ragerunner

I agree standards need to change. But I really don't believe they will, unless external forces make them change. It should be interesting to see if these forces come into to play over the new few years.

I live in the south Denver region. Where I work continues to be one of the strongest growth areas on the front range. Our retail sales taxes are up this year (many can't say that), we have given out almost 300 residential permits (that is a lot for a town of 47,000), and attracted several new companies into the town. We also have a brand new hospital that just broke ground. From the data I have been seeing I believe we are not the norm, here in Colorado or most of the country. So I am grateful.

I use to work for a local municipality in Butler County. I still have close friends in government that I frequently talk too and get their updates. I now live in Colorado working in government and economic development. So what am I seeing today. Some where in mid June or early July the wheels fell of the system again (not just residential). In the spring developers, builders and businesses that I work with were dusting of plans and even moving on new projects and businesses. Then it just stopped and did it very quietly. From my understanding the same is happening in Ohio and other places. We are now starting to see the stats that are showing this cliff/wall. Cincy area: I think home prices are going to continue to fall (smaller percentage than national average) because of the weekness in the job market, low income levels, large foreclosure numbers and national impacts (loans, etc.). Cincinnati didn't fair as well in this recession as it did in some of the past recessions. It end up with an above average unemployment rate and faced some significant job loses in places it had not previously been hit by (one example is the thousands of airport jobs). Cincy's price drops are going to be more about poor economics and not about overbuilding (residential). Until there is a true correction in jobs and foreclosures (locally and national) housing will continue to slowly bleed and so will the economy. Commercial/Office: I think the area will see mimimal development in commercial and office as well. Just way to much vacant space with supply and demand out of wack. The recovery will take much long than in past recessions before significant new demand is needed. I believe Cincy will trail the national recovery since the regional is growing slower than the national average. NOTE: I could have put many different city names on these comments. Another factor that is growing is a realization by many that housing is not a cash cow or an ATM machine. It may not even be a good investment. The entire concept that the American dream is owning a house in a suburban neighborhood has taken a noticable hit. Its not dead, but it is wounded. This is going to play out in new home construction, location of construction/investment and prices for the noticable future. Their is so much involved in all of this it is difficult to just type it quickly on a forum. I also believe we will see another housing 'stimulus' program that may once again slow the adjustment that must ultimately be made. If not, the double dip will be for the entire economy, not just housing. I know I have said this before, but I have always believed this was not about never having a long draw out recession (I think the powers that be knew this was a massive train wreck from the beginning). Its about not falling into a true depression and keeping the decline orderly. With that all said, I also have learned that Wall Street, the FEDs and Washington should not be underestimated. They will continue to pull rabbits out of their hat until they either achieve their goals (whatever those may be) or they simply run out of rabbits. Then they will start pulling other animals out of their hat, they just many not be as cute.

I think Washington and the FEDs are going to unlease a new taxpayer incentive program for housing very soon (before november elections). Without it a double dip is in the bag. The other big red flag in this data is the significant increase in inventory. The largest levels of supply in over a decade (going into the slow fall and winter selling season). Home prices are well on their way to another leg down. Existing-home sales plunge 27.2% Inventory of unsold homes jumps to 11-year high "WASHINGTON (MarketWatch) -- The sale of existing U.S. homes sank 27.2% in July -- the biggest one-month drop ever -- largely because of the phase-out of a federal tax credit, according to an industry trade group. The National Association of Realtors said existing-home sales fell to a seasonally adjusted annual rate of 3.83 million in July from 5.26 million the month before. Sales of single-family homes fell to the lowest rate in 15 years. A year earlier, existing home sales totaled 5.14 million in July. Inventories of unsold homes rose 2.5% to 3.98 million, representing a 12.5-month supply, the highest level since at least 1999, the trade group said." http://www.marketwatch.com/story/existing-home-sales-plunge-272-in-july-2010-08-24-101400

