Don't banks need people with good credit to loan? With all this downtown and foreclosures, 10's of million of people s credit are SHOT. That's a potential of 10's of million of new businesses that will not be formed unless they have cash.   No wonder free checking maybe a thing of the past. We can rely on new students with no credit history to help us out of this. :(

 

That's why banks are not lending--there are no interested buyers who are creditworthy. Those who abused credit by buying houses they couldn't afford (and obligatorily, the mortgage brokers who sold them the loans) are now in deep trouble. But this entire global crisis is just a result of what's been happening on an individual level--we abuse debt. Now our credit card is maxed out and we just ran out of gas. Unfortunately, this is going to be only the beginning of our problems, because certainly the government is going to try to step in and muscle a return to the wasteful days by spending more money we don't have.

Don't banks need people with good credit to loan? With all this downtown and foreclosures, 10's of million of people s credit are SHOT. That's a potential of 10's of million of new businesses that will not be formed unless they have cash. No wonder free checking maybe a thing of the past. We can rely on new students with no credit history to help us out of this. :(

 

That's why banks are not lending--there are no interested buyers who are creditworthy. Those who abused credit by buying houses they couldn't afford (and obligatorily, the mortgage brokers who sold them the loans) are now in deep trouble. But this entire global crisis is just a result of what's been happening on an individual level--we abuse debt. Now our credit card is maxed out and we just ran out of gas. Unfortunately, this is going to be only the beginning of our problems, because certainly the government is going to try to step in and muscle a return to the wasteful days by spending more money we don't have.

 

Sad but true.

 

Getting over our debt addiction would be like getting over a drug addiction: painful, but healthy.  Unfortunately, we don't appear to have the ability as a whole--either in the public or private spheres--to kick that addiction.

 

It really galls me because I try to be responsible, keeping my living expenses low and not borrowing anywhere near the amount that I could, and I seriously worry that I'm going to end up getting burned for it in the future--I'll be branded as one of those evil misers with "money to spare."

^Childless renters who itemize deductions get it the worst, thanks to the moronic mortgage interest deduction.

 

It really galls me because I try to be responsible, keeping my living expenses low and not borrowing anywhere near the amount that I could, and I seriously worry that I'm going to end up getting burned for it in the future--I'll be branded as one of those evil misers with "money to spare."

 

Serious question- how unique to you think you are in this respect?  There's a lot of loose language about how "we" abuse credit, but I think most people (not necessarily you) have a very poor grasp how debt is distributed across all households.  The media is partly to blame by quoting those completely misleading average credit card debt and average student loan stats.  But most people aren't maxed out on credit card debt.  Most people aren't in foreclosure.  As of 2007, the most recent data year for the Survey of Consumer Finance, 23% of all households had zero debt at all (no mortgage debt even) and a clear majority of U.S. households saved money.

There are quite a few people who have paid off their mortgages, inherited their houses or built their own.

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

But most people aren't maxed out on credit card debt. Most people aren't in foreclosure. As of 2007, the most recent data year for the Survey of Consumer Finance, 23% of all households had zero debt at all (no mortgage debt even) and a clear majority of U.S. households saved money.

 

That's a really bad date to pull that data for comparison. Since then, housing prices have declined significantly and we've seen at least two market crashes. I'm sure households are in much worse shape now.

Housing price decline and market crashes don't necessarily change the number of households with no debt, though they may.  Unless I had some data on how those numbers were actually impacted, I wouldn't say that I'm sure of it.  In fact, here's some numbers from an article in the NY Times about household deleveraging:

 

"Total household credit has contracted for seven straight quarters. Mortgage debt is down $462 billion from the peak, which it reached in November 2008. Bank-card borrowings, which peaked two months later, are off $126 billion. Auto loans have fallen $122 billion; home-equity lines, $77 billion."

 

http://www.nytimes.com/2010/07/18/magazine/18FOB-wwln-t.html?_r=1&scp=1&sq=deleveraging&st=cse

But most people aren't maxed out on credit card debt.  Most people aren't in foreclosure.  As of 2007, the most recent data year for the Survey of Consumer Finance, 23% of all households had zero debt at all (no mortgage debt even) and a clear majority of U.S. households saved money.

 

That's a really bad date to pull that data for comparison. Since then, housing prices have declined significantly and we've seen at least two market crashes. I'm sure households are in much worse shape now.

