May 16, 200916 yr The irony of course is that we call the 01 recession 'dot-com' when its crushing blows really hit the Great Lakes the hardest. There is a deeper meaning to that fact and that credit bubble that followed.
May 16, 200916 yr If I recall right there was also journalistic talk of 1990s "bubble"...the so-called the dot-com bubble, what Alan Greenspan called "irrational exuberance". However the numbers show this was an era of increasing jobs and low unemployment for Cleveland and Cincinnati...places not usually associated with IT concentrations. I know unemployment in the Dayton MSA, too, fell to 4% during this era. So that 1990s prospertity went well beyond the IT industry and metros with IT concentrations. Im not sure this was really that well reported in the national media.
May 18, 200916 yr So that 1990s prospertity went well beyond the IT industry and metros with IT concentrations The late '90s was just another Greenspan credit bubble. His typical response to every crisis. The early & mid '90s saw the Asian currency collapse, Russian economic collapse, and Mexican near-collapse (I think the US may have lent Mexico some money to keep them afloat). To each crisis, Greenspan flooded the financial markets with easy credit. He did try to take away the punch bowl in the mid '90s, but did so by raising rates steeply. The US economy nearly tiped into a recession, and he quickly reversed course. From that time on, he was afraid to tighten credit, thereby creating the 2 mega credit bubbles - the so-called 'Dot Com' and so-called 'Housing' bubbles. Expect to see Greenspan grilled, fried, and served up by future economic historians.
May 18, 200916 yr Jeffery... Thanks for the great posts on the employment charts here , and the housing starts thread.
May 18, 200916 yr So that 1990s prospertity went well beyond the IT industry and metros with IT concentrations The late '90s was just another Greenspan credit bubble. His typical response to every crisis. The early & mid '90s saw the Asian currency collapse, Russian economic collapse, and Mexican near-collapse (I think the US may have lent Mexico some money to keep them afloat). To each crisis, Greenspan flooded the financial markets with easy credit. He did try to take away the punch bowl in the mid '90s, but did so by raising rates steeply. The US economy nearly tiped into a recession, and he quickly reversed course. From that time on, he was afraid to tighten credit, thereby creating the 2 mega credit bubbles - the so-called 'Dot Com' and so-called 'Housing' bubbles. Expect to see Greenspan grilled, fried, and served up by future economic historians. A lot of people (including myself) thought he was a genius back then, but now not so much. It's interesting that there is still lots for us to learn about economic matters.
May 20, 200916 yr Can I just say that if California goes under, then all this supposed fed stimulus money that was going to help the rest of the economy will go poof as the feds have to rush in and save the biggest state from itself. That and the rumors of the feds owning GM, well it's just depressing.
May 20, 200916 yr ^ I know that California is in a grave financial situation, but did something specific prompt your post? Did they want today that a default on their bonds was possible in the next couple of months? I could be out of the loop here today.
May 20, 200916 yr ^ I know that California is in a grave financial situation, but did something specific prompt your post? Did they want today that a default on their bonds was possible in the next couple of months? I could be out of the loop here today. I dont understand the second half of your post.
May 20, 200916 yr Author My gut is telling that the fallout and ripple effect of this is going to be very painful for a lot of people and companies. What amazes me is 'Main Street' in general doesn't seemed overly concerned that the government is about to 'buy' a major US company. GM to be bought by the US Government "General Motors Corporation's plan for a bankruptcy filing involves a quick sale of the company's healthy assets to a new company initially owned by the U.S. government, a source familiar with the situation said on Tuesday. The source, who would not be named because he was not cleared to speak with the media, did not specify a purchase price. The new company is expected to honor the claims of secured lenders, possibly in full, according to the source. The remaining assets of GM would stay in bankruptcy protection to satisfy other outstanding claims. ... http://www.current.com/e/http://current.com/items/90076188_gm-to-be-bought-by-the-us-government.htm
May 20, 200916 yr I know that California is in a grave financial situation, but did something specific prompt your post? Did they want today that a default on their bonds was possible in the next couple of months? I could be out of the loop here today. That's not what I typed, is it? Somehow I must have pasted something into that reply by mistake. Anyway, I read that all the tax proposals were voted down yesterday. I guess that increases the likelyhood of a default in the not-to-distant future.
