Hah! :-P 8-)

"Hell, I'd be fine with a 50% unemployment rate if all the jobs we had were good '

 

You've changed your tune, C-Dawg.  Two years ago you were warning of actual riots if unemployment got high.  I'd say 50% is pretty high, wouldn't you?

 

So which is it.... 50% unemployment is good (if those jobs paid well) or bad (people will riot) ??????

 

 

(just busing your chops here)

So we have had, Greece, Ireland, and now Portugal. Is Spain or Italy that far behind? If one or both get to this point, the markets may find it very difficult to deal with a larger debt issue.

 

Portugal finally asks EU for help

Poorly received auction prompts finance minister’s comments

 

"WASHINGTON (MarketWatch) — Portugal finally threw in the towel and asked for international assistance Wednesday, after paying a high price in its latest test of the global bond market.

 

Portugal’s prime minister, Jose Socrates, told the nation that the assistance was “inevitable” after parliament rejected an austerity plan. Portugal now looks set to join Greece and Ireland in receiving bailouts from the European Union and the International Monetary Fund."

http://www.marketwatch.com/story/portugal-pays-nearly-6-to-borrow-12-months-2011-04-06?dist=afterbell

 

Sigh.

 

And of course the fact that the EU already bailed out Greece and Ireland I'm sure played no role in Portugal's legislators' decision to reject the austerity plan.

Sigh.

 

And of course the fact that the EU already bailed out Greece and Ireland I'm sure played no role in Portugal's legislators' decision to reject the austerity plan.

 

That is why I think Spain may not be that far behind. Tons of debt, 20% unemployment, and very little appetite to implement austerity measure that will add more to the unemployment lines.

"Hell, I'd be fine with a 50% unemployment rate if all the jobs we had were good '

 

You've changed your tune, C-Dawg.  Two years ago you were warning of actual riots if unemployment got high.  I'd say 50% is pretty high, wouldn't you?

 

So which is it.... 50% unemployment is good (if those jobs paid well) or bad (people will riot) ??????

 

 

(just busing your chops here)

 

Haha, yeah, my perspective has changed. I don't think Americans are the rioting type when it comes to unemployment. That was a 1930's thing. People were different back then and didn't believe college would solve all of their labor problems (unemployment today is quite a bit different since so many people are rushing back to college/staying in school forever to avoid the labor market). 50% is high, but our labor participation could be heading towards those levels anyway...

 

If anything, Americans have proven to be shockingly peaceful through the Power Grab, bailouts, pay cuts, healthcare cuts, and mass layoffs. This country has an extremely high tolerance for corruption and greed. We are nothing like Europe and don't have to worry about any Greece-style rioting.

^Americans at this time are too pacified, apathetic, distracted and frankly still too wealthy to riot or even put together an effective demonstration.

 

If anything, Americans have proven to be shockingly peaceful through the Power Grab, bailouts, pay cuts, healthcare cuts, and mass layoffs. This country has an extremely high tolerance for corruption and greed. We are nothing like Europe and don't have to worry about any Greece-style rioting.

 

I found this quote funny Cdawg.  If you've ever had the unfortunate chance to work in Greece, you would know it's the corruption and greed that lead to that rioting.  Nothing gets done in Greece without some "grease."  Kickbacks and bribes are the way to get things done there--and when the gravy train was ending for those folks in their civil service jobs they weren't to happy and decided to take to the streets.

I would say without inflation, retail sales numbers would have been negative this month. People are clearly starting to cut back.  I think April's numbers will show this in an even more pronounced way.

 

U.S. retail sales rise 0.4% in March

Gasoline sales bolster monthly growth from February

 

"Total retail sales increased 0.4% in March, compared with a 1.1% gain in the prior month, the Commerce Department estimated, as rising gasoline and home-furnishings revenue offset declining sales of cars."

 

"The 0.4% overall increase for last month was boosted by sales of gasoline. Excluding sales at gas stations, retail sales were up a slim 0.1%."

http://www.marketwatch.com/story/us-retail-sales-rise-04-in-march-2011-04-13

The last sentence could be a big one.

 

Banks facing $3.6 trillion 'wall of maturing debt', IMF Global Financial Stability Report says

 

"Debt-laden banks are the biggest threat to global financial stability and they must refinance a $3.6 trillion "wall of maturing debt" which comes due in the next two years, the International Monetary Fund said in its Global Financial Stability Report."