Journey to the Center of the Earth

While I believe were are taking many of the same paths that Japan has been taking for the last 20 years there are some big difference. Japan started their lost decades with lower debt levels (national and personal), larger saving rates and they have a declining population. The US is starting with a much higher debt levels (national and personal), much smaller saving rates and a rising population. I think these three big differences are going to cause a notiably different outcome. How the US economy is being 'Japanised' Federal Reserve policy is taking a worrying turn towards monetarism. This can only result in an American 'lost decade' "As things stand, the US is rapidly beginning to look like Japan (a country that has as yet failed to recover properly form a property and stock market bubble that burst in 1990). Like Japan, the US appears to be stuck with a zombie banking system, ineffective monetary policy, an ever-rising national debt and persistently low economic growth. And while, as Steven Hill's Cif article argued, Japan looks healthy to our eyes, with low unemployment (5%) and an effective social security net, Japan has been on a long decline from almost no unemployment. It can only afford what it can now because when its bubble burst in 1990, the Japanese economy was in such good shape. The US is already in bad shape: imagine what 20 years of economic sclerosis will do! Worse still, unlike Japan, the US has a growing population, which means that little or no growth is going to make the average American poorer. And finally, let's not forget that low growth means low tax revenues, jeopardising ever more the possibility of the federal government being able to finance social spending aims." http://www.guardian.co.uk/commentisfree/cifamerica/2010/aug/12/useconomy-usdomesticpolicy

I am sure some of it we don't even want to know.

While I agree that some of this is clearly going to the public sector, the private sector has seen its share. I have talked and seen many people in the private sector (engineering firms, planning firms, etc.) that were down to almost no work before the stimulus. But, since the stimulus they have secured significantly more work. The problem is many of them are now completing the planning, engineering and designing of many of these stimulus projects and that positive impact is starting to drop. The impact now is in the construction trade industries that are building these stimulus projects. Buy the end of the year I think we will see this category of stimulus at about 75% spent.

Ohio foreclosure activity rises 23% in July "Ohio Foreclosure activity got off to a rough start in the second half of the year, jumping more than 20 percent in July as filings declined nationwide, according to new data from RealtyTrac Inc." Read more: Ohio foreclosure activity rises 23% in July - Dayton Business Journal http://www.bizjournals.com/dayton/stories/2010/08/09/daily30.html

What programs would that be? If you are talking about the contract, grants and loans portion of the stimulus, then about half of that has been paid out. From what I am seeing on a local, and state level most of those funds have been appropriated, but about half the work may still need to be accomplished and/or is currently underway. There is a lag time between work and pay out with these types of funds. If you look how the first half of those funds have affected employment numbers national, unemployment and job losses continue to not improve. This leads me to believe that the other half of these funds will have about the same impact. What I have been seeing is that these funds have haulted the layoff scene in some industries. But, highering has not noticably increased. If you are talking about other stimulus funds I would like to hear you take on this. http://www.recovery.gov/Pages/home.aspx

In the words of Gomer Pyle, surprise, surprise, surprise. If this data holds true than GDP would have fallen from 3.7 to 1.3 within one quarter. That is a pretty quick haircut. This would probably mean that the peak of the stimulus took place at the beginning of 2010. GDP much weaker in second quarter, economists say "The markets might face their biggest downside economic surprise of this recent growth slowdown yet in the form of a downward second quarter gross domestic product revision, which today's U.S. trade deficit figures suggest will be a whopper," wrote analysts at Action Economics." "Instead of growing at a 2.4% annualized pace in the second quarter, real gross domestic product will likely be cut almost in half to a 1.3% annual rate, according to economists surveyed by MarketWatch." http://www.marketwatch.com/story/whopping-downward-revision-for-q2-gdp-seen-2010-08-11

