Because housing is so ingrained with our economy on every level.  It's the reason credit is still so hard to get as banks' balance sheets are still in chaos.  Eventually, we will have spent over a trillion dollars on Freddie and Fannie alone.  The housing crisis has decimated so many neighborhoods, townships and even cities, and as unemployment - and I'm talking about middle class employment, not some $8/hr jobs which may be increasing - continue to evaporate, the problem just builds and builds as more people walk away. 

 

Historically, housing has led our country out of recessions as well. 

 

Housing is absolutely indicative of our economy, perhaps more so than employment since, again, the rise of low paying jobs still count as jobs; thus, the employment numbers are complete baloney.

Because housing is so ingrained with our economy on every level.  It's the reason credit is still so hard to get as banks' balance sheets are still in chaos.

 

Banks have money to lend again and their balance sheets are not in as much chaos as you might think.  Lending has not thawed significantly because banks' credit standards have gotten a little tighter.  This is a good thing for the country even if we might be slightly better in the short term if credit utilization had spiked upwards again.  Debt is not a sustainable economic recovery fuel.

 

Historically, housing has led our country out of recessions as well.

 

I know this is true of the 2000-01 recession, but I'd be interested to see how many other recessions housing ostensibly "led" us out of.

 

Housing is absolutely indicative of our economy, perhaps more so than employment since, again, the rise of low paying jobs still count as jobs; thus, the employment numbers are complete baloney.

 

Housing may be indicative of the psychology of the public with respect to the economy--people start shelling out large amounts for housing again when they feel like the economy has real wind behind it again.  However, I stand by my earlier point: the fact that people can get the same amount of house for far less money at the moment is a good thing from an economic perspective because it means, all other things equal, that people can get a roof over their heads and then have more discretionary income to distribute among other sectors of the economy.

 

The stagnation of real wages is, of course, far more concerning.

Clearly the job growth issues is headed in the right direction and has improved signficantly from the deepest part of the recession. But, it takes about 150,000+ jobs per month just to consume incoming workforce. Over the last 6 months we had only created enough jobs to take care of that incoming workforce number, nothing left over to deal with the unemployed. As far as the unemployment number going down, that means very little, since the main reason it is currently dropping is do to people exhausting their unemployment benefits and/or have giving up looking for a job. If all these people where add back into the unemployment number it would skyrocket. The next 6 months are going be big in determining if the employment picture is truly improving in the US. It will be interesting to watch.

 

I think this chart shows that we have not even begun to deal with the damage that was done during the core of the recession. The good news is, we are now not adding to that damage and that is a step in the right direction.

 

http://money.usnews.com/money/careers/articles/2011/03/04/graphic-february-jobs-report-shows-modest-growth

 

^I'm confused.  You say the numbers indicate we're headed in the right direction and have improved significantly, but then you state the unemployment number means very little and would likely skyrocket if it included the full spectrum of people who were in the workforce before the recession.  So which is it, are we still in the hole or not?

The first derivative, and maybe the second, of the employment stats are positive.  That's a start. :-P

^I'm confused.  You say the numbers indicate we're headed in the right direction and have improved significantly, but then you state the unemployment number means very little and would likely skyrocket if it included the full spectrum of people who were in the workforce before the recession.  So which is it, are we still in the hole or not?

 

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

^got it, thanks for clarifying.

Interesting read. This type of information has started to show up more and more in the MSM. It will be interesting to see if more concrete information ever becomes available. Maybe through an audit of the FEDs. Not likely, but you never know.

 

Time for Fed to disprove PPT conspiracy theory

Commentary: Analyst charges that government is manipulating markets

 

"WASHINGTON (MarketWatch) -- The massive stock-market rally in the past nine months is mostly due to secret government buying of stock-index futures, a respected stock-market analyst said Tuesday."

 

"Charles Biderman, chief executive of TrimTabs Investment Research, is the latest and most credible person to charge that the Federal Reserve and the Treasury (in league with top Wall Street firms) is rigging the stock market on a daily basis."