May 20, 200916 yr ^^ The gov't buying GM. That really irritates me. And being the gov't, it will be real hard to sue to block it, real hard to sue to get reimbersed, real hard to sue.... you get the picture. I read this late yesterday. Sounds like the government will "pick" the president and board, who will be..... the same people holding those positions today. This just isn't right.
May 20, 200916 yr ^^ The gov't buying GM. That really irritates me. And being the gov't, it will be real hard to sue to block it, real hard to sue to get reimbersed, real hard to sue.... you get the picture. I read this late yesterday. Sounds like the government will "pick" the president and board, who will be..... the same people holding those positions today. This just isn't right. Then what do you do? I wanted them to go under. The market will "right size" itself. but every is crying the "ripple" affect. Please.
May 20, 200916 yr Calif. had a big vote yesterday on a number of revenue enhancements and they all went down to defeat.
May 20, 200916 yr ^^ The gov't buying GM. That really irritates me. And being the gov't, it will be real hard to sue to block it, real hard to sue to get reimbersed, real hard to sue.... you get the picture. I read this late yesterday. Sounds like the government will "pick" the president and board, who will be..... the same people holding those positions today. This just isn't right. Then what do you do? I wanted them to go under. The market will "right size" itself. but every is crying the "ripple" affect. Please. Like you said, you let them go under. Leaving businesses/people/anything with no accountability is a recipe for disaster.
May 20, 200916 yr Then what do you do? I wanted them to go under. The market will "right size" itself. but every is crying the "ripple" affect. Please. I mostly disapprove of the US government become an intermediary owner. I would rather the courts sort it out, where everyone could get to argue for their claims. It will be very hard for claimants to stand up in court when the government has already pre-ordained what will happen, who will win and who will lose. I had the same problem with how the government picked winners and losers in the banking industry with the forced consolidation (PNC won, NationalCity lost, but the market did not decide the outcome). I had the same problem with how the government picked which investment banks to bailout and which to let fall. I think the courts, without the large shadow of the government imposing over them, should sort out bankruptcies. Yes, it would probably be a long, drawn-out BK, but I think that would be better than having the government simply step in a buy the company.
May 20, 200916 yr Calif. had a big vote yesterday on a number of revenue enhancements and they all went down to defeat. And what's really sad is, despite the voice of the people speaking, the federal government is going to come in and override that voice by bailing out the state of California and absorbing its debt (i.e., time for Ohio to start paying for their mistakes...because its not like we have any of our own).
May 20, 200916 yr Those of you with long memories will recall another government takeover and consolidation of a big failed company. That would be the Penn Central collapse of the early 1970s. At that time Congress took over the bankrupt Penn Central, added the bankrupt Erie-Lackawana (not sure what happened to the Reading), and formed the "Consoldiated Rail Corporation", Conrail for short. The intent was not to establish a nationalized "British Rail" or "Deutsche Bundesbahn" but to keep the system operating and then privatize it again. Perhaps that's the idea behind GM. The concept here probably isnt long-term nationalization but a sort of managed restructuring, similar to what Conrail did with the bankrupt Northeast rail system.
May 20, 200916 yr Author Calif. had a big vote yesterday on a number of revenue enhancements and they all went down to defeat. And what's really sad is, despite the voice of the people speaking, the federal government is going to come in and override that voice by bailing out the state of California and absorbing its debt (i.e., time for Ohio to start paying for their mistakes...because its not like we have any of our own). It will be interesting to see if states find similar 'strings' attached to such direct bailout out as the banking industry is finding out. The FEDs are expanding their reach and power by the day.
May 20, 200916 yr he US economy nearly tiped into a recession, and he quickly reversed course. From that time on, he was afraid to tighten credit, thereby creating the 2 mega credit bubbles - the so-called 'Dot Com' and so-called 'Housing' bubbles. There was something else going on, though, because there was signifigantly more job creation happenind in the 1990s vs the 2000s, for Ohio metro areas.