 

"Government debt was generally high and on a worryingly upward path in many advanced economies, the IMF said. It repeated its warning that the United States and Japan faced particularly dangerous debt dynamics."

 

"Advanced economies were "living dangerously" with high debt burdens, and faced the difficult task of trying to pare deficits without choking off the economic recovery."

 

"The IMF said banks' exposure to troubled sovereign debt is "uncertain," which adds to the funding strains."

http://www.telegraph.co.uk/finance/economics/8448169/Banks-facing-3.6-trillion-wall-of-maturing-debt-IMF-Global-Financial-Stability-Report-says.html

While he tries to point the finger to low population growth as a major reason prices will stay down in many parts of the country. I think it will also be slow job growth, slow/stagnate income growth, over supply and many other things that will keep pressure on prices for many years to come. I also think we are seeing a noticable shift in product demand which will change migration patterns from what they used to be. This will leave many areas that where once the 'hot place to be' (suburban areas and place that lack transit) not so hot in the future (growth wise and price wise).

 

BofA CEO: Owners shouldn't look at home as an asset

Housing rebound may take so long that homeowners should seek other long-term investments

 

"CHARLOTTE, N.C. — Homeowners may need to look elsewhere for long-term investment returns as housing prices in some areas may not rebound long-term, Bank of America Corp Chief Executive Officer Brian Moynihan said on Tuesday."

 

"It's sobering to think, but some people shouldn't be thinking of (their home) as an asset," Moynihan said at the 2011 National Association of Attorneys General conference. "They should be thinking of it as a great place to live."

http://www.msnbc.msn.com/id/42556230/ns/business-real_estate/

 

The number of foreclosures are clearly going to increase later this year and they will put even more pressure on prices.

 

Foreclosure delays near end, might get 'scary'

 

"Foreclosure delays due to the increased scrutiny of robo-signing and other investigations of bank practices may be ending. RealtyTrac's Rick Sharga says "it's a little scary to think about what's coming down the pike."

http://www.marketwatch.com/story/foreclosure-delays-near-end-might-get-scary-2011-04-14

 

Blah, Blah, Blah. Lets see someone actually prosecute some of these big boys. Until then its just fluff.

 

Goldman Sachs misled Congress after duping clients, Senate panel chairman says

 

"Goldman Sachs misled clients and Congress about the firm’s bets on securities tied to the housing market, the chairman of the U.S. Senate panel that investigated the causes of the financial crisis said.

 

Senator Carl Levin, releasing the findings of a two-year inquiry yesterday, said he wants the Justice Department and the Securities and Exchange Commission to examine whether Goldman Sachs violated the law by misleading clients who bought the complex securities known as collateralized debt obligations without knowing the firm would benefit if they fell in value.

 

The Michigan Democrat also said federal prosecutors should review whether to bring perjury charges against Goldman Sachs Chief Executive Officer Lloyd Blankfein and other current and former employees who testified in Congress last year. Levin said they denied under oath that Goldman Sachs took a financial position against the mortgage market solely for its own profit, statements the senator said were untrue.

 

“In my judgment, Goldman clearly misled their clients and they misled the Congress,” Levin said at a press briefing yesterday where he and Senator Tom Coburn, an Oklahoma Republican, discussed the 640-page report from the Permanent Subcommittee on Investigations."

http://www.washingtonpost.com/business/economy/goldman-sachs-misled-clients-lawmakers-on-cdos-senate-panel-says/2011/04/13/AFhEv8ZD_story.html

The amount of greed, fraud and unethical conduct is just amazing. It makes you wonder what has not yet been revealed behind doors numbered 2 and 3. Wall Street is looking more and more like a very untrustworthy bunch.

 

Moody's, S&P Caved to Mortgage Pressure by Goldman, UBS, Levin Report Says

 

"Moody’s Investors Service and Standard & Poor’s adjusted the way they graded securities after Goldman Sachs Group Inc., UBS AG and at least six more banks pressured them, according to a U.S. Senate report.

 

The world’s two largest bond-ranking companies, both based in New York, made exceptions to rules when bankers asked for better safety ratings on complex mortgage-backed securities, the Senate Permanent Subcommittee on Investigations said yesterday. When Moody’s and S&P changed their assessments of hundreds of those bonds in July 2007, it helped trigger the financial crisis, the panel said."