 

"In a special report released Tuesday, Biderman said the $6 trillion increase in U.S. stock-market capitalization since March can't be explained by the usual sources of funds flowing into the market -- such as mutual funds, direct retail investment, pension funds, hedge funds or foreign purchases."

http://www.marketwatch.com/story/time-for-fed-to-disprove-ppt-conspiracy-theory-2010-01-05

The 2008 crash isn’t over, only covered up

Commentary: Reaganomics driving us into Phase 2 of meltdown

 

"SAN LUIS OBISPO, Calif. (MarketWatch) — We have hard evidence Washington and Wall Street knew the 2008 crash was coming years in advance. Yes, they could have prevented it. But didn’t. And, yes, the cover-up cost Americans trillions.

 

Was their Reaganomics ideology so rigid, so blinding, they couldn’t (and still cannot) admit they were wrong? Forcing them to lie to America? Cover up the lies? The evidence is clear."

http://www.marketwatch.com/story/the-2008-crash-isnt-over-only-covered-up-2011-03-08

 

Man, wouldn't it be great if we all could do this. Take all you 'bad' debt and send it some where else and only keep the great credit score that left over. I wonder if one day the FDIC will take receivership of the 'bad' bank? I guess this shows the big boys still have A LOT of bad debt on the books, even after all the FED and taxpayer's have done over the last 3 years for them.

 

BofA Segregates Almost Half of its Mortgages Into ‘Bad Bank’

 

"Bank of America Corp. (BAC), the biggest U.S. lender by assets, is segregating almost half its 13.9 million mortgages into a “bad” bank comprised of its riskiest and worst-performing “legacy” loans, said Terry Laughlin, who is running the new unit.

 

“We are creating a classic good bank, bad bank structure,” Laughlin told investors at a meeting in New York today. He was promoted last month to manage the costs of resolving disputes stemming from the company’s 2008 purchase of Countrywide Financial Corp. “We’re going to get after this, we’re going to do it the right way and we’re going to put it to bed in the next 36 months,” he said.

 

The legacy portfolio will hold 6.7 million loans with outstanding principal balance of about $1 trillion, according to a presentation to investors today."

http://www.bloomberg.com/news/2011-03-08/bofa-segregates-almost-half-its-mortgages-into-bad-bank-under-laughlin.html

 

So, is this type of inflation here to stay until it sinks the US and world economy and everyone falls back into a deep recession? Or is this a short term issue that will reverse itself quickly? Oil can adjust with events, but food appears to be on a long term rise.

 

Import Prices in U.S. Increased 1.4% in February on Oil, Food

 

"Prices of goods imported into the U.S. rose more than forecast in February, led by gains in crude oil and food.

 

The 1.4 percent increase in the import-price index exceeded the 0.9 percent median forecast in a Bloomberg News survey and followed a 1.3 percent rise in January, Labor Department figures showed today in Washington. Prices excluding fuel rose 0.3 percent. Food costs over the past 12 months posted the biggest gain since records began in 1977."

http://www.bloomberg.com/news/2011-03-15/import-prices-in-u-s-increased-1-4-in-february-on-oil-food.html

 

 

 

 

Heh.  Well, considering all the subsidies we give to big agribusiness in America, I actually think food prices could stand to rise a little bit more--but as an incident to eliminating that spending, not because of a globe suddenly awash in dollars with too few outlets for them.

 

If you think regular food prices are going crazy, check out what cotton prices have done over the past year.  It's getting to the point where <a href="http://newsfeed.time.com/2011/03/09/the-end-of-the-dollar-bill-high-cotton-prices-could-force-1-coin/">the $1 bill, which is 75% cotton, basically costs $1 to print</a>.  The government is actually looking at going to $1 metal coins because they'd be cheaper than "paper" money (which isn't really paper, but fabric).

I wouldn't be surprised if that increase in the cost of food was actually because of the increase of the cost of petroleum, since the agriculture industry, particularly in the U.S., is heavily mechanized and as dependent of oil energy as any manufacturing industry.

 

Unless it is simply a result of crop losses in other parts of the world.

