ragerunner

Moody’s downgrades Spanish debt to Aa1 Cites weak growth prospects and deteriorating government finances "Moody’s cited weak growth prospects, a “considerable deterioration” in government finances and worsening debt affordability as key reasons for the downgrade. The move, though widely expected, comes a day after the first general strike for the country since 2002, with thousands of protestors taking to the streets across the country to oppose austerity measures." http://www.marketwatch.com/story/moodys-cuts-spain-debt-rating-to-aa1-2010-09-30 Cost of Anglo Irish rescue may hit $47 billion Allied Irish Banks slumps after being told to raise more cash "LONDON (MarketWatch) — The cost of bailing out nationalized lender Anglo Irish Bank could soar to as much as 34.3 billion euros ($46.6 billion), the country’s central bank said Thursday, as it also unexpectedly told Allied Irish Banks to raise a further €3 billion." http://www.marketwatch.com/story/irish-banks-may-need-another-19-billion-2010-09-30

Something tells me that the European Union hopes that is the only primary effect. I am not so sure it will be. Time will tell.

So how big is that 'shadow inventory' that we have talked about? And its still growing at a nice clip. This will continue to put pressure on the economy, banks, RE industry and home values for years to come. S&P: $460B Shadow Inventory Will Take 41 Months to Clear "It’s no secret that the volume of distressed residential properties is weighing heavy on U.S. housing markets and is prolonging any meaningful recovery. Of even greater concern is the industry’s growing backlog of homes that need to be liquidated and resold but have yet to make their way to the market – that menacing shadow inventory that threatens to asphyxiate appreciation of home values and drive the industry to a new low in this down cycle." http://www.dsnews.com/articles/sp-460b-shadow-inventory-will-take-41-months-to-clear-2010-09-29

Speaking of Europe, protests and IMFs warning of potential instability. Demonstrators protest spending cuts across Europe "LONDON (MarketWatch) -- Thousands of demonstrators gathered in Brussels to oppose austerity measures Wednesday and protests against planned spending cuts were set to take place in cities in Greece, Ireland, Italy and Latvia, news reports said. A general strike was also under way in Spain. The AFP news agency said labor leaders hoped to see 100,000 people from 30 countries gather in Brussels to propose austerity measures." http://www.marketwatch.com/story/demonstrators-protest-spending-cuts-across-europe-2010-09-29 Spain endures strikes, awaits downgrade General strike cripples country as financial markets eye downgrade "The two main unions in Spain declared the action a success, with 72% of workers participating. Some food markets were shuttered as well as some businesses fearing vandalism; car factories, street cleaning, postal services and even some television stations were not operating. Buses, trains and metros were all running at minimum service, which for many meant long waits to get to work. Some airline services out of the capital were disrupted. In the early part of the day, Madrid’s Gran Via, which runs through the heart of the city, was blocked to traffic by protestors who lay in the street, while some protests got violent in parts of the country as bus and truck drivers were blocked from moving by protestors." http://www.marketwatch.com/story/spain-endures-strikes-awaits-downgrade-2010-09-29

I have recently posted a lot of stats on how we may not have 'soup lines' but the concept is there, just in a different format. I came across a very good article that demonstrates this issue and how it is getting more pronounced. I think this continues to show a growing segment of the US population is closer and closer to the edge. Watching Wal-Mart at Midnight "Bill Simon, CEO of Wal-Mart’s U.S. business, at a Goldman Sachs conference last week, on behavior at a Walmart store around midnight at the end of a month: “The paycheck cycle we’ve talked about before remains extreme." “And you need not go further than one of our stores on midnight at the end of the month. And it’s real interesting to watch, about 11 p.m., customers start to come in and shop, fill their grocery basket with basic items, baby formula, milk, bread, eggs,and continue to shop and mill about the store until midnight, when electronic — government electronic benefits cards get activated and then the checkout starts and occurs. And our sales for those first few hours on the first of the month are substantially and significantly higher. “And if you really think about it, the only reason somebody gets out in the middle of the night and buys baby formula is that they need it, and they’ve been waiting for it. Otherwise, we are open 24 hours — come at 5 a.m., come at 7 a.m., come at 10 a.m. But if you are there at midnight, you are there for a reason.” http://blogs.wsj.com/economics/2010/09/20/watching-walmart-at-midnight/

I would agree Americans are a lot more tolerant and take longer to have 'social unrest' comparied to Europe and many other places. We really have the mentality that it will get better, just be patient. I think this has helped our country and probably hurt our country at different times.