Think of all the trillions that have been spent and we still got income decline. Home prices will continue to fall if incomes keep going down. U.S. Incomes Tumbled in 2009 "Personal income took a hit in most of the U.S. last year with the only gains coming from government support, according to new data from the Commerce Department." "Even though prices declined last year — down 0.2% from a year earlier as measured by the national price index for personal consumption expenditures — incomes fell even more. On average, personal income dropped 1.8% in 2009, following a 2.7% increase in 2007." "In areas that saw gains, most of the increases came from the government in one way or another." http://blogs.wsj.com/economics/2010/08/09/us-incomes-tumbled-in-2009/ A look a some of the midwest cities. (2009) (2008) Cincinnati - $38168 $39066 -2.3% Cleveland - $29704 $30092 -1.3% Columbus - $38242 $38741 -1.3% Dayton - $35344 $35526 -0.5% Indy - $38339 $39297 -2.4% Chicago - $43727 $45377 -3.6% Detroit - $37541 $39028 -3.8% Lexington - $35696 $36413 -2% Dayton is interesting on this list. Since it has such a huge amount of government funded and government supported jobs, it had the smallest decline in income.

We road census hiring on the way up (with Wall Street and the FEDs cheering job recovery) and now we are riding it on the way down. What will be the spin for this? Stocks retreat after disappointing jobs report "The Labor Department said 131,000 jobs were cut last month, though that was primarily tied to layoffs of temporary census workers. The unemployment rate remained unchanged at 9.5 percent. Economists polled by Thomson Reuters had forecast 65,000 jobs would be cut last month and the unemployment rate would rise to 9.6 percent." "Because of the cuts to census workers, investors were largely focused on private sector jobs, which account for most jobs in the country. Private employers added just 71,000 jobs, well short of the 90,000 expected by economists." http://www.ibj.com/stocks-retreat-after-disappointing-jobs-report/PARAMS/article/21553

Down, down, down we go. Pending Sales of Existing Homes decrease 2.6% "The index of pending home resales dropped 2.6 percent from the prior month, figures from the National Association of Realtors showed today in Washington. Economists projected a 4 percent gain, according to the median forecast in a Bloomberg News survey. The expiration of a government tax credit on April 30 caused the gauge to slump 30 percent in May, the most since data began in 2001." http://www.bloomberg.com/news/2010-08-03/pending-sales-of-existing-u-s-homes-unexpectedly-decreased-2-6-in-june.html Maybe they will add some HELOC money with all these refi's in an effort to deal with deflation issues? The big banks have been getting free money and making a nice profit off of it. Why not throw some of this 'free' money at Main Street as well? As Housing Programs Falter, Administration Weighs New Refinance Plan "Rumors of a new government-led mortgage refinancing program have begun to surface. DS News has received word from sources inside the administration and from high-ranking executives at some of the largest banks, confirming that the White House is indeed considering a refi push that would allow homeowners to lower their monthly mortgage obligations by locking in today’s rock-bottom interest rates." "Namely, a large portion of such efforts would be negated with high redefault rates expected on the refinanced loans, the bank said. Secondly, while a government-sponsored refi wave may help existing borrowers, it could penalize prospective new borrowers, as investors price in the potentiality of another government-driven refi wave in the future. And thirdly, refis would result in large losses for mortgage investors." http://www.dsnews.com/articles/as-housing-programs-falter-administration-weighs-new-refinance-plan-2010-08-02 So, what might be next for all this mess? The economic data is clearly screaming double dip and the decline in US money supply and deflation concerns are growing by the day. Add in we have elections coming in November and you know they are going to pull some very ugly rabbits out of the hat. Stimulus 2 to the mega power may be on the way. RBS tells clients to prepare for 'monster' money-printing by the Federal Reserve "As recovery starts to stall in the US and Europe with echoes of mid-1931, bond experts are once again dusting off a speech by Ben Bernanke given eight years ago as a freshman governor at the Federal Reserve." "Entitled "Deflation: Making Sure It Doesn’t Happen Here", it is a warfare manual for defeating economic slumps by use of extreme monetary stimulus once interest rates have dropped to zero, and implicitly once governments have spent themselves to near bankruptcy." "The speech is best known for its irreverent one-liner: "The US government has a technology, called a printing press, that allows it to produce as many US dollars as it wishes at essentially no cost." "The ECRI leading indicator produced by the Economic Cycle Research Institute plummeted yet again last week to -6.9, pointing to contraction in the US by the end of the year. It is dropping faster that at any time in the post-War era." "Societe Generale's uber-bear Albert Edwards said the Fed and other central banks will be forced to print more money whatever they now say, given the "stinking fiscal mess" across the developed world. "The response to the coming deflationary maelstrom will be additional money printing that will make the recent QE seem insignificant," he said." http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7857595/RBS-tells-clients-to-prepare-for-monster-money-printing-by-the-Federal-Reserve.html