With the piling on clustercusses around the world, I'm not sure any normal models is going to fit well. You could see a serious spike in consumer technology prices as well all kinds of disruptions in automobile manufacturing, but also oil could back off and food could go in any direction.

The BLS finally put up their January employment estimate for Ohio, and as expected there was a drop after December, which happens every year.  The difference is that this drop was considerably less than in 2008-2009 and 2009-2010.  In fact it was less than the pre-recession years of the later 2000s:

 

Drop in employment between Dec & Jan:

 

Thousands  Dec-Jan

147.3   2005-2006

136.2   2006-2007

141.8   2007-2008

187.6   2008-2009

133   2009-2010

97   2010-2011

 

 

So, if we see a ramp-up in employment during the winter and spring quarters, as is usually the case, we have a good foundation for a slow employment recovery in Ohio due to this relativey shallow end-of-year drop.

 

 

The BLS finally put up their January employment estimate for Ohio, and as expected there was a drop after December, which happens every year.  The difference is that this drop was considerably less than in 2008-2009 and 2009-2010.  In fact it was less than the pre-recession years of the later 2000s:

 

Drop in employment between Dec & Jan:

 

Thousands  Dec-Jan

147.3   2005-2006

136.2   2006-2007

141.8   2007-2008

187.6   2008-2009

133   2009-2010

97   2010-2011

 

 

So, if we see a ramp-up in employment during the winter and spring quarters, as is usually the case, we have a good foundation for a slow employment recovery in Ohio due to this relativey shallow end-of-year drop.

 

 

 

Thanks for posting your data.

The residential builders and developers I talk to are not very upbeat about this year.

 

U.S. housing starts approach record low

Housing starts slump 22.5%

 

"WASHINGTON (MarketWatch) — New construction of U.S. housing units plunged in February, erasing a sharp gain in January and coming close to an all-time-low level.

 

Starts fell 22.5% to a seasonally adjusted annual rate of 479,000, the Commerce Department said. This is just 0.4% above the record low of 477,000 units set in April 2009.

 

The decline in starts in February was the largest since March 1984.

 

January starts were revised higher to a 618,000 pace from the 596,000 previously reported. The 18.4% jump in January was due to an 87.4% surge in apartment starts, which analysts attributed to special factors."

http://www.marketwatch.com/story/falling-us-housing-starts-close-in-on-record-low-2011-03-16

People are not talking about it, but we lost over 500 points on the Dow the past 2 days.

It's been ugly, and I'm tempted to try and time the market and sell a lot today on the expectation that it will keep going down for a while, but I just don't know.  Not at this point.  Sigh.  The downside of being an equity investor.

 

The unfortunate thing is that the sell-off in the stock market this time, modest though it has been so far, is not just the result of some failure of confidence or some change in perception based on statements at the Fed or even arcane monetary moves.  The fall-off in nominal worth in this instance is at least in part caused by a significant amount of real-world damage because of the tsunami in Japan.  The lives, industrial facilities, and infrastructure lost to that quake and tsunami are already having real-world ripple effects through the global economy.  There were manufacturing facilities there that produced goods for the global electronics supply chain in many categories of consumer and business products, for example.  And, of course, the ripple effects cascade out to other parts of Japan, since, for example, much of Japan's domestic production of steel and other construction and industrial materials will no longer be for export; as soon as it is safe to begin rebuilding, it will be moved internally within Japan to the affected areas, not out to the world through Japan's ports.

 

In fact, I'd almost say that the fact that the market has dropped as little as it has is a strong vote of confidence that (a) America can weather a temporary hit to one of its largest trading partners, and (b) the hit will indeed be temporary, and Japan will recovery swiftly and (at least nearly) completely.  Of course, that means that the market is still subject to dropping further if that confidence wanes, which will be strongly affected by the reactor news over the next week or so.

I find it amazing that a disaster happens and now their currency is stronger against the dollar. Not sure how that ever happens, but it did.

https://news.fidelity.com/news/news.jhtml?articleid=201103170030RTRSNEWSCOMBINED_TRE71H0EB_1&cat=Top.Investing.RT&IMG=Y

 

Not sure how well that link will load, but it's Reuters, so "https" notwithstanding, I hope it isn't behind Fidelity's login wall.