 

Consistent with the data X cites, I believe the average savings rate is higher now than it was in 2007, though that doesn't speak to the distribution of savers or how it's changed.  More to the point, I think it's a little harsh to call someone per se reckless with their borrowing if they've been forced into foreclosure or bankruptcy because they've lost their job or had unexpected medical bills they could not afford, which has been the case for many people as a result of the recession.  I'm not trying to make a big point here, just putting the caricature of the shopaholic American consumer addicted to unsustainable debt into some context.

^^ One could probably label anyone per se reckless who has about a 50% debt-to-income ratio, depending on income level, and fails to accumulate any savings. Since the saving rate hit a low of about 1% in 2005 and has risen to 6% by today, one can assume that the average rate consists of a great deal of heavy savers and heavy overconsumers. Without this data, we cannot pass judgment, but it is clear that now that debt is not easily available, saving is a necessity.

^^ One could probably label anyone per se reckless who has about a 50% debt-to-income ratio, depending on income level, and fails to accumulate any savings. Since the saving rate hit a low of about 1% in 2005 and has risen to 6% by today, one can assume that the average rate consists of a great deal of heavy savers and heavy overconsumers. Without this data, we cannot pass judgment, but it is clear that now that debt is not easily available, saving is a necessity.

 

I certainly agree with the last point.

 

With respect to your first point (unsupportable debt to income ratios), I think the larger issues are the interest rates, the term, and the depreciation of whatever you purchased.  In other words, $30,000 in student loan debt over 10 years at 5% interest is different than $30,000 in credit card debt at 21% interest on a revolving basis for vacations and spending binges at Easton and Polaris.  That's true whether your income is $30,000 or $150,000.

^For sure, which is why it's a good thing that as of 2007, when credit was still free flowing, most American households had zero credit card debt. And the median amount of unpaid credit card balance for all households was less than $100.

 

http://www.federalreserve.gov/pubs/bulletin/2009/pdf/scf09.pdf

http://www.bos.frb.org/economic/ppdp/2009/ppdp0910.pdf

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

" Without it a double dip is in the bag"

 

Are you refering to a double-dip for the housing market, or a double-dip for the US economy as a whole?

 

Housing seems to have already entered its "next leg down" phase following the expiration of the federal tax credits where prices are likey to fall further (another 10% nationally?) before remaining at a low plateau for some time.

 

Rage, since you work in some sort of county planning, do you see the local economy (SW Ohio) falling much, growing slowly, or something else?

I second CincyDad's question.  I actually think a permanent "dip" in the housing market would be a good thing for the country, even though it would disrupt the expectations and planning of older Americans who expected to be able to use their homes as piggy banks.  For much of the 20th century, that expectation did not exist, so it is not impossible to conceive of a world without it again.  Houses were (and, IMHO, should be) something you buy as at least as much as a durable good as a value-producing investment.  Money that goes to buy real estate becomes highly illiquid and is basically calcified.  I'd much rather see a permanent rationalization of home prices based on a new set of assumptions, i.e., that they are not investments (particularly when you take out the taxes, maintenance, HOA fees, and other costs of ownership that don't exist with more liquid investments, and then take inflation between the times of purchase and sale into account).  That may be happening.  If it does, and if those lower prices endure while the rest of the company begins to pick up again, it will mean families have more money that does not get sucked away into a ridiculously high mortgage payment.

 

Houses are valuable not because you should rationally anticipate an inflation-beating return.  They are valuable because they provide something that is immediately useful, and hopefully will remain so for years: shelter, a base of operations, etc.  That is the characteristic of a durable good like a car or computer, not an investment.

^Along the same lines, the production of housing in most areas is similar to durable goods (fungible lots, mass production, supply elasticity), so there's no reason the housing market should operate differently.  As long as Phoenix was surrounded by open land and served by highways, there was zero reason for housing there to appreciate.  Same thing for Miami, as long as there was zoning capacity to build more towers.  The only exceptions are the markets with severe regulatory/geographical supply constraints, like NYC, Boston, SF and LA or submarkets with unique, non-replicable characteristics, like proximity to CBD (where it's valued) and historic architecture.

All of this speculation boom/bust cycle would end if we eliminated the mortgage tax deduction.  Lots of counties (e.g. Canada) do not and never did have it and they do just fine. Also, it is extremely regressive with the renters subsidizing the home owners. 

All of this speculation boom/bust cycle would end if we eliminated the mortgage tax deduction. Lots of counties (e.g. Canada) do not and never did have it and they do just fine. Also, it is extremely regressive with the renters subsidizing the home owners.