 

“The ratings agencies weakened their standards as each competed to provide the most favorable rating to win business and greater market share,” according to the report. “The result was a race to the bottom.”

http://www.bloomberg.com/news/2011-04-13/moody-s-s-p-caved-to-mortgage-pressure-by-goldman-ubs-levin-report-says.html

 

 

Speaking of the rating agency's above. I guess they have to keep some resemblance of equity in the system.

 

Stocks drop after S&P cuts U.S. outlook

 

"NEW YORK (MarketWatch) — U.S. stock indexes fell sharply Monday after Standard & Poor’s revised its long-term outlook on the U.S. to negative from stable.

 

“Because the U.S. has, relative to its ‘AAA’ peers, what we consider to be very large budget deficits and rising government indebtedness and the path to addressing these is not clear to us, we have revised our outlook on the long-term rating,” the ratings agency said in a release.

 

S&P may have acted partly in self-defense, “given these guys were notably behind the curve when it came to subprime,” said Stuart Hoffman, chief economist at PNC Financial Services. “It’s a recognition of the facts on the part of the [credit] agencies that don’t want to be accused of being asleep at the switch again.”

http://www.marketwatch.com/story/stocks-open-lower-after-sp-cuts-us-debt-outlook-2011-04-18

 

Moody's downgrades Irish banks

 

"LONDON (MarketWatch) -- Moody's Investors Service on Monday downgraded the ratings of several Irish banks following its recent downgrade of Irish government bonds."

http://www.marketwatch.com/story/moodys-downgrades-irish-banks-2011-04-18

 

Finland, Greece spark new Europe debt fears

Strong showing by True Finns party, Greek worries in spotlight

 

"LONDON (MarketWatch) — Finland and Greece, two relatively small nations on opposite ends of the euro zone both in terms of geography and fiscal health, sparked a fresh round of turmoil in European government bond markets Monday.

 

In Finland, a strong showing by the anti-euro True Finns party in Sunday’s national election raised fears that the country of 5.4 million could slow or even block a pending European Union–International Monetary Fund bailout package for Portugal."

http://www.marketwatch.com/story/finland-greece-weigh-on-european-bond-market-2011-04-18

Here's an example of how the decline in jobs is playing out in certain demographic subgroups.  This one is for older workers, who appear to be particularly hard-hit if they lose their jobs:

 

"...Ann Kingston, 59, has not found a steady job since moving back to the Dayton area in November, and she believes her age has played a role in her unsuccessful job hunt.

 

Kingston said employers seem to view her and other older workers as more expensive, less capable of learning new technologies and unmotivated to work hard. Her experience is not uncommon...."

 

Older workers who lost jobs in recession spend longer time without employment

 

This was a pretty good article, showing how employers are biased against the older unemployed, and also former unionized workers. 

 

The DDN ran a big front-page story on the collapse of jobs in manufacturing, esp due to off-shoring, in the Sunday paper.  Pretty good reporting and analyses by the paper.  Unfortunatly this article isnt online.

 

 

Goldman may need to improve its PR to handle it damage image.

 

Goldman is up to its old tricks

Commentary: Managing expectations dull the pain of weak profits

 

"Tuesday’s results seemed on the surface like an old Goldman quarter — a $2.74 billion profit that translated into $1.56 a share, easily topping analyst expectation of 82 cents.

 

Shares rallied in morning trading, then slipped an hour into the session.

 

Why the pullback? It could be because the market took a closer look at the numbers. Profit was actually down 21% from the $3.46 billion reported a year ago, stung by a $1.64 billion preferred dividend paid to Warren Buffett’s Berkshire Hathaway Inc."

 

"It could be just a fluke. Or it could be the negative fallout from the financial crisis, the $550 million settlement over collateralized-debt obligations and a growing suspicion that Goldman doesn’t have its clients’ best interests at heart."

http://www.marketwatch.com/story/goldman-is-up-to-its-old-tricks-2011-04-19

http://money.cnn.com/2011/04/20/markets/dollar_euro/index.htm?hpt=T2

 

 

NEW YORK (CNNMoney) -- The dollar took a beating Wednesday, losing ground to a range of currencies, and falling to its lowest level against the euro in 15 months. And that's pretty much been the trend in recent months. At the start of the year, the euro was trading at $1.33 against the dollar, but has since surged to $1.45 against the beleaguered greenback.