 

The short answer: cash is an extremely risk-averse position.  Like any other asset, if tons of people want it, the price of it goes up.  Risk aversion soared in Japan after the earthquake/tsunami/reactor leak triple whammy.  The spike upward in the value of the yen relates to the plunge downward in the Nikkei, which obviously suffered a much sharper loss than the Dow.  It also reflects Japanese investors selling foreign stocks (including American ones, which are foreign from the Japanese perspective) and converting the proceeds to yen if they weren't sold in yen in the first place.  If tons of people suddenly want to exchange stocks for yen, the price of stocks goes down and the price of yen goes up.

^ Ah. I always wondered why, when the Dow would go down, the dollar would frequently go up (and vice-versa). Now I (kind of) get it. Thanks.

A popular term for the concept is "flight to liquidity".

More and more home owners are joining the upside down club, which has the potential to increase foreclosure rates in the future.

 

Existing-home sales fall 9.6% in February

Prices drop to lowest level since 2002

 

"WASHINGTON (MarketWatch) — Sales of previously owned homes dropped 9.6% in February and prices fell to their lowest level since 2002, reflecting a continued slump in the U.S. real estate market."

http://www.marketwatch.com/story/existing-home-sales-sink-96-in-february-2011-03-21

 

Shadow inventory still depressing the housing market: NAR

 

"The “elevated level of shadow inventory of distressed homes” still depresses the housing market, said Lawrence Yun, chief economist of the National Association of Realtors (NAR)."

 

"According to a recent estimate by Standard and Poor’s, there are 1.7 million homes in the shadow inventory. Moreover, there are about 250,000 foreclosure filings per month, so new houses are continually added to the shadow inventory."

http://www.ibtimes.com/articles/117045/20110228/housing-shadow-inventory-real-estate.htm

Interesting about the real estate market since we are seeing job growth and economic growth in general, paltry though it may be.    I think the concern is that property valuations will drop thus tax revenue for local govt.  But otherwise this is a deflationary situation in housing, no?

More and more home owners are joining the upside down club, which has the potential to increase foreclosure rates in the future.

 

The regional variation in underwater mortgages is mind-boggling: As of 2010 Q4 CoreLogic estimated that 65% (!!) of mortgaged properties in NV had negative equity compared to only 7% in New York State.  Ohio was at 22%, just a hair under the national underwater share.  Very sensitive to price trends, obviously, so it might compress some if prices fall more in NY.

Is this not an example of the market correcting itself?  Painful as that might be in the short-term, isn't it better for us in the long-run?

Interesting about the real estate market since we are seeing job growth and economic growth in general, paltry though it may be.    I think the concern is that property valuations will drop thus tax revenue for local govt.  But otherwise this is a deflationary situation in housing, no?

 

No doubt, there is deflation in housing values. I think the job growth and economic growth is just to minimal right now to really help housing. Even those that have jobs are very hesitant to purchase right now, with concerns about were the economy is headed in the future.  I also think more and more people are not sold on the return on investment a house can bring.

Is this not an example of the market correcting itself?  Painful as that might be in the short-term, isn't it better for us in the long-run?

 

Absolutely, but with the biggest RE bubble in US history continuing to pop, the pain for the economy is very acute and still is not done.

 

I still believe what I said years ago in these thread, this bust was never about not having a economic bust (they knew it was coming, despite what they said), it was about trying to have an orderly economic bust.

Is this not an example of the market correcting itself?  Painful as that might be in the short-term, isn't it better for us in the long-run?

 

Absolutely, but with the biggest RE bubble in US history continuing to pop, the pain for the economy is very acute and still is not done.

 

I still believe what I said years ago in these thread, this bust was never about not having a economic bust (they knew it was coming, despite what they said), it was about trying to have an orderly economic bust.