 

I think Canada may also have a legal minimum-down-payment requirement--I think it's only 5%, but considering the 3% and 0% loans that people were writing in the US, a similar requirement here might have saved a lot of headache.  That forces people to be somewhat more conservative (i.e., realistic) when shopping for a house.  Canada actually recently <a href="http://www.cbc.ca/canada/british-columbia/story/2010/04/19/mortgage-rules-april-19.html">tightened mortgage requirements</a>, because the housing market there was too hot.

 

I'm conflicted about this, because I'm generally opposed to regulation of contract relations between private parties.  That said, I'd be more than willing to trade a simple, flat, 5%-down requirement and get rid of all the other housing market regulations out there (TILA, CRA, Reg Z, etc. etc. etc.).  That mishmash of disclosure requirements doesn't change anything but the amount of fine print on mortgage papers.  I'd even be willing to see it go to 10%.  That would be genuine simplification of the regulatory structure (whereas when most pols say "simplify," they generally mean "exempt my preferred contributors from the regime, which will make their lives simpler").

" Without it a double dip is in the bag"

 

Are you refering to a double-dip for the housing market, or a double-dip for the US economy as a whole?

 

Housing seems to have already entered its "next leg down" phase following the expiration of the federal tax credits where prices are likey to fall further (another 10% nationally?) before remaining at a low plateau for some time.

 

Rage, since you work in some sort of county planning, do you see the local economy (SW Ohio) falling much, growing slowly, or something else?

 

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.

^ Personally, I'd like to see lending standards return to similar to what they were a generation ago:

 

20% down as standard

5% down as mandatory, with PMI (no 2nd mortgage/heloc used for purchase)

No seller financial contribution

Buyer pays all closing costs at time of purchase, out of their cash reserves.

 

(not all of these were requirements a generation ago, but I'd lilke to see them become requirements now.)

 

Implementing those requirements would put a strong break on housing for some time.  People would have to live in appartments and save money in order to buy a house. 

 

This would have the reverse effect on housing that lowering the standards had.  When the lending standards dropped 8 years ago, lots of people living in appartments who were in the process of 'saving up for a house' suddenly had the threshold greatly reduced.  As a result, a whole bunch of people suddenly became 'purchase qualified'.  By returning the lending standards to what they were, a lot of people would suddenly become 'purchase un-qualified' and need to rent and 'save up for a house'.

 

But that's not what politicians want to happen.

 

Rage, when did you move to Colorado?

Rage, when did you move to Colorado?

 

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.

^ Personally, I'd like to see lending standards return to similar to what they were a generation ago:

 

20% down as standard

5% down as mandatory, with PMI (no 2nd mortgage/heloc used for purchase)

No seller financial contribution

Buyer pays all closing costs at time of purchase, out of their cash reserves.

 

(not all of these were requirements a generation ago, but I'd lilke to see them become requirements now.)

 

Implementing those requirements would put a strong break on housing for some time.  People would have to live in appartments and save money in order to buy a house. 

 

This would have the reverse effect on housing that lowering the standards had.  When the lending standards dropped 8 years ago, lots of people living in appartments who were in the process of 'saving up for a house' suddenly had the threshold greatly reduced.  As a result, a whole bunch of people suddenly became 'purchase qualified'.  By returning the lending standards to what they were, a lot of people would suddenly become 'purchase un-qualified' and need to rent and 'save up for a house'.

 

But that's not what politicians want to happen.

 

 

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.

Did you move out there earlier this year?  I always thought you were in Butler County (Ohio).

Did you move out their earlier this year?  I always thought you were in Butler County (Ohio).

 

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.

Did you have trouble selling your Ohio house 18 months ago?  (I think you once said you owned a house, back when you were posting housing inventory for Cincy metro on an earlier incarnation of this thread)

Did you have trouble selling your Ohio house 18 months ago?  (I think you once said you owned a house, back when you were posting housing inventory for Cincy metro on an earlier incarnation of this thread)

 

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.

Well, good luck out there.

 

What is making your local economy different than the rest of the country?  Is it the oil industry?  Mining?  telecom? 

 

What is driving your economy (and can we get some if it) ?

Well, good luck out there.

 

What is making your local economy different than the rest of the country?  Is it the oil industry?  Mining?  telecom? 

 

What is driving your economy (and can we get some if it) ?

 

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.

California is bleeding companies.  Washington State is starting to bleed companies.  It started with Boeing last year.  A lot of small companies are moving to Idaho!

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

Recovery Summer 2010!

 

BIDEN: 'We're moving in right direction'...

 

Worries about recovery deepen...

 

'Hindenburg Omen' creator exits stock market...