I know there has been some discussion on weather consumers have been cutting their credit card debt. It appears those first few reports forgot to take into account defaults. Defaults up, credit card debt up as well. Not a good combo for the future. This will only bring more defaults and bankruptcies in the future. It will also put more pressure on the ability to spend and increase America's number one economic engine. Credit card debt falling? Not really "Credit card debt decreased by about $12 billion in the second quarter of 2010, compared with the previous quarter. However, the charge-off rate over the same period increased from 10.1%, or $21.7 billion, to 10.8%, or $21.8 billion. With this data included, CardHub reported, the total U.S. consumer credit card debt actually increased by $9.7 billion." "What we are seeing is that consumers are charging off their debt in record numbers, and the consumers who are not charging off their debt are accumulating more," said Odysseas Papadimitriou, the CEO and founder of CardHub." http://articles.moneycentral.msn.com/Banking/YourCreditRating/credit-card-debt-falling-not-really.aspx

What on earth are they talking about, a world job crisis (in the US and Europe)? Didn't they get the memo, the US recession was over a year ago. Don't they know, if the Hamptons and Washington are flush with money then everything is fine. IMF fears 'social explosion' from world jobs crisis "America and Europe face the worst jobs crisis since the 1930s and risk "an explosion of social unrest" unless they tread carefully, the International Monetary Fund has warned." http://www.telegraph.co.uk/finance/financetopics/financialcrisis/8000561/IMF-fears-social-explosion-from-world-jobs-crisis.html

While afforadable housing and cost of living is one part of the formula, the availability of jobs is even larger. I think areas that can do both, clearly have an advantage. OKC currently has both of these items going for them.

I think raising rates is very valuable. It will reward savers and incentivized more people to save. It can also increase the desire to buy American debt, which we need and it would show confidence in our recovery by the Feds. I also believe that by the time they decided inflation is a problem, it will already be a problem. Mark to Market: I think the debt (real estate) that banks are holding has clearly shown its value. We are not talking about a one year event. We now have several years to show their true value. If the banks thought their debt was going to be worth it original paper price, then they would not continue to unload this onto the FED, sallie, and freddie balance sheets (taxpayer), which they continue to do at significant pace even today. They know the value will never return any place near what they had bookmarked it for or are currently bookmarking it. This is why they continue to dump it as fast as possible. So mark to market should be restored, its value has clearly been set and the banks know it.

Removing mark to market has been one of the biggest tools that the banks and financial companies have been using to show 'improving' balance sheets along with taxpayer money.

Now that the recession has been officially over for a year, I hope we see some noticable changes in how the FEDs act. I would think we should no longer need the following since the recession is over: - 0% interest rates (time to start raising rates) - No more Quantitative Easing (QE) - the taxypayer did their part - Restore Mark to Market - Its over, accounting at the big banks and financials should revert back to normal practices. Once we see these things happen along with a noticable improvement in unemployment rate and the 50 year high poverty level rate, then I think we can say things are really improving. But for now their actions are the opposite from their words.

It should be interesting to see were we go from here. I still think 'another' recession within the next 12 months is not out of the cards. But, we may simply be in a prolonged no growth mode. This would fall in line with all the comments about us being the next Japan. On a side note: It appears 10% unemployment and U6 at around 16% no long is part of the recession formula. Many on Wall Street and Washington told us we could have a recovery without jobs. I guess they were right. Maybe this will be a nice boost for those that are trying to retain their political seats. U.S. recession ended June 2009, NBER finds 18-month downturn was longest since end of World War Two "WASHINGTON (MarketWatch) -- The U.S. recession that started in December 2007 ended in June 2009, making it the longest slump since World War Two, according to the National Bureau of Economic Research." http://www.marketwatch.com/story/us-recession-ended-june-2009-nber-says-2010-09-20