 

There may be something to that, but I repeat the caution that I harped on earlier in this thread about reading too much into the housing market as a sign for the larger economy.  The housing market was way too high.  Housing was booming in price before the bust as if it were a commodity, and given both the trade in properties themselves (flipping and more straightforward speculation) and in the debts behind them (CDOs), in some sense, it really was being treated as a commodity.

 

Well, if it's treated as a commodity, then we should treat housing exactly like we treat oil, gold, copper, corn, and other commodities, which means that we should be alarmed when prices start going up again, not relieved.

 

I currently rent.  I occasionally go to open houses, and I browse Trulia fairly regularly.  Nothing I have seen, whether downtown or out in the suburbs, single-family home or condo, large or small, has even remotely encouraged me to consider buying.  Not after I looked at the property taxes, HOA fees, and other costs of homeownership that are currently subsumed into my rent payment (including water, sewer, and trash).  There are places that in the middle of this "bust" have sticker prices of $450,000 that I don't think would fetch $225,000 at auction.

Well, if it's treated as a commodity, then we should treat housing exactly like we treat oil, gold, copper, corn, and other commodities, which means that we should be alarmed when prices start going up again, not relieved.

 

As a fellow renter by choice, I'm sympathetic to your sentiments to some extent, but if you eliminate passive construction and pronouns from your post, the picture is obviously a lot murkier.  Who treated housing as a commodity?  Most buyers?  A particularly active subset of real estate investors?  Investment banks?  PLS and CDO investors?  And who is being hurt by price declines?  A much broader group, I'd think.  So considering the stake that most households have in the real estate market (which generally dominates their net worth), it's a lot to ask of the "general public" not to cheer when prices go up and fret when they decline.

Until sellers get their heads out of their a$$es and accept their homes' true value, we will be stuck in this rut

Well, if it's treated as a commodity, then we should treat housing exactly like we treat oil, gold, copper, corn, and other commodities, which means that we should be alarmed when prices start going up again, not relieved.

 

As a fellow renter by choice, I'm sympathetic to your sentiments to some extent, but if you eliminate passive construction and pronouns from your post, the picture is obviously a lot murkier.  Who treated housing as a commodity?  Most buyers?  A particularly active subset of real estate investors?  Investment banks?  PLS and CDO investors?  And who is being hurt by price declines?  A much broader group, I'd think.  So considering the stake that most households have in the real estate market (which generally dominates their net worth), it's a lot to ask of the "general public" not to cheer when prices go up and fret when they decline.

 

Many more people than simply high-end investors treated their homes as commodity investments rather than durable goods.  People borrowed against them as if they were gold in order to fund consumption-type expenditures, and quite often not to fund essentials like utility and health care bills.

^I hear you, but we're still talking about a subset of homeowners here.  A lot of people who acted quite reasonably have been hurt by this, so I'm slightly sensitive to broad brush statements inferring that current pain was broadly deserved.  Forgive me, I'm just being cranky.

^I hear you, but we're still talking about a subset of homeowners here.  A lot of people who acted quite reasonably have been hurt by this, so I'm slightly sensitive to broad brush statements inferring that current pain was broadly deserved.  Forgive me, I'm just being cranky.

 

I don't think I went as far as to say deserved.  Some individuals "deserved" it more than others in the sense that some people took larger risks (whereas the downturn became broad enough to affect the risk-friendly and risk-averse alike), but ownership of any asset is always something of a risk.  Beyond the level of individuals, one could maybe make a more collective-level argument about whether America as a whole deserved it, though I'm not even sure what the criteria would be for establishing whether we (royal "we") "deserved" it or not.

Sales of new U.S. homes tumble 16.9% to record low

 

WASHINGTON (MarketWatch) — Sales of new single-family homes collapsed in February, the Commerce Department reported Wednesday, as a combination of high unemployment, tumbling prices and a glut of cheaper alternatives brought activity to a near-standstill.

 

New-home sales fell 16.9% to a seasonally adjusted annual rate of 250,000 in February, though January’s figures were revised higher to 301,000 from 284,000. Compared to February 2010, sales collapsed by 28%.

