of economics and more than a few prominent economists were corrupted by consulting fees, seats on boards of directors and membership in the masters of the universe club." http://movies.nytimes.com/2010/10/08/movies/08inside.html?pagewanted=2

This is one of the first times I have seen the labor numbers and how sigificant the paycuts have been for many. Your Incredible Shrinking Paycheck "And fall they have, to an extent not seen since the 1930s. Labor Department figures show that from 2007 to 2009, more than half the full-time workers who lost jobs and then found new work took pay cuts. A depressing 36% had to take positions paying 20% less than the ones they lost." http://news.yahoo.com/s/time/09171205001900;_ylt=Al.8esiGDc.LC5gqsUJ7F9Os0NUE;_ylu=X3oDMTNrYnE1N25tBGFzc2V0A3RpbWUvMjAxMTAyMjgvMDkxNzEyMDUwMDE5MDAEY2NvZGUDbW9zdHBvcHVsYXIEY3BvcwM0BHBvcwMxBHB0A2hvbWVfY29rZQRzZWMDeW5faGVhZGxpbmVfbGlzdARzbGsDeW91cmluY3JlZGli

Wow!! What shocking news? The NAR has been so trust worth throughout the housing implosion, they would never fudge the numbers?!. CoreLogic Blasts NAR for Overstating Home Sales "The "most popular measure" of existing home sales, the National Association of Realtors' Existing Home Sales, has increasingly overstated home sales for ten years as measured by five other sources, and reached a level in 2010 that is 15 to 20 percent higher than actual sales, according to CoreLogic, which made the charges in its US Housing and Market Trends Report. CoreLogic reported sales totaled only 3.6 million in 2010, down 12 percent from 2009. By comparison, NAR reported sales fell only 5 percent in 2010 after rising in 2009, and were flat relative to 2008. CoreLogic said sales did not actually rise in 2009." Read more: http://www.upi.com/Real-Estate/2011/02/15/CoreLogic-Blasts-NAR-for-Overstating-Home-Sales/4181297811217/#ixzz1F05Maw3U

Why Isn't Wall Street in Jail? Financial crooks brought down the world's economy — but the feds are doing more to protect them than to prosecute them "Nobody goes to jail. This is the mantra of the financial-crisis era, one that saw virtually every major bank and financial company on Wall Street embroiled in obscene criminal scandals that impoverished millions and collectively destroyed hundreds of billions, in fact, trillions of dollars of the world's wealth — and nobody went to jail. Nobody, that is, except Bernie Madoff, a flamboyant and pathological celebrity con artist, whose victims happened to be other rich and famous people." "The rest of them, all of them, got off. Not a single executive who ran the companies that cooked up and cashed in on the phony financial boom — an industrywide scam that involved the mass sale of mismarked, fraudulent mortgage-backed securities — has ever been convicted. Their names by now are familiar to even the most casual Middle American news consumer: companies like AIG, Goldman Sachs, Lehman Brothers, JP Morgan Chase, Bank of America and Morgan Stanley. Most of these firms were directly involved in elaborate fraud and theft. Lehman Brothers hid billions in loans from its investors. Bank of America lied about billions in bonuses. Goldman Sachs failed to tell clients how it put together the born-to-lose toxic mortgage deals it was selling. What's more, many of these companies had corporate chieftains whose actions cost investors billions — from AIG derivatives chief Joe Cassano, who assured investors they would not lose even "one dollar" just months before his unit imploded, to the $263 million in compensation that former Lehman chief Dick "The Gorilla" Fuld conveniently failed to disclose. Yet not one of them has faced time behind bars." http://www.rollingstone.com/politics/news/why-isnt-wall-street-in-jail-20110216?print=true