 

 

 

The dollar index, which measures the U.S. dollar against a basket of currencies, has fallen 5% so far this year to around 74, as jittery investors flocked to the dollar for safety. That's down from a high near 87 in June of 2009. The continued weakening of the dollar -- if you go by reputation -- is a little puzzling. The dollar is thought of as a safe haven asset in times of turmoil. If you look at the past four months, it's hard to find anything but unsettling events. Japan. Egypt. Libya. Eurozone debt.

 

But the dollar has failed to appreciate.

This was more than just a slump, this was a plunge. But, one time data doesn't set a trend. This will need to be watch for the next few months, if things don't improve than another recession is well on the way.

 

Philly Fed manufacturing index slumps in April

 

"The Philadelphia Fed’s index of current activity tumbled to 18.5 in April after a March reading of 43.4, which was its highest level since January 1984. Economists polled by MarketWatch had expected the gauge to fall to 35.5 in April."

http://www.marketwatch.com/story/philly-fed-manufacturing-index-slumps-in-april-2011-04-21-1023480

http://money.cnn.com/2011/04/20/markets/dollar_euro/index.htm?hpt=T2

 

 

NEW YORK (CNNMoney) -- The dollar took a beating Wednesday, losing ground to a range of currencies, and falling to its lowest level against the euro in 15 months. And that's pretty much been the trend in recent months. At the start of the year, the euro was trading at $1.33 against the dollar, but has since surged to $1.45 against the beleaguered greenback.

 

 

 

The dollar index, which measures the U.S. dollar against a basket of currencies, has fallen 5% so far this year to around 74, as jittery investors flocked to the dollar for safety. That's down from a high near 87 in June of 2009. The continued weakening of the dollar -- if you go by reputation -- is a little puzzling. The dollar is thought of as a safe haven asset in times of turmoil. If you look at the past four months, it's hard to find anything but unsettling events. Japan. Egypt. Libya. Eurozone debt.

 

But the dollar has failed to appreciate.

 

This is another reason oil prices are rising. As the dollar weakens it takes more dollars to buy said item. This becomes even more pronounced since most oil prices are pegged to the dollar.

I'd actually say that it's the main reason oil prices are rising, not just "another" one.  True depletion is a long-term phenomenon.  Monetary adjustments are much more immediate.

^Might be right, but the depletion thing is kind of a straw man.  Most people would say the other factors in oil price rises are short term supply constraints or demand spikes, which can have real impacts on dollar pricing even if the dollar is gaining value v. other currencies.  If someone were really bored this afternoon they could look at the price trend for oil in another currency to compare.  Or find some broad measure of dollar strength to see how its change compares to the dollar change in oil prices over the past X months.  Would be interesting to disaggregate the oil price increase.

 

Note also that the causation runs in both directions, because rising oil costs widen the US trade deficit which then puts downward pressure on the dollar.

This was more than just a slump, this was a plunge. But, one time data doesn't set a trend. This will need to be watch for the next few months, if things don't improve than another recession is well on the way.

 

Agreed.  We could be seeing the fallout from the gas price rise, perhaps?

I think people are much more prepared this time around for higher gas prices.  Total miles traveled never really went back up even after gas prices fell down to $2/gallon.  The automanufacturers have much larger supply of fuel efficient cars and the trend of large SUV's "because I can" seems to have gone away since 2007.

If/when the banks have been healed through a weaker dollar (inflating their way out of the debt), then the FEDs will show more support for a stronger dollar. Until then, main street will feel the pain of stagflation for the forseeable future.

 

Don't Like a Weak Dollar? Might as Well Get Used to It

 

"The greenback is approaching pre-financial crisis lows and threatening to smash through its all-time low when measured against the world's predominant national currencies.

 

A combination of factors accounts for the weakness, with the Federal Reserve's easy-money policies, huge national debts and deficits and the consequential possibility of a debt downgrade because of the financial mess in Washington leading the way.

 

In short, as trader Dennis Gartman noted Thursday, "the rout of the US dollar" is in full effect."