May 21, 200916 yr One of the key differences between the 90s and the 00s was the level of industrialization in China and India and health of European and East Asian economies (Japan, Korea, Taiwan). In the 90s, America really was an engine of growth by what we produced (even as deindustrialization was continuing apace). In the 00s, it was the American consumer who continued to drive growth but without any serious underlying reason why besides a credit bubble. I think there a kind of fantastic attitude that prevailed. Rough sketch: Futurist regime run amok - Dot Com bubble Scared sh#tless by Y2K Loss of Utopian future - Dot Com bust Scared sh$tless again by 9/11 Lots and lots of retail therapy as solution to fear Scared stupid by wars More retail therapy Screwed (today)
May 21, 200916 yr Those of you with long memories will recall ... My memory is not quite that long. I agree, long-term nationalization probably isn't the goal of the government in the GM case. I was thinking more about this last night. Maybe what is bothering me is the short-circuited bankruptcy process, not the actual interim government ownership. I'm not a lawyer, but it seems like the whole contract law process is being messed with here. In most contracts, there is an "out" called bankruptcy. Everyone agrees to that. However, we all have a common understanding of the bk process, and what to reasonably expect out of it. So that is also taken into consideration at the time a contract is made. Now, the rules of bk are not set in stone, and tend to have some fluidness about them, varying to some degree in each case. But in general, you have a pretty good idea of what to expect in bk. Now with the government rushing every major bk thru the courts in record time, there just isn't time to sort out everything like there normally is. Major decisions seem to be made on the fly, decisions that affect companies and individuals in major ways. That 'major decisions made on the fly' attitude has been a hallmark of this economic upheaval, especially by the government. I am not sure at all that they were even close to making the right decisions in some of the cases. And yet these decisions affect millions of investors, and thousands of individual lives. I know that the GM and Chrysler bankruptcies have been in the works for months before the formal filing, which allows for a rapid implementation of the proceedings. However, these filings are being worked out behind closed doors for all that time. Courts are supposed to allow everyone to stand up and have their say, to have their claim made and judged. But when you come to the court with a plan already worked out behind closed doors and ask the court to rubber stamp it, then you are not giving all potential claimants their day in court. And you are essentually side-tracking the bk process that is part of contract law. The short-circuited bk process that denies every claimant his day in court is what I'm really objecting to, not the temporary actual government ownership of the company.
May 21, 200916 yr Author One of the key differences between the 90s and the 00s was the level of industrialization in China and India and health of European and East Asian economies (Japan, Korea, Taiwan). In the 90s, America really was an engine of growth by what we produced (even as deindustrialization was continuing apace). In the 00s, it was the American consumer who continued to drive growth but without any serious underlying reason why besides a credit bubble. I think there a kind of fantastic attitude that prevailed. Rough sketch: Futurist regime run amok - Dot Com bubble Scared sh#tless by Y2K Loss of Utopian future - Dot Com bust Scared sh$tless again by 9/11 Lots and lots of retail therapy as solution to fear Scared stupid by wars More retail therapy Screwed (today) So true, so sad.
May 21, 200916 yr Author Standard & Poor's cuts U.K. outlook to negative from stable Sterling, British stocks drop; analysts debate if U.S. is next "LONDON (MarketWatch) -- Standard & Poor's on Thursday lowered its credit outlook on the U.K. to negative from stable for the first time ever in view of the country's swelling debt, which may expand even as the economy recovers." http://www.marketwatch.com/story/sp-cuts-uk-outlook-to-negative-from-stable I think the US will be next. If the current 'bailout bonanza' doesn't hold this kind of cut to the UK credit rating (and potentially the US) may become a huge factor in their/our ability to continue to 'fight' the economic battle.
May 22, 200916 yr The recession? It's over, says economist http://articles.moneycentral.msn.com/Investing/Extra/the-recession-it-is-over-economist-says.aspx selected highlights from the article.... When will this horrible recession be over? According to one surprising source, it's over right now. The source is Robert J. Gordon, an acclaimed macroeconomist and professor at Northwestern University. It's surprising to learn he thinks the recession is over, because he is one of seven members of the elite Business Cycle Dating Committee of the National Bureau of Economic Analysis. These are the people who decide officially, for the record books, when recessions begin and end .... According to Gordon's research, in every recession since 1974, the peak in jobless claims came within weeks of the bottom of the recession.