 

“The housing market has literally collapsed,” said Tony Sanders, a real estate finance professor at George Mason University. “We’re stuck, it’s not going to revive in the spring and may not in the summer.”

http://www.marketwatch.com/story/sales-of-new-us-homes-tumble-169-to-record-low-2011-03-23

^I hear you, but we're still talking about a subset of homeowners here.  A lot of people who acted quite reasonably have been hurt by this, so I'm slightly sensitive to broad brush statements inferring that current pain was broadly deserved.  Forgive me, I'm just being cranky.

 

I don't think I went as far as to say deserved.  Some individuals "deserved" it more than others in the sense that some people took larger risks (whereas the downturn became broad enough to affect the risk-friendly and risk-averse alike), but ownership of any asset is always something of a risk.  Beyond the level of individuals, one could maybe make a more collective-level argument about whether America as a whole deserved it, though I'm not even sure what the criteria would be for establishing whether we (royal "we") "deserved" it or not.

 

Yeah, I know I was just being cranky.  I guess I've just grown wary of collective-level arguments for such a complex ecosystem of actors.  I totally agree that buying any asset is risky, but the mortgage debacle is now weighed down with so many "blame" narratives with varying levels of silliness/worthlessness.  I am not imputing any of these onto you, just explaining my general crankiness on the topic (for which I apologize).

A new trend seems to be setting in currently, companies are not looking to increase production capacity at this time. As a side note, oil is currently over the $106 mark. Wall Street and the economy will only be able to shrug of these types of oil prices for so long.

 

Durable-goods orders drop 0.9% in February

Demand for machinery, big defense items declines

 

"WASHINGTON (MarketWatch) — Orders for U.S. durable goods in February posted the biggest drop in four months, largely because of lower sales of heavy machinery and defense-related products, government data showed Thursday."

 

"Orders have now declined in four of the past five months, suggesting some hesitancy on the part of businesses to continue to expand until they see further strengthening of the U.S. economy."

 

“February’s U.S. durable goods orders report is unequivocally bad,” said Paul Ashworth, chief U.S. economist of Capital Economics."

http://www.marketwatch.com/story/us-durable-goods-orders-fall-in-february-2011-03-24

We are not quite number one, but we are getting close. Keep printing boys, keep printing.

 

I still believe we have the ability to address these issues, but our current path and greed from Wall Street will only make it worse.

 

US Finances Rank Near Worst in the World: Study

 

"The US ranks near the bottom of developed global economies in terms of financial stability and will stay there unless it addresses its burgeoning debt problems, a new study has found.

 

In the Sovereign Fiscal Responsibility Index, the Comeback America Initiative ranked 34 countries according to their ability to meet their financial challenges, and the US finished 28th, said David Walker, head of the organization and former US comptroller general.

 

"We think it is important for the American people to understand where the United States is as compared to other countries with regard to fiscal responsibility and sustainability," Walker said in a CNBC interview. "Americans are used to rankings and they're used to ranking very high, but frankly in this area we rank very low."

http://www.cnbc.com/id/42246531

Yeah, but our economy is booming.

All is lost.

All is lost.

 

If the greed of Wall Street continue to transfer wealth off of Main Street at it current rate, the long term picture will not be rosy.

^did you read the article?  Does it say anything about Wall Street greed???  No, it says spending must be cut significantly.  Current political discussions about spending cuts amount to "arguing over the bar tab on the Titanic".  Dem's are baiting the Repubs into sticking their neck out and calling for serious cuts & reforms.  Then they will use it against them come election time.  Majority of Americans are too stupid to realize or care. 

If you are going to advocate for serious and meaningful cuts to balance the budget without raising taxes (in fact, significantly lowering them) is it not your responsibility to give the public more than lip service on the point?  Meaning, shouldn't you identify where you are going to cut so the public is adequately informed prior to granting you the power to do so?

 

There is very little I hate more than lip service.  For instance, just 2 seconds after Tea Party fav and presidential hopeful Herman Cain said there are entire federal programs that need to be wiped out, he was asked to give a single example.  Nothing but crickets in response.