 

"Gartman described the dollar as being in "serious jeopardy" because of its status against the euro, which was defended recently as European Central Bank President Jean-Claude Trichet announced a rate hike in the zone.

 

No such defense is being offered in the US, where neither Fed Chairman Ben Bernanke nor most of the rest of the central bank's Open Market Committee seems much in the mood to raise rates despite the anemic dollar."

http://www.cnbc.com/id/42703813

 

 

 

IMF Bombshell: Age of America Nears End

by Brett Arends

Tuesday, April 26, 2011

 

The International Monetary Fund has just dropped a bombshell, and nobody noticed.

 

For the first time, the international organization has set a date for the moment when the "Age of America" will end and the U.S. economy will be overtaken by that of China. And it's a lot closer than you may think. According to the latest IMF official forecasts, China's economy will surpass that of America in real terms in 2016 — just five years from now. Put that in your calendar.

 

It provides a painful context for the budget wrangling taking place in Washington right now. It raises enormous questions about what the international security system is going to look like in just a handful of years. And it casts a deepening cloud over both the U.S. dollar and the giant Treasury market, which have been propped up for decades by their privileged status as the liabilities of the world's hegemonic power. According to the IMF forecast, which was quietly posted on the Fund's website just two weeks ago, whoever is elected U.S. president next year — Obama? Mitt Romney? Donald Trump? — will be the last to preside over the world's largest economy.

 

Most people aren't prepared for this. They aren't even aware it's that close. Listen to experts of various stripes, and they will tell you this moment is decades away. The most bearish will put the figure in the mid-2020s. But they're miscounting. They're only comparing the gross domestic products of the two countries using current exchange rates. That's a largely meaningless comparison in real terms. Exchange rates change quickly. And China's exchange rates are phony. China artificially undervalues its currency, the renminbi, through massive intervention in the markets.

 

In addition to comparing the two countries based on exchange rates, the IMF analysis also looked to the true, real-terms picture of the economies using "purchasing power parities." That compares what people earn and spend in real terms in their domestic economies. Under PPP, the Chinese economy will expand from $11.2 trillion this year to $19 trillion in 2016. Meanwhile the size of the U.S. economy will rise from $15.2 trillion to $18.8 trillion. That would take America's share of the world output down to 17.7%, the lowest in modern times. China's would reach 18%, and rising.

 

Just 10 years ago, the U.S. economy was three times the size of China's.

 

FULL ARTICLE ON MARKETWATCH

http://www.marketwatch.com/story/imf-bombshell-age-of-america-about-to-end-2011-04-25

^LOL OF course. The country has 5 times the population. My worry would be using the Chinese currency instead of the Dollar to trade oil. Of course we could just stop buying products made in China, however China would demand theirmoney that's owed to them by the US.

Home prices in 'double dip'

 

"NEW YORK (CNNMoney) -- Home prices in February sank 3.3% to just above the post-crisis lows reached in April 2009. It was the seventh straight month of declines.

 

There is very little, if any, good news about housing," said David Blitzer, spokesman for S&P. "Prices continue to weaken, trends in sales and construction are disappointing."

 

The drop has come in two stages. First, the index recorded 36 months of nearly uninterrupted declines after reaching the spring 2006 peak. Then came a 13-month upswing during which the index recorded a 5% gain. That rebound ended last June.

 

Since then, the index has recorded losses every month and it has now edged closer to a new low -- the dreaded double-dip."

http://money.cnn.com/2011/04/26/real_estate/february_case_shiller/index.htm?source=cnn_bin&hpt=Sbin

 

The market is correcting itself.

^^  "There is very little, if any, good news about housing,"

 

Oh, I think there are probably 3 million good bits of news about housing.  For the 3 million or so people who anticpate (or would like to) buy in the next couple of years, homes are getting for affordable.

 

 

(made up the 3 million number, and of course, its only good news if you don't have to sell one house to buy another.  But that 3 million number does not include the later group.)

The market is correcting itself.

 

And it still has a noticable ways to go in most markets. But, this correction will continue to put more homes into the foreclosure catagory.

 

CincyDad,

Agreed, this correction is very good, long term news. One day we may actually have residential units that are truly affordable and not consuming a siginficant chunk of someones income.