Good thing we had some inflation going on to help sales increases stay above 0. Sales at U.S. retailers rise 0.3% in January Monthly increase in spending is lowest since last summer "The increase in sales fell short of Wall Street’s expectations. Economists surveyed by MarketWatch had forecast sales to rise by 0.6% overall and by 0.6% excluding the auto segment." "The government also revised sales data for December 2010 lower — to a 0.5% increase from 0.6% as originally reported." "The biggest increase in retail sales last month occurred at gas stations, which isn’t a good thing for most consumers since it reflects higher fuel prices. Sales at gas stations rose 1.4%, following a 1.8% increase in December." "Yet spending fell at clothing and building-supply stores. Consumers also spent less at bars and restaurants and bought fewer leisure items." http://www.marketwatch.com/story/us-retail-sales-increase-03-in-january-2011-02-15-854310

The mortgage interest deduction and possible reform or dismantling of Fannie and Freddie are actually two different things. (The way you wrote this sort of suggests that the two are connected, though I wasn't sure if you really meant it that way or not.) Seattle is indeed an economic powerhouse, and the news about the housing market there shouldn't take anything away from that. However, Seattle, like many coastal markets, also experienced a more significant run-up in prices than basically any Ohio market. I have a friend from OSU who went out there to work for Boeing as an aerospace engineer, so he's got a nice, solid, stable, middle-class, knowledge-economy income. Even with that, there's no way he could have afforded what many places in Seattle were costing four years ago. Even now, my eyes widen when we sometimes compare costs of living (we're good enough of friends that we can talk about finances with each other) with him in Seattle and me in Akron. Seattle has come down in price, but that doesn't mean that it's cheap. I own as much Seattle property as I care to: I own Amazon stock. Meanwhile, I pay Akron prices to keep a roof over my head. I may not have Seattle's social scene, but there's a lot more to do in even a comparatively small Midwestern city than a lot of people (especially those not from around here) appreciate. And, of course, the Internet is everywhere. So true, Seattle, and many other markets still have a ways to go before income and cost of living rebalance to historic norms.

I think very few American cities will avoid a noticable drop in home values by the time this is over. Housing crash hitting cities thought to be stable New wave of distress now affecting areas where boom was relatively restrained "SEATTLE — Few believed the housing market here would ever collapse. Now they wonder if it will ever stop slumping." "In the last year, home prices in Seattle had a bigger price decline than in Las Vegas. Minneapolis dropped more than Miami, and Atlanta fared worse than Phoenix." "Seattle is down about 31 percent from its mid-2007 peak and, according to Zillow’s calculations, still has as much as 10 percent to fall. Mr. Humphries estimates the rest of the country will drop a further 5 and 7 percent as last year’s tax credits for home buyers continue to wear off." http://www.msnbc.msn.com/id/41569256/ns/business-the_new_york_times

U.S. home values post largest quarterly decline in 2 years "Foreclosure moratoriums caused by robo-signing disputes and the expiration of home buyer tax credits led to a painful decline in home prices during the fourth quarter of 2010, with home values falling 2.6% from the previous quarter, the largest quarterly drop in nearly two years, says Zillow.com in its latest fourth-quarter Real Estate Market Report. Zillow says a market consumed with tax credits in the early part of 2010 kept home values stabilized. But, the end of those credits caused a hangover, leading to a 5.9% drop in year-over-year fourth quarter home values and a 27% decline in home values from the market's peak in June 2006." http://www.housingwire.com/2011/02/09/u-s-home-values-post-largest-quarterly-decline-in-2-years For comparison, in 2010 the US had 1 million foreclosures. Joseph Stiglitz Predicts Another 2 Million Foreclosures In 2011 "Stiglitz now expects the housing situation at the root of the crisis to get worse. He expects an addition 2 million foreclosures in 2011, adding to the 7 million that have already occurred in the U.S." Read more: http://www.businessinsider.com/stiglitz-there-are-going-to-be-another-2-million-foreclosures-in-2011-2011-2#ixzz1DUI5HD5t With this type of growth in the number of upside down mortgages, the number of foreclosures will remain high. 30% of mortgages are underwater "Now 27% of homeowners with mortgages owe more than their homes are worth. That's up from 23.2% a quarter earlier." http://money.cnn.com/2011/02/09/real_estate/underwater_mortgages_rising/

That does seem to be the case, I find that a lot of direct MSM information on our economic stituation has to come more and more from the British media and other place than the MSM in the US.