May 22, 200916 yr Author The recession? It's over, says economist http://articles.moneycentral.msn.com/Investing/Extra/the-recession-it-is-over-economist-says.aspx selected highlights from the article.... When will this horrible recession be over? According to one surprising source, it's over right now. The source is Robert J. Gordon, an acclaimed macroeconomist and professor at Northwestern University. It's surprising to learn he thinks the recession is over, because he is one of seven members of the elite Business Cycle Dating Committee of the National Bureau of Economic Analysis. These are the people who decide officially, for the record books, when recessions begin and end .... According to Gordon's research, in every recession since 1974, the peak in jobless claims came within weeks of the bottom of the recession. I was just about to post this one. I hope he is right. My struggles with this is the unemployment rate continues to rise currently. I also am not sure weather this is a false bottom. There is still a lot of economic turmoil going on in the US and around the world. One indicator may not be sufficient to call a bottom in this economic bust. We shall see.
May 22, 200916 yr A lot of people on this board, including myself, believe there is "another leg down" coming this fall for the stock market as people realize the economy is not truely growing again. But who knows, maybe they will declare this recession over as of June1. But who's to say a new recession won't start October 1? Kinda like they say we had a recession in 1981, and another one in 1982-83. Personally, I don't buy his arguement that reaching peak unemployment claims is sufficent to declare the economy expanding again. Per his chart, back in 1983, new claims fell by 50% in a very short time. But I don't see new claims falling like that this time around. There may be a very gradual decent over the next few years, but I don't see any job growth to reduce the number of people out of work. That number will probably continue to grow for another 3 years. This recession is not like any since 1940, and I think that's pretty well accepted. To use patterns from those lesser recessions to predict this one is very difficult. (It's also difficult to use the 1930s Depression patterns for this Great Recession for reasons others have given.) I think you can pretty well throw out all the old rulebooks for predicting an end to this recession. What the chart does show nicely is that employment is a lagging indicator of economic growth.
May 22, 200916 yr L and most recessions have at least one up quarter with more down quarters before real growth begins. Sadly, we are just going to hyper-inflate our way of the mess.
May 22, 200916 yr Author L and most recessions have at least one up quarter with more down quarters before real growth begins. Sadly, we are just going to hyper-inflate our way of the mess. By the time this is over the US dollar may be used as toilet paper and toilet paper as a tradeable item. I hope not.
May 26, 200916 yr Not good. Breaking today: Home prices fell record 19% in first quarter, led by declines in Miami, Detroit and Las Vegas, according to Case-Shiller report.
May 26, 200916 yr Author Nothing like the smell of greed and the desire to keep up with the Jones next door. What an absolute mess. All brought to us by the financial industry, RE industry, HGTV and the average American buying into the spin. That's so 2005: What were we thinking? Huge houses, bad mortgages, reality TV, expensive coffee -- in just a few short years, we've left a dicey legacy. By Liz Pulliam Weston MSN Money "When you're living through them, some of the most bizarre fads can seem positively normal. If you have any doubt, check out your parents' high school yearbook photos. (Yes, your dad really did think he was stylin' in that haircut -- and that shirt.) With time comes perspective, but I didn't want to wait 20 or 30 years to determine what the Pet Rocks and Members Only jackets of our age would be. So I asked around, querying readers on the Your Money message board and my followers on Twitter to determine what financial trends will most embarrass us in years to come. The results are my 20 nominations for the "What were we thinking?" award: 1. McMansions 2. Granite countertops 3. Remodeling as an investment 4. House porn 5. Cash-out refinancing 6. Costco closets 7. Zero-down financing 8. Option ARM mortgages 9. Condos as investments 10. Credit card debt 11. Birkin bags 12. "The Secret" 13. Finance plans for plastic surgery 14. Reality TV 15. Mega-SUVs 16. "Underwater" cars 17. $4, four-adjective coffee 18. Massive plasma TVs 19. Deregulation 20. Las Vegas" For the full article. http://articles.moneycentral.msn.com/SavingandDebt/LearnToBudget/thats-so-2005-what-were-we-thinking.aspx?page=all
May 26, 200916 yr Author Not good. Breaking today: Home prices fell record 19% in first quarter, led by declines in Miami, Detroit and Las Vegas, according to Case-Shiller report. Not good at all. Here is a quick look at how some of the Ohio markets have done since their peak(s) around 2006 (Average Sale Price). The downward fall is not over. March 2006 March 2009 Cincinnati $175,556 $132,315 Cleveland Area $162,541 $94,255 Columbus $168,757 $138,500 Dayton $127,458 $101,065 http://www.ohiorealtors.org/news/stats/index.aspx
May 26, 200916 yr Not good. Breaking today: Home prices fell record 19% in first quarter, led by declines in Miami, Detroit and Las Vegas, according to Case-Shiller report. Not good for whom? To a poor person seeking a home, having watched in horror as prices annually raced past your earning potential, this is fantastic news.