This would be a great step in removing the 'stigma' that many American's have about renting instead of owning. It would also support our new economy where the average worker only stay at a job for about 5 years, making the workforce more flexible.

 

HUD chief suggests study of renters' tax credit

 

"WASHINGTON -(MarketWatch)- The Obama administration is open to exploring whether a new tax credit for renters should be created as part of broad discussions about how to overhaul the U.S. tax system, a top official said Tuesday.

 

Housing and Urban Development Secretary Shaun Donovan briefly mentioned the idea of a tax credit for renters in a speech at a conference about rental housing.

 

Speaking to reporters after the speech, Donovan said the proposal is "something that is worth looking at" as a way to boost government support for renters. Any new tax breaks, he said, would have to be offset in other parts of the tax code and wouldn't add to the deficit."

http://www.marketwatch.com/story/hud-chief-suggests-study-of-renters-tax-credit-2011-04-26

^That's what I'm talking about! I'm sick of all this discrimination against single renters.

More ideas involving less revenue for the government?  I have a simpler idea: get rid of the mortgage interest tax deduction.  That, too, would eliminate special government favoritism for homeowners, would help reduce the deficit, and would head off debates about whose favoritism was better than who else's favoritism ("my credit is better than your deduction," etc.).

If I recall right Canada doesnt have this deduction?

More ideas involving less revenue for the government?  I have a simpler idea: get rid of the mortgage interest tax deduction.  That, too, would eliminate special government favoritism for homeowners, would help reduce the deficit, and would head off debates about whose favoritism was better than who else's favoritism ("my credit is better than your deduction," etc.).

 

That is definitely another option. I think the for overall flexibility of our nation's workforce, one or the other needs to happen.

Strong U.S. jobs growth, euro report boost dollar

 

http://www.cleveland.com/business/index.ssf/2011/05/strong_us_jobs_growth_euro_rep.html

America’s Middle Class Crisis: The Sobering Facts

 

"-- There are 8.5 million people receiving unemployment insurance and over 40 million receiving food stamps.

 

-- At the current pace of job creation, the economy won't return to full employment until 2018.

 

-- Middle-income jobs are disappearing from the economy. The share of middle-income jobs in the United States has fallen from 52% in 1980 to 42% in 2010.

 

-- Middle-income jobs have been replaced by low-income jobs, which now make up 41% of total employment.

 

-- 17 million Americans with college degrees are doing jobs that require less than the skill levels associated with a bachelor's degree.

 

-- Over the past year, nominal wages grew only 1.7% while all consumer prices, including food and energy, increased by 2.7%."

http://finance.yahoo.com/blogs/daily-ticker/america-middle-class-crisis-sobering-facts-141947274.html

.... and the wealth gap continues to grow.

.... and the wealth gap continues to grow.

 

Hopefully this situation stabilizes or even improves in the near future. Most countries that have a noticable 'wealth gap' tend to deal with some unpleasant situations. Expecially those that go from having a more balanced society and then move into an unbalanced society.

Home Market Takes a Tumble

Turnaround More Distant After 3% Drop, Steepest Quarterly Decline Since 2008

 

"Home values posted the largest decline in the first quarter since late 2008, prompting many economists to push back their estimates of when the housing market will hit a bottom.

 

Home values fell 3% in the first quarter from the previous quarter and 1.1% in March from the previous month, pushed down by an abundance of foreclosed homes on the market, according to data to be released Monday by real-estate website Zillow.com. Prices have now fallen for 57 consecutive months, according to Zillow."

http://online.wsj.com/article/SB10001424052748704810504576309532810406782.html

U.S. import prices climb 2.2% in April

 

"WASHINGTON (MarketWatch) — U.S. import prices climbed 2.2% in April, the Labor Department said Tuesday, marking the first time prices have climbed over 2% in consecutive months since June 2008."

 

“We see the import price data as a clear and present danger on the inflation front — although it is a perspective that has not been shared by Federal Reserve Chairman Ben Bernanke,” said analysts at RDQ Economics. Bernanke has often said he expects the commodity price impact on inflation to be “transitory.”

http://www.marketwatch.com/story/us-import-prices-climb-22-in-april-2011-05-10-9320

With the Philly Fed index plunging last month and now the New York gauge dropping sharply, it appears things may have taken a turn in the wrong direction over the last 2 months. If these indexes don't improve significantly over the next few months we may be in for another leg down in the economy by the end of this year.