The same is true for me, but I think that has something to do with our education level and the circles we run in. Even though "all classes" are represented in our samples, the proprotions might be skewed. That's not the case for me. I have more blue collar friends than white collar. Waaaaaaay more. My closest circle of friends consists of 1 lincoln electric factory worker, 1 ford plant worker, 2 lanscapers, 1 tree service worker, 1 accountant, 1 restaraunt manager, 1 bartender, 1 carpenter, 2 service department workers, 1 firefighter, 1 real estate developer and myself. All friends since HS. We're a diverse bunch. Only the tree service guy is unemployed, but that happens every winter (don't ask why he doesn't plan ahead or why ODJFS gives him unemployment comp every year this happens.... I will never know. I think it also depends on what part of the country you live in, and what part of those area you live in. I have many friends in Florida, Ohio and places like Arizona or Nevada that worked in the RE industry, construction industry, architect industry that are no long employed and have not found new employment. I have also notice that many people that did lose their jobs were unable to find a replacement job any place near the old pay. As far as the stats go, I am sure reality is some place in the middle. But, I do believe that middle is between the U6 number and the SGS number, which would put it much higher than U3 and close to the lower levels of the great depression. Once you look at food stamp numbers and how fast they are rising you realize the pain is very real for more and more Americans.

Another look at unemployment stats in graphic form. SGS is basically how the government kept unemployment stats before 1994. So if this was the 80's or early 90's (before they changed who was added into the unemployment figures) the government would have reported about a 22% unemployment rate for January 2011. Hopefully this gives a little better historic perspective of where we are right now and how it compares to the past.

This type of payroll increase won't cut into the amount of people unemployed, matter of factor that number will grow if payroll numbers don't increase significantly. Add in that the total number of jobs created was revised down for 2010 by 150,000 and the data no longer looks so rosy. It takes about 1.4+ million jobs per year just to keep up with new entries into the job market. 2010 only created 950,000. At this rate we could have an unemployment number in a year or two of 5 or 6% and still have more people unemployed than we do today. Some other quick data from this report: U6 (a better stat for how many are unemployed): grew to 17.3% For a quick reference: During the Great Depression: 1931 - Unemployment was 16.3% 1933 - Unemployment peaked at 24.9% Not say we are in a depression, but the numbers are starting to not look so good. Total number of employed in 2010 only grew by 790,000 (after they revised the year total down by 483,000 - WOW That is a MAJOR miss by the numbers) way below what is needed just to break even. Jobless rate falls to 9.0% as weather hits payrolls Nonfarm payrolls increase by just 36,000 vs. expectations of 140,000 "WASHINGTON (MarketWatch) — The U.S. unemployment rate fell unexpectedly to 9.0% in January, a 21-month low, as nonfarm payrolls rose by a surprisingly meager 36,000 jobs, the government reported Friday." "The level of employment in December 2010 was revised down by 483,000." "Before the revisions, the estimates suggested that over the past year 1.1 million of the 8.3 million jobs lost during the recession had returned. Now it appears that only 950,000 of the 8.6 million jobs have been recovered, Ashworth said." http://www.marketwatch.com/story/us-unemployment-falls-to-90-on-few-new-jobs-2011-02-04

While may things factor into these types of events, weather, growth of demand from emerging markets, etc. It is hard to ignore the mass printing of money by the FEDs to keep interest rates low in the US and the cheap access to money by most major wall street banks (that is being funneled into the commodities market) are also affecting inflation on these items as well. World food prices at fresh high, says FAO "World food prices rose to a record high in January, according to the UN's Food and Agricultural Organization (FAO). The FAO Food Price Index, which measures the wholesale price of basic foods within a basket, averaged 231 points last month - its highest level since records began in 1990. It was up 3.4% from December, the seventh monthly rise for the index." "The index is now higher than June 2008 when the cost of food sparked violent protests in countries including Cameroon, Haiti and Egypt." "The high price of food is thought to have been a factor in recent political unrest in both Algeria and Tunisia in the form of anti-government demonstrations, protests which have spread to neighbouring Egypt and Jordan." http://www.bbc.co.uk/news/business-12354402