 

Economy in 'Depression, Not Recession'...

 

Dow Faces 'Bouncy Ride to 5,000'...

 

Typical Slow Summer -- or Something Darker?

 

New Home Sales Sink to Lowest Pace on Record...

 

Investors Scatter to Safety...

 

MORGAN STANLEY: Government Bond Defaults Inevitable...

 

Dem Sen: Trillions in Debt, 'Nothing to Show for It'...

Recovery Summer 2010!

Dem Sen: Trillions in Debt, 'Nothing to Show for It'

 

OUCH

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

Not the Peso, the Amero!

I think it is safe to say that we are in a depression (though that was what recessions were called until the Great Depression ruined the term). I think the inflation issue is tied very closely to the Chinese and to a lesser extent Indian economies. If either bust in the next year or so, I think the inflationary pressures likely waste away, but if they keep booming (esp. in demand for petroleum and other high priced commodities) well look out.

Fear not, Obama to the rescue!

Fear not, Obama to the rescue!

 

What has this got to do with the recession.  Going into this we all knew that recovery would not happen immediately.  Anyone who tried to act like it would be over when Obama took office is a moron.  The recession is like losing weight.  You didn't gain the weight overnight so you cannot be expected to lose it overnight.  The recession was a 8 year fall, it wasn't going to turn around in 2 years.

 

Give it a break already.

Haha. Obama is out of touch and his stimulus is an abject failure. It's good to be king.

I'm not trying to dispute any claims here, just an odd feeling after 2008-09 where everything was going to shit, and myself and those around me were certainly feeling it.  Today, I read about things going to shit but while things aren't significantly better I feel secure and no one around me seems to be any danger of financial crisis.  Maybe it just means I'll be more surprised tomorrow.

Interesting comments C-dawg.  Thanks. 

  "I think the real goal of the layoffs was to cut wages."

 

  Wages, which are essentially the price of labor, are different than price of most other things because there is an expectation that wages only go up and never go down.

 

  Gasoline prices go up and down daily. So do stocks, wholesale goods, and all kinds of other things. Retail prices might be a little more stable for the simple fact that store clerks have to change all the price labels at the shelf, and customers have come to expect relative stability. Even land prices, after so many years of increasing, are now dropping in many places.

 

    But wages are a different story. People expect wages to increase and never drop.

 

    If the present market is actually deflationary, and some economists think it is, then wages should go down along with everything else. As you said, it is easier for a company to lay off some older worker with experience and hire some recent college graduate who will work for half as much. Apparently people are more willing to be laid off than to take a pay cut.

 

    On the other hand, I am familiar with a company of over 100 employees who laid off 19 in 2008 and the rest took pay cuts. Since then, they have hired two or three.

 

   

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

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

"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

 

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.

"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

 

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.

. That is why I like to look at employment numbers instead of unemployment numbers and those employment numbers are down significantly.

 

As you all know I have been tracking the Ohio private sector employment numbers from the BLS.  The numbers for this year, including the preliminaries for July, pretty much are "normal" in that the month-to-month increases and seasonal patterns seem to be tracking pretty close the numbers from the mid to late 2000s.  There is always a seasonal drop that happens in the last quarter & first quarter, and this was a normal drop for 2009-2010.

 

However the decline was so steep in 2008 and the end-of-year seasonal drop between 2008 & 2009 was off the cliff.  Then the numbers did a weak small recovery in the spring but then continued to decline in summer and fall of 2009 (but at a much shallower slope than in 2008, which was a real slide before going off the cliff). 

 

So even with the Ohio private sector economy generating jobs at a relatively normal pattern so far this year it's not enough to get us out of the deep hole in terms of lost employment or lost positions.

 

If we go into a double-dip recession, even a shallow one, this could drop the numbers even more....which will add to the deficit even more because entitlements will kick in for even more unemployed people.  The situation could get dire.  But so far the employment numbers are not showing a weakening (keeping in mind this is a lagging indicator).

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

The uncertainty is killing the market. Obama must make the tax rates of the last nine years permanent and stop raising taxes/spending.

Obama must make the tax rates of the last nine years permanent and stop raising taxes/spending.

 

I thought you supported some sort of big transformative technology/infrastructure program?

 

 

 

The uncertainty is killing the market. Obama must make the tax rates of the last nine years permanent and stop raising taxes/spending.

 

If it's "uncertainty" that is killing the market, wouldn't rescinding the tax breaks permanently, effective immediately, also end that uncertainty?

 

Alternatively, is it even physically possible to offer certainty before the November elections are resolved?