I actually watched the video clip live last night and the discussion focused on two things - major overhaul of the tax structure to make it more fair, close loopholes, and increase revenue, and major spending cuts.  Everyone agrees on defense spending, and changes to the structure of SS/Medicare/Medicaid, but nobody wants to step up, because it'll be political suicide. 

 

Is Herman Cain that crazy "taxes are too damn high" guy?

If you are going to advocate for serious and meaningful cuts to balance the budget without raising taxes (in fact, significantly lowering them) is it not your responsibility to give the public more than lip service on the point?  Meaning, shouldn't you identify where you are going to cut so the public is adequately informed prior to granting you the power to do so?

 

There is very little I hate more than lip service.  For instance, just 2 seconds after Tea Party fav and presidential hopeful Herman Cain said there are entire federal programs that need to be wiped out, he was asked to give a single example.  Nothing but crickets in response.

 

I don't know Herman Cain, but sadly, that phenomenon is all too common.

^did you read the article?  Does it say anything about Wall Street greed???  No, it says spending must be cut significantly.  Current political discussions about spending cuts amount to "arguing over the bar tab on the Titanic".  Dem's are baiting the Repubs into sticking their neck out and calling for serious cuts & reforms.  Then they will use it against them come election time.  Majority of Americans are too stupid to realize or care. 

 

Where do you think some of the money creation is going? And its clearly adding to our debt issues.

 

As far as politics go, I believe both parties are up to their necks in Wall Street dealings and yes, most American's are too stupid to realize this is the case. So they continue to fight for one party or the other, missing the real issue.

A new trend seems to be setting in currently, companies are not looking to increase production capacity at this time. As a side note, oil is currently over the $106 mark. Wall Street and the economy will only be able to shrug of these types of oil prices for so long.

 

 

This could be a leading indicator.  We might see more early warning signs like this, but we'll see this flush out in the employment numbers if job growth in the first and second quarters are weak.

The ire against Wall Street is largely--not entirely, but largely--misplaced.  Remember that if it had not been for trillions in taxpayer bailouts (both direct payments and indirect supports), Wall Street would have suffered far more grievously than it did.  The ire there is more properly directed at the government that failed to resist the power of Wall Street lobbying, though of course I hardly hold Wall Street blameless there.

 

Nevertheless, the vast majority of Wall Street wants the American economy to be healthy.  Companies going bankrupt make bad investments, hurting shareholders.  They also don't repay their loans, hurting bondholders and other creditors.  Yes, sophisticated investors can make money even a bear market, but it's still easier in a bull market--and sophisticated investors can make even more money in a healthy economy with a rising stock market.  Short selling, options strategies, and similar advanced securities and derivatives plays can minimize downside risk and even allow for profits on falling stocks, but there are limits to how much money can be made with strategies like that.  Healthy companies make a lot more people a lot more money than sick ones.

 

Of course, sometimes what makes a company healthier involves conserving resources, including hiring freezes, layoffs, wage reductions, delaying investments in inventory and equipment, and so forth.  People don't like to admit that that might be the best things for the company--and they always celebrate companies who manage to keep hiring and spending and still profit even during downtimes (Panera, which has enjoyed a very successful run the last couple of years, has done that, for example), but the sad truth is that not every company is capable of that.

Household wealth down 23% in 2 years - Fed

 

"NEW YORK (CNNMoney) -- The average American family's household net worth declined 23% between 2007 and 2009, the Federal Reserve said Thursday.

 

A rare survey of U.S. households, first performed in 2007 but repeated in 2009 in order to gauge the effects of the recession, reveals the median net worth of households fell from $125,000 in 2007 to $96,000 in 2009."

 

"It is widely known that the 2008 financial crisis resulted in the vaporization of trillions of dollars in household wealth. But Federal Reserve officials said Thursday the new report offers a look at exactly how hard the recession hit families, and how they reacted.

 

The numbers paint a stark picture."

http://money.cnn.com/2011/03/24/pf/financial_crisis_outcome/index.htm?source=zacks