May 26, 200916 yr Not good. Breaking today: Home prices fell record 19% in first quarter, led by declines in Miami, Detroit and Las Vegas, according to Case-Shiller report. Not good for whom? To a poor person seeking a home, having watched in horror as prices annually raced past your earning potential, this is fantastic news. How? Most people can't even qualify for home even though prices are falling.
May 26, 200916 yr Not good. Breaking today: Home prices fell record 19% in first quarter, led by declines in Miami, Detroit and Las Vegas, according to Case-Shiller report. Not good at all. Here is a quick look at how some of the Ohio markets have done since their peak(s) around 2006 (Average Sale Price). The downward fall is not over. March 2006 March 2009 Cincinnati $175,556 $132,315 Cleveland Area $162,541 $94,255 Columbus $168,757 $138,500 Dayton $127,458 $101,065 http://www.ohiorealtors.org/news/stats/index.aspx Those are different numbers, from a different source, figured in a different way. Not that they are better or worse numbers, but just so people know. That is not the data Case-Schiller uses, the source for the story you are quoting from Sherman. Personally, I think the realtor's association numbers are bunk, or rather they are misleading to the average person. They make it sound like the average sale price of homes this quarter=the average value of all homes. Very big difference there, especially when most people are holding tight while banks are unloading lots of foreclosures.
May 26, 200916 yr Not good. Breaking today: Home prices fell record 19% in first quarter, led by declines in Miami, Detroit and Las Vegas, according to Case-Shiller report. Not good for whom? To a poor person seeking a home, having watched in horror as prices annually raced past your earning potential, this is fantastic news. How? Most people can't even qualify for home even though prices are falling. There is a point on the graph at which they will qualify. With each drop in prices, more people are brought into the fold. The market is trying to correct itself. Raising average incomes would help stabilize home prices, as it would cause that same point on the graph to arrive at a higher value.
May 26, 200916 yr Not good. Breaking today: Home prices fell record 19% in first quarter, led by declines in Miami, Detroit and Las Vegas, according to Case-Shiller report. Not good for whom? To a poor person seeking a home, having watched in horror as prices annually raced past your earning potential, this is fantastic news. How? Most people can't even qualify for home even though prices are falling. There is a point on the graph at which they will qualify. With each drop in prices, more people are brought into the fold. The market is trying to correct itself. Raising average incomes would help stabilize home prices, as it would cause that same point on the graph to arrive at a higher value. I agree with part of that. But what you state, is only part of the equation, there are still many people who are out of work, or don't have a steady income. They cannot nor shouldn't buy. Then there are those who have just gawd awful credit. Now that borrowers are under scrutiny, the qualifiy rules are different. My assistants are going thru this now.