Connecting to the concept that the 'slow leaking' of the oversupplyed housing inventory will takes years and put pressure on home prices for a long time to come. Going down Relief is years away: report "The drop in US home prices -- which are already down 28 percent since 2006 -- could languish until 2013 as a massive 12 million homes in a shadow inventory still have to clear through the system. Shadow inventory, which are homes in mortgage default or those already foreclosed upon but not yet on the market, will keep values from recovering as they drip back onto the market, experts said. "Whether it's the sidelines, shadow or current inventory, the issue is there's more supply than demand," Oliver Chang, a US housing strategist with Morgan Stanley told Bloomberg News, which first reported on the data supplied by his firm as well as Moody's Analytics, Fannie Mae and Barclays." Read more: http://www.nypost.com/p/news/business/relief_is_years_away_report_itpiPx5QMLbKyrkHzFMB1L#ixzz0znr7HRQ6

Those 'soup lines' continue to grow. Poverty in the U.S. spikes "NEW YORK (CNNMoney.com) -- The nation's poverty rate jumped to 14.3% in 2009, its highest level since 1994, and the 43.6 million Americans in need is the highest number in 51 years of record-keeping, the government said Thursday." http://money.cnn.com/2010/09/16/news/economy/Census_poverty_rate/index.htm?hpt=T1&iref=BN1 Its good the banks are moving a little fast on foreclosures. But, they have a long ways to go at this rate and its going to continue to put pressure on the housing market for the foreseeable future. U.S. Homes Lost to Foreclosure Up 25 Percent "LOS ANGELES -- Lenders took back more homes in August than in any month since the start of the U.S. mortgage crisis." http://www.foxnews.com/us/2010/09/16/homes-lost-foreclosure-percent/

Interesting data and survey results. ‘Double Dip’ Recession & European Financial "Significant numbers of Americans have experienced hardship as a result of the recession." "- 42% say that they or their spouse has had wages or salary reduced - 34% say they or their spouse lost their job or has been laid off - 33% have taken on more hours or another job to try and make ends meet - 28% dipped into a planned retirement account like an IRA or 401K because they needed the money - 14% say they have been forced to sell or liquidate a major asset like their car or home - 9% have had their house foreclosed on - 8% had their child delay college (or graduate school) or drop out to save money - In terms of their own personal finances, 2 in 10 expect say they will recover by the end of 2011 (20%), 3 in 10 say after the end of 2011 (27%), and a quarter say their personal finances won’t ever fully recover (24%)." http://www.strategyoneinsight.com/?p=136

Obama to unveil new, massive business tax cut: WSJ "SYDNEY (MarketWatch) -- U.S. president Barack Obama is expected to announce that businesses will be allowed to write off 100% of all new investments in plant and equipment in 2011, The Wall Street Journal reported Monday. The president is expected to make the announcement Wednesday, with the tax break to be retroactive from the same day, according to the report. Congress will need to approve the proposal which, if implemented, would cut business taxes by almost $200 billion over a two-year period, the report said." http://www.marketwatch.com/story/obama-to-unveil-new-massive-business-tax-cut-wsj-2010-09-06 Will more debt really fix the problem. Our infrastructure needs help, but do we really have the financial capacity at this time? Or, should we be taking the approach some of the European countries are taking and cutting back on spending? Increase debt with the printing press or go on a diet and cut debt? Obama lays out $50 billion infrastructure proposal "The plan calls for rebuilding 150,000 miles of roads, building or maintaining 4,000 miles of railways, and constructing or refurbishing some 150 miles of airport runways along with a new air navigation system to cut travel times and airport delays." http://www.marketwatch.com/story/obama-to-unveil-50-bln-infrastructure-plan-2010-09-06

Considering that we've now nearly quadrupled the length of time one can be on unemployment insurance, I'm not sure how much to read into this stat. I think a lot. Many have been unemployed so long they are no longer showing up in this data. That is why I like to look at employment numbers instead of unemployment numbers and those employment numbers are down significantly. I also think this recession hit hard industries that simply do not show up in the unemployment numbers. Small business owners going out of business, private construction/contractors, real estate sales people, etc. that don't draw unemployment but are in line for food stamps, and medical care.