 

New York manufacturing gauge drops sharply in May

 

"The Empire State manufacturing survey fell sharply to 11.9 in May from a reading of 21.7 in April. The April reading was the highest level in a year. The index has now sunk to its lowest level since December.

 

The size of the decline surprised economists. Analysts polled by MarketWatch had expected a dip to 19.7."

http://www.marketwatch.com/story/new-york-manufacturing-gauge-drops-sharply-in-may-2011-05-16

 

Not a surprise, but it does show that the spring hope is not arriving, again. By about July they will start calling for a recovery in the spring of 2012.

 

Home builder index shows no improvement in May

 

"WASHINGTON (MarketWatch) - An index that measures the confidence of home builders was unchanged in May, suggesting virtually no improvement in the moribund U.S. housing market. The National Association of Home Builders said its Housing Market Index, produced in tandem with Wells Fargo, remained "at the low level of 16." Economists surveyed by MarketWatch had expected the HMI to rise to 17."

http://www.marketwatch.com/story/home-builder-index-shows-no-improvement-in-may-2011-05-16

A question to those who are focusing largely or exclusively on housing data, particularly new housing starts:

 

How many residential units does the country need?  With population growth and household formation slowing, and with a large existing housing stock, isn't it completely natural to see new housing starts slowing?

 

We could probably add another 100,000 people to the Akron-Canton area without building a single new residence.  If we returned to the modes of living of many families 50-100 years ago (i.e., multiple children per bedroom), we could probably add twice that or more.  In Cleveland and Cincinnati, I imagine that similar phenomena are present, and the numbers involved are even larger.  Economic necessities have started to push people into practices that are economically sensible but previously rare for cultural reasons, e.g., renting out a spare bedroom to an unrelated tenant in an owner-occupied single-family home.

I've always wondered that myself; I guess it's sometimes cheaper to build new construction than revitalize old buildings.

 

 

I agree, somewhat.  I hate seeing new construction in my neighborhood.  The last thing we need is MORE houses.

 

Unfortunately, our nation's economy has become reliant on new residential construction and all the spin off jobs it creates.

 

That said, I, for one, am not all that disappointed when I see reports on housing like the above..... although I am certainly not one of those who get downright giddy these days with glum reports on the economy.

Unfortunately, our nation's economy has become reliant on new residential construction and all the spin off jobs it creates.

 

Agreed.  However, just because the cure for dependency may be painful does not mean that it is more healthy to continue that dependency.  I recognize that an adjustment away from dependency on residential construction as a key economic driver will be economically and even culturally disruptive.  I don't celebrate that pain, but I do approve of the gain that will accompany kicking that dependency.  There is a difference between celebrating or cheering pain per se and offering a colder, more analytical opinion that the same amount of pain is worth it for other reasons.

 

I would similarly celebrate the painful but necessary right-sizing of the financial sector.  Sadly, we seem to have missed the boat on that one--we paid off the dealer to continue our habit (see: financial sector bailouts) rather than dealing with the consequences of kicking our dependency there.

Bottom line is that the economy for years has been far worse than anyone has been willing to admit.  Construction of superfluous housing was just masking it, at the same time that other sectors were further sapped to pay for all that construction.  Developers and contractors made out like bandits.  That money had to come from somewhere.  It should have been invested in other ways, be it factory upgrades, infrastructure, education, or just paying down the public debt.  But instead we got millions of unneeded McMansions and retail plazas.

I'm not sure how much of the money for "McMansions" could have been re-directed to 'factory upgrades'.... at least not in this Country.  Cuba, yes.  Here, no.

It should not have been invested in housing, true.

 

It should also not have been invested in securities backed by loans backed (secured) by housing, which is related but separate (and, IMO, even worse).

 

That aside, it doesn't matter much because the numbers that really *do* matter <a href="http://online.wsj.com/article/SB10001424052748703730804576317142210698436.html?mod=WSJ_Opinion_LEADTop">also aren't good</a>.

The "financial collapse" was not caused by building homes.  It was caused by fraudulent loan officers making bad loans and then selling the loans on Wall Street.  It was caused by negligent regulators in the federal government.  It was caused by allowing dangerous financial instruments like "collateralized debt obligations/CDOs to be created.