May 26, 200916 yr Not good. Breaking today: Home prices fell record 19% in first quarter, led by declines in Miami, Detroit and Las Vegas, according to Case-Shiller report. Not good for whom? To a poor person seeking a home, having watched in horror as prices annually raced past your earning potential, this is fantastic news. How? Most people can't even qualify for home even though prices are falling. There is a point on the graph at which they will qualify. With each drop in prices, more people are brought into the fold. The market is trying to correct itself. Raising average incomes would help stabilize home prices, as it would cause that same point on the graph to arrive at a higher value. I agree with part of that. But what you state, is only part of the equation, there are still many people who are out of work, or don't have a steady income. They cannot nor shouldn't buy. Then there are those who have just gawd awful credit. Now that borrowers are under scrutiny, the qualifiy rules are different. My assistants are going thru this now. When a significant portion of the market is thus screwed, I would expect home prices to continue plummeting indefinitely. We need to examine whether the current mortgage system still has any merit at all. Very few modern jobs last as long as the standard note does. If neither side moves, steadiness of income OR flexibility of housing commitments... we're stuck in this whirlpool forever. Housing will get cheaper and cheaper until todays Wal-Mart greeters and burger-flippers can afford it. Those who currently have money tied up in housing might want to consider the effect that other people's pitiful wages might have on their investment. If you want to make money on real estate, you need people around you to be doing OK. Who woulda thunk that a functional free market may, by its own nature, require income parity? Seems ironic, given the false dichotomy we're so frequently presented.
May 26, 200916 yr Housing prices aren't going to fall in line with incomes per se. Housing prices will fall in line with what an investor can get in terms of return on their investment in the form of rent. Those greeters and burger flippers might not be able to afford to buy the house, the upfront costs and qualifications being the main barrier instead of the payments, but they may be able to afford the new rent rate when someone who has access to capital to clear those barrieres can pick up the property for cheap and rent it out for less than they could when it was expensive to buy. Of course, this becomes a low margin game, with little room for reinvestment in the property.
May 26, 200916 yr Well, yes, that's how it will work if we want a semi-medieval system to develop. There is at least one class of people (those sitting on cash right now) for whom that development would be most beneficial. Thus, it may develop on its own if it isn't stopped. When the 1990s Russian economy collapsed, it took very VERY little time for ownership of most national assets to be consolidated.
May 27, 200916 yr Author Of course China and other are distrubed, they see their dollar holdings potentially becoming worth toliet paper. I find it difficult to believe we are nearing the end of the recession (as the media, FEDs, etc... are starting to claim). I think we will see a significant chance of another leg down later this year. I also still believe that we also have a chance to see a world IMF dollar in the next few years. Hopefully not, but we have a lot of 'unpaid bills'. China warns Federal Reserve over 'printing money' China has warned a top member of the US Federal Reserve that it is increasingly disturbed by the Fed's direct purchase of US Treasury bonds. By Ambrose Evans-Pritchard Last Updated: 1:52PM BST 27 May 2009 Richard Fisher, president of the Dallas Federal Reserve Bank, said: "Senior officials of the Chinese government grilled me about whether or not we are going to monetise the actions of our legislature." "I must have been asked about that a hundred times in China. I was asked at every single meeting about our purchases of Treasuries. That seemed to be the principal preoccupation of those that were invested with their surpluses mostly in the United States," he told the Wall Street Journal. US bonds sale faces market resistance His recent trip to the Far East appears to have been a stark reminder that Asia's "Confucian" culture of right action does not look kindly on the insouciant policy of printing money by Anglo-Saxons. ... http://www.telegraph.co.uk/finance/financetopics/financialcrisis/5379285/China-warns-Federal-Reserve-over-printing-money.html
May 27, 200916 yr ^^ as to China (and others) buying our debt... Yes, they are concerned. What we should watch for is how the longer-term US Treasury Bonds will fair. The short-term bills & bonds sold over the past few days met with a very good reception. However, this may be a situation where people don't want to lock their money in long-term fearing inflation and devaluing of the dollar. If so, then tomorrow's 7 yr (?) T-bonds should not see as favorable a reception as the short-term bonds have this week. We'll find out tomorrow what the world thinks of lending money long-term to the US.