If this recession was the worst since the great depression, where are the soup lines? They are there, just not on the street corner. I know that many of the support agencies in our County are struggling to keep up with demand or having funds expended way before the end of the year and this is in one of the wealthiest counties in the US. Record number in government anti-poverty programs "WASHINGTON — Government anti-poverty programs that have grown to meet the needs of recession victims now serve a record one in six Americans and are continuing to expand." "More than 50 million Americans are on Medicaid, the federal-state program aimed principally at the poor, a survey of state data by USA TODAY shows. That's up at least 17% since the recession began in December 2007." "More than 40 million people get food stamps, an increase of nearly 50% during the economic downturn, according to government data through May. The program has grown steadily for three years." "Close to 10 million receive unemployment insurance, nearly four times the number from 2007." http://www.usatoday.com/news/washington/2010-08-30-1Asafetynet30_ST_N.htm

Each time they try a program like this, the impact becomes less and less. I also think we are at the point were consumer confidence is stopping people from taking on this type of purchase. Even if they are currently employed, they are not sure what the future will be. I also think the industry has moved a lot of purchases forward already and drained the demand pipeline for months to come. Of course this has never stopped the FEDs, Wall Street or Washington from trying. Also, Bernanke clearly stated in Jackson Hole, that they would use 'unconventional' means to stop the economic decline. Add that to the upcoming elections and we have a very desperate situation for many. No Decision on Reviving Homebuyer Credit: Donovan "WASHINGTON (Reuters) - The Obama administration has not decided whether it should resurrect a popular tax credit for first-time homebuyers, Housing and Urban Development Secretary Shaun Donovan said on Sunday. "It's too early to say whether the tax credit will be revived," Donovan said in an interview on CNN's "State of the Union" program. He said the administration would "do everything we can" to stabilize the shaky U.S. housing market." http://www.nytimes.com/reuters/2010/08/29/us/politics/politics-us-usa-economy-housing.html?_r=1

All hands on deck, all hands on deck, man the printing presses. FIRE, FIRE, FIRE!!!!! Just the need for the FEDs to tell us that deflation is a concern is a big statement in itself. I think it has become very clear. We are in the game to the end (whatever that may be). They will print until we either stabilize or become another peso. They are also going to do all they can to keep home prices flat or going up. More taxpayer programs are on the way. Fed 'will strongly resist' deflation: Bernanke Economy will grow in second half, pickup in 2011 "JACKSON HOLE, Wyoming (MarketWatch) -- Federal Reserve Board Chairman Ben Bernanke said Friday that the central bank would not sit idly and let the U.S. economy sink into a period of deflation. "The Federal Open Market Committee will strongly resist deviations from price stability in the downward direction," Bernanke said in a speech opening the Fed's annual summer policy retreat." http://www.marketwatch.com/story/bernanke-talks-tough-on-deflation-2010-08-27?dist=countdown

It appears the housing industry is sharing the losses. Sales are down 32% from last year, and last year was not good. New-home sales drop to record low 276,000 yearly rate "WASHINGTON (MarketWatch) -- Sales of new homes in the United States fell to all-time record low in July, as demand from consumers has dried up after tax breaks for homebuyers expired in April, the Commerce Department estimated Wednesday." "Sales are down 32.4% in the past year." http://www.marketwatch.com/story/july-new-home-sales-fall-to-record-low-pace-2010-08-25?dist=afterbell

Location, location, location. The town I work for has been helped significantly by having Denver and Colorado Springs fair better (so far) than many large metros. Another thing that has helped is the exit of companies and people from California, Arizona, and Nevada. Colorado and Utah seem to be on the receiving end of some of this right now. I am sure the mountains, sunny weather and progressiveness of Denver in mass transit, etc. have helped as well. The region is also a large player in the renewable energy industry.

Yes, Prices just kept falling. But, life goes on (we still have the house). My family and I are very grateful to be where we are at this time.

No, I have been here for about year and half. Before that I was in Butler County for about 3.5 years and was in south Florida for about 5 years. Grew up in Indiana, know the midwest well.