Where are home prices headed in the future? I think we are in for a noticable drop and this will put a lot of pressure on the economy. Shadow Inventory to Push 2011 Home Prices Lower than '09: Altos Research "House prices will continue to drop through the rest of the year and will begin 2011 lower than they were in 2009, according to a webinar hosted by Scott Sambucci, vice president of data analytics for Altos Research. The culprit behind the forecast is the weight of the shadow inventory of homes yet to hit the market. But, Sambucci said, anyone who generalizes the size and length of time it takes to clear the shadow inventory will be wrong." http://www.housingwire.com/2010/07/30/shadow-inventory-to-push-2011-home-prices-lower-than-09-altos-research?utm_source=rss&utm_medium=rss&utm_campaign=shadow-inventory-to-push-2011-home-prices-lower- Fiserv Predicts Home Prices to Drop Another 4.9% in Year Ahead "Despite recent increases in a number of the industry’s home price measurements, and even an uptick in the company’s own index of residential property prices, Fiserv Inc. says the gains will be short-lived. The Wisconsin-based information technology firm is forecasting home prices to fall by nearly 5 percent more over the next 12 months." http://www.dsnews.com/articles/fiserv-predicts-home-prices-to-drop-another-49-in-year-ahead-2010-07-29

Can't we all just keep playing nicely in the sandbox together? Usually the kids only do so until one realizes the other has been stealing toys or someone decides they have grown big enough to take a few shots. I think both apply here. Chinese rating agency strips Western nations of AAA status "China's leading credit rating agency has stripped America, Britain, Germany and France of their AAA ratings, accusing Anglo-Saxon competitors of ideological bias in favour of the West." "Dagong Global Credit Rating Co used its first foray into sovereign debt to paint a revolutionary picture of creditworthiness around the world, giving much greater weight to "wealth creating capacity" and foreign reserves than Fitch, Standard & Poor's, or Moody's." "The US falls to AA, while Britain and France slither down to AA-. Belgium, Spain, Italy are ranked at A- along with Malaysia." http://www.telegraph.co.uk/finance/china-business/7886077/Chinese-rating-agency-strips-Western-nations-of-AAA-status.html

Another major piece of Denver's mass transit system was unveiled today and it will add a great new piece of architecture to the city. I really like the design and how it fits into the airport. Calatrava unveils DIA plans "Spanish architect Santiago Calatrava today unveiled designs for the first phase of Denver International Airport's south terminal redevelopment and he said they complement the airport's best-known architectural element — its terminal with the white-tented roof." "The south terminal project's first phase, which is expected to cost as much as $650 million, includes a commuter-rail station, a public plaza that links with the existing terminal, and a 500-room airport hotel." http://www.denverpost.com/ci_15625013 For more pics. http://www.denverpost.com/ci_15625013

Wouldn't that moment be something. Can you imagine? Someone like Kathleen Corbet gets up on stage and says "Hi, I'm personally responsible for the fact that millions of people have no assets and can't send their kids to college". That would never happen. I'd definitely prefer seeing that over a salary cap though! Maybe they could test run that apology concept with a Saturday Night Live act. Then check the ratings and take it from there.

Wouldn't that moment be something.