May 27, 200916 yr Nor, he added was there much risk of inflation taking off yet. The Dallas Fed uses a "trim mean" method based on 180 prices that excludes extreme moves and is widely admired for accuracy. "You've got some mild deflation here," he said. Interesting.
May 27, 200916 yr Cleveland Area $162,541 $94,255 Why was Cleveland so much worse than the other cities? (I'd love to see Toledo's numbers too). Cleveland's labor market is weathering this much better than Toledo and Dayton (or so I thought). I wonder if it's "cleveland area" as the others are just the city proper?
May 28, 200916 yr Author GM Said to Plan June 1 Bankruptcy as Bondholders Back New Offer "May 28 (Bloomberg) -- General Motors Corp., the world’s largest automaker until its 77-year reign ended in 2008, plans to file for bankruptcy protection on June 1 and sell most of its assets to a new company, people familiar with the matter said." http://www.bloomberg.com/apps/news?pid=20601087&refer=top_news&sid=aCdKhRIRlKYE
May 29, 200916 yr http://www.reuters.com/article/GCA-Oil/idUSTRE54R6A120090528?sp=true Rising oil may test U.S. economy's green shoots Thu May 28, 2009 3:34pm EDT By Emily Kaiser - Analysis WASHINGTON (Reuters) - Swiftly rising oil prices threaten to sap the buying power of U.S. consumers who are essential to ending the longest recession since the Great Depression. Oil has been on a tear in the last five weeks, rising 48 percent since April 21 to hit a 2009 intraday peak above $65 per barrel on Thursday. Part of that reflects hopes that the global economy is inching out of a deep slump, but it may also have something to do with investors seeking an inflation shield as the U.S. dollar weakens and government spending grows. ........ "In the souls of the people the grapes of wrath are filling and growing heavy, growing heavy for the vintage." -- John Steinbeck
June 1, 200916 yr The early 1970s oil price shocks wreaked havoc with the economy. Man, it sounds like the 1970s all over again, including a green movement, a cycling craze and wind power.
June 3, 200916 yr Author Many of the underlining economic issues are not improving like many would like you to believe or hope. Coming: A 3rd wave of foreclosures The next group of Americans to lose their homes seemed to have good credit and affordable loans. But those families have been walloped by the recession. There's a simple reason you shouldn't get too excited about the "green shoots" of an economic turnaround. In the housing market, a lot of prime mortgages are becoming subprime as a new wave of foreclosures begins to hit. Mainstream homeowners -- those previously "safe" borrowers with sound credit who have conservative, fixed-rate mortgages -- are getting into trouble at an alarming rate. In the first quarter, the percentage of these borrowers who were behind on their mortgages or in foreclosure had doubled from a year earlier, to nearly 6%. For the first time in the housing crisis, these homeowners accounted for the largest share of new foreclosures. Job losses are a major reason once-safe borrowers are falling into trouble. With unemployment likely to rise, the problem will only get worse. So the core challenge at the heart of our economic crunch -- a poor housing market that infects banks and the whole credit system -- is not going away soon. That's bad news for the stock market and the economy in general. For the rest of the article. http://articles.moneycentral.msn.com/Investing/CompanyFocus/coming-a-3rd-wave-of-foreclosures.aspx
June 3, 200916 yr The housing sector is dead (and I'd guess for a generation), but the question is can we have an economy with the housing market near zero. The trouble with some of this is that the worst overbuilding was highly concentrated so some of that is really operable on the national market. Also a lot of postwar housing will be nearing the end of their natural life (and a lot of prewar housing that wasn't well taken care of will start to decline even faster), but I don't see that as a potential source of growth for another ten years or so. I imagine will start hearing about a housing crisis (the lack of affordable, quality homes) before we start to tossing money at houses in a serious way again. People will continue to invest in their homes. The question is how. If most folks give up on the idea of monetizing every investment for a move to larger home, that may mean there are certain investments that make less sense and others that make more.
June 3, 200916 yr The housing sector is dead (and I'd guess for a generation), Is it? I see little evidence of that where I live. They keep building and building (single family houses). Not as fast as before, but they are still building at an (un) healthy pace. A new subdivision was started last fall.
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