If TARP wasn't enough, try another route to transfer wealth. We talked a lot about this several pages back, and I tried to show that bailout mania is still underway (despite reports about how TARP was winding down), it's just taking a different path. The end result is that the taxpayer is holding the bag and Wall Street gets to report some very nice profits. Of course this is small potatoes compared to what they are doing with the FED discount window. That is the mechanism being used by Wall Street to send commodity prices up and is causing inflation to become very real around the world on most needed items. THE PERFECT BAILOUT: Fannie And Freddie Now Send Taxpayer Cash Directly To Wall Street "And they're still sending billions of dollars of taxpayer cash directly to Wall Street, in what might be described as the "perfect bailout." "Fannie and Freddie got a "blank check" from Treasury Secretary Tim Geithner at the end of the financial crisis. This blank check allows the housing giants to lose as much money as they want, with the taxpayer footing the bill. Fannie and Freddie use much of this money to buy mortgages from Wall Street at what may be grossly inflated prices. This is a super arrangement for the banks, because they get to unload all their terrible mortgages at prices that won't produce losses. And it's fine for Fannie and Freddie because, well, because they have the blank check. But of course there's no free lunch. And in this scheme, the US taxpayer is, as usual, footing the bill. In other words, Fannie and Freddie are now doing what the Treasury wanted the original "TARP" bailout to do--use taxpayer money to help banks clean toxic assets off their balance sheets. Unlike the original TARP, however--which justifiably outraged taxpayers--no one knows or cares about what Fannie or Freddie are doing. So, it's the perfect bailout." http://finance.yahoo.com/tech-ticker/article/535882/THE-PERFECT-BAILOUT%3A-Fannie-And-Freddie-Now-Send-Taxpayer-Cash-Directly-To-Wall-Street

Moving in the right direction. It takes about 150,000 to consume the incoming workforce each month. Note that December's numbers were readjusted downward by about 50,000 jobs, which puts job creation down about 60,000 from December to January. U.S. private-sector payrolls up 187,000: ADP "WASHINGTON (MarketWatch) — Private-sector employment rose in January, and “strength was evident” in all major industries and sizes of business, according to Automatic Data Processing Inc.’s employment report released Wednesday." "For December, ADP reported that private payrolls gained 247,000, compared with a prior estimate of 297,000." http://www.marketwatch.com/story/us-private-sector-jobs-up-187000-adp-2011-02-02

If the price of oil and commodities continue to rise they will clearly hurt the economy's recovery efforts and will cause more unrest around the world (people don't like it when they can't afford to eat). High oil prices have several times put the economic into a recession and as we near the $100 price tag, that danger grows. What I continue to hope for and slowly I am seeing (at least in some parts of the country) is the move by people to live closer to work, use transit, walk/bike, reduce the size of their living spaces and the amount of income they are using for that shelter. I think all these things are very positive for our country over the long haul but, may prove not as good for exurbia/suburbia and even metros that have not incorporated more compact, sustainable mixed use environments. I also think that metro regions that are on the frontline in developing these types of environments and have mass transit systems well underway, will out perform the metros that lag behind in these efforts.

New-home sales rise to 329,000 in December Pace reclaims highest since April, but housing market still weak "WASHINGTON (MarketWatch) — Sales of new single-family homes rose almost 18% in December to the highest rate since last spring, but builders in 2010 still suffered through their worst year in modern times." “The impressive increase in new home sales in December is mainly due to the rush to beat the deadline of a tax credit in California,” the firm Capital Economics said in a report. “Without that boost, new sales would have been broadly unchanged.” "Whatever the case, new home sales in 2010 ended up at the lowest level since record-keeping begin in 1963." http://www.marketwatch.com/story/us-new-home-sales-reach-329000-rate-in-december-2011-01-26