Its comforting to know that each one of us, in some small way, helped these starving executives make it through these tough times. Bailed-out banks paid execs $1.6 bln: reports "SAN FRANCISCO (MarketWatch) -- The U.S. Treasury's pay czar Kenneth Feinberg said that 17 bailed-out banks paid their top executives a total of $1.6 billion during the financial crisis, according to media reports Friday. Feinberg reportedly said he does not have the authority to get the banks in question to repay the lavish payments that were made while the banks were receiving taxpayer funds." http://www.marketwatch.com/story/bailed-out-banks-paid-execs-16-bln-reports-2010-07-23

After trillions, we are still 'unusually uncertain' about the economy. WEW!!!! I think we are being prepared for more taxpayer funded intervention. Just give all US adult citizens $200,000 and dictate they must use it to pay down debt before they use it for other things and we will see things get a lot better fast. Of course inflation would go through the roof, but that would be just a side effect. :wink: Bernanke says outlook uncertain Says Fed may do more to spur growth but doesn't elaborate "WASHINGTON (MarketWatch) -- Federal Reserve Board Chairman Ben Bernanke said Wednesday the outlook for the economy is "unusually uncertain" and the Fed is willing to do more if growth proved to be weaker than forecast. "We remain prepared to take further policy actions as needed to foster a return" to full employment with low and stable inflation, Bernanke said in written testimony prepared for the Senate Banking Committee." http://www.marketwatch.com/story/bernanke-to-address-fears-of-the-double-dip-dragon-2010-07-21?dist=countdown

That would be an understatement. They care very much for how this affects the BIG banks and major Wall Street financial firms. Almost all efforts by the FED have been to ensure the health of these entities. All other effects are secondary.

So after all that taxpayer money, we are basically back to were we started before the tax credit (in housing). All those billions and we are still sitting in the same boat. What a great use of economic resources. Home prices (new and preowned) will start a noticable decline by fall, if not sooner. U.S. housing starts drop 5% to 8-month low Number of homes under construction falls to record low in June "WASHINGTON (MarketWatch) -- Ground-breaking on new housing units fell sharply after a federal tax credit for buyers expired, putting the housing sector back in the dumps where it was a year ago, according to Commerce Department data released Tuesday." "Despite record-low mortgage rates, housing is at risk of a double dip [recession] unless job growth strengthens soon," wrote Sal Guatieri, a senior economist for BMO Capital Markets." http://www.marketwatch.com/story/us-housing-starts-fall-5-to-8-month-low-2010-07-20

The point of my post was not the conspiracy theory stuff, its that China continue to par it US holdings. I think their is no doubt, that China can't just dump its US debt, but if they decide to no longer be a big player in our debt being purchased, that will clearly impact our debt dependent economy. I do find it interesting to think that the UK (in its currently financial situation) is really buying US debt at that pace. But, I guess anything is possible.

Oops. I guess Main Street isn't seeing all the green shoots!!!! This drop is huge, almost as big as after 9/11. U.S. July consumer sentiment plummets "WASHINGTON (MarketWatch) -- U.S. consumer sentiment plummeted in early July, hitting the lowest level since August, according to survey results released Friday by Reuters and the University of Michigan." "The reading has only dropped this much or more seven times. The data goes back to 1978. The drop of 9.5 points in early July compares with a drop of 9.7 points following the terror attacks of Sept. 11, 2001." http://www.marketwatch.com/story/us-july-consumer-sentiment-plummets-2010-07-16-103300 The US and UK are just playing games on a merry go round. Or, the US and the US is just playing games on a merry go round. Whoever it is, I think the goal is to just keep the ride going in circles and hoping it doesn't stop. Chinese Treasury Dump Brings Its Total Holdings To One Year Low, As "UK" Continues Exponential Accumulation Of US Bonds "We are a rather surprised that this morning's stunning Treasury International Capital report has not gotten far more prominent attention. The reason: in it we read that in May 2010, China dumped $33 billion in Treasuries, bringing its total to the lowest since June 2009. Furthermore, Japan also offloaded $8.8 billion in bonds, as did the Oil Exporters. Yet total foreign Treasury holdings increased from $3,957 billion to $3,964 billion almost exclusively as a result of ongoing exponential UK accumulation. It is time someone in the mainstream media asked just who is doing all this "UK-based" buying?" http://www.zerohedge.com/article/chinese-treasury-dump-brings-its-total-holdings-one-year-low-uk-continues-exponential-accumu