I will buy the last five non-Boreas posters in this thread a beer of their choice if they refrain from responding to Boreas' attempt to spike the mercury in this thread.  Two if they come out biking with me on the Towpath Trail and accept such consideration at the Winking Lizard.  This thread was blessedly mild in tone until ten minutes ago.

What are you?  Some kind of thread nanny?

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.

 

I don't think it's an issue of re-direction.  After all, who can say where exactly a loan that isn't directed to housing in the first place is re-directed to?

 

Likewise, it's hard to conceive of the loans not made to housing going instead to pay down the public debt--after all, that would mean making a loan to the federal government to pay off other loans of the federal government, so perhaps effectively re-domesticating loans of the federal government from China or elsewhere abroad.

 

Of course, the market offers a painful corrective for this: in foreclosure, it's very common that both lenders *and* borrowers take significant haircuts on their loans.  Under Ohio law, the minimum bid at foreclosure is 2/3 of the official appraisal of the property conducted during the foreclosure proceedings.  Often, the bank is the only bidder, and must credit that amount to the debtor's balance.  The bank can then re-sell the property at somewhere in between the 2/3 mark and the actual outstanding balance on the loan.  Sometimes, the bank takes an *additional* loss on the resale of the property after the property becomes REO.  (I know a condo in downtown Akron that I've been keeping my eye on that is currently on the market for less than the court docket of the foreclosure auction says that the minimum bid would have been, so I believe that it's on the market for less than foreclosure sale price.)

 

When enough banks get burned enough often enough, the amount that they're willing to finance will come down.  This will be particularly true in the residential real estate market (not the commercial market) if we eliminate or dramatically reform Fannie Mae and Freddie Mac, which would eliminate one way for many banks to get large numbers of consumer mortgages off their balance sheets, forcing them to deal with having long-term relationships with more of their loan "customers."  (I put customers in scare quotes because that's the lingo I've heard some bankers use, but I really don't like the term, just like I don't like the trendy rebranding of loans as credit "products" ... I think they should be call services, not products, and the customers should be called clients.)

 

The second-order effects of this will be that regular open-market sellers of residential real estate will start to rationalize their prices as well.  This will also be painful for the individuals but helpful for the economy on the collective level.  I think on this thread (and I know on other threads), I've made the point that money that does not simply go into deleveraging oneself from a mortgage is money freed up for use elsewhere in the economy, whether that's paying for rising food and gas prices or actually enjoying life a little more.

Loans were made in housing because government incentives steered them there.  In America, not Cuba.  The fact that the US has had an unreasonable fetish for homeownership is no revelation.  If we (via government incentives) had demonstrated the same level of interest in those items I listed off, a different situation might have resulted.  In America, not Cuba. 

It's called the business cycle. It all seemed so rational to invest in housing because the jobs couldn't be outsourced, the boomers were hitting their peak earning years, and there was a strong desire to increase accessibility of home ownership to further down the socio-economic strata. However, once bad money started following good, it crowded out investment in more productive areas of the economy. Not only did too many people waste money on housing, the follow on industries got too unsustainably large. Then boom went the dynamite. The dotcom boom/bust of the 90s was the same process different part of the economy.

Leading indicators fall for first time since June

April gauge off 0.3% as jobless claims rise, supply times shorten

 

"WASHINGTON (MarketWatch) — The pace of economic growth may be “choppy” in the summer and fall, the Conference Board said Thursday as it reported that its index of leading economic indicators fell 0.3% in April, the first monthly decline since June."

http://www.marketwatch.com/story/leading-indicators-fall-for-first-time-since-june-2011-05-19

 

This index along with the New York index are now in a free fall. Going from 43.4% to 3.9% in just 2 months.

 

Philadelphia Fed’s factories index drops again

 

"The Federal Reserve of Philadelphia on Thursday said its index of current activity sank to 3.9 in May from 18.5 in April, the lowest reading since October. Just two months ago, the index reached 43.4, the highest level since January 1984.

 

Economists polled by MarketWatch had expected the gauge to rise to 20.1 in May."

http://www.marketwatch.com/story/philadelphia-fed-business-index-drops-again-2011-05-19

 

Prices and sales continue to fall for new and used homes. A double dip for housing is pretty much a lock now and this is all happening at the start of the 'peak' selling season.

 

Existing-home sales drop unexpectedly in April

 

"WASHINGTON (MarketWatch) — Resales of U.S. single-family homes and condos fell 0.8% to a seasonally adjusted annual rate of 5.05 million in April, the National Association of Realtors reported Thursday.

 

The median home price tumbled 5% from last year to $163,700.

 

Inventories of existing U.S. homes for sale jumped 9.9% to 3.8 million, representing 9.2 months’ supply."

http://www.marketwatch.com/story/existing-home-sales-drop-unexpectedly-in-april-2011-05-19

A few pages back we had some discussion about the fraud and illegal activity of Wall Street and many of its main players. Looks like Goldman's issues might be growing.

 

You Won't Read This Story About Goldman

 

"No one seems to care much about Goldman's latest troubles, and many Americans seem numb to more allegations of wrongdoing related to the financial crisis.

 

Yet they keep coming, especially at Goldman. One of the biggest was last week's disclosure that the Commodity Futures Trading Commission's staff has "orally advised" the company that it "intends to recommend ... aiding and abetting, civil fraud and supervision-related charges" against the trade-clearing unit at Goldman.

 

In addition, Goldman said the Justice Department is reviewing data related to credit-default swaps and fee arrangements for clearing of credit-default swaps, including potential anticompetitive practices. European regulators are also investigating.

 

And remember Abacus? That's the collateralized debt obligation created by Goldman that morphed into a $550 million fraud settlement. There are more subpoenas on that gem, Goldman said last week."

http://online.wsj.com/article/SB10001424052748704281504576331811046204714.html

 

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

 

....housing is fun to look at in a car-crash horror show sort of way, but....

 

....The numbers I look at are those employment numbers (which are, yes, a lagging indicator but the data is fairly easty to get and is available at the state level), and those leading indicator numbers like orders, purchasing agent indexs, etc.

 

Numbers like the one RR posted about just upthread.  And this is NOT good.  Just one set but not good at all. 

 

Could this be the gas price rise finally impacting the economy?

Orders for durable goods fall 3.6% in April

Airline, auto declines account for bulk of reversal, U.S. data indicate

 

"WASHINGTON (MarketWatch) — U.S. orders for durable goods fell sharply in April, mainly because of lower demand for aircraft and autos, the government reported Wednesday.

 

The Commerce Department said new orders for U.S.-made products designed to last three years or more, such as autos or appliances, dropped 3.6% last month. It was the biggest decline since October.

 

Orders fell 1.5% in April after factoring out the volatile transportation sector, marking the third decline in fourth months."

http://www.marketwatch.com/story/orders-for-durable-goods-fall-36-in-april-2011-05-25

We should rename this thread.

But now, because of the Japanese disaster, supply of automobiles has become tight. So while orders were down in April, dealers are already feeling the pinch. Don't be surprised if the next time you take your (newer) car to the dealer for service they ask to buy it from you.

Nothing the printing press can't fix, right, well, maybe, we hope, click your heals, and wish upon a star. Maybe we should ask our neighbor. Hey Japan, how is the printing press process going and did you click your heals and wish upon a star too?

 

First-quarter GDP growth remains at 1.8%

The second estimate comes in well below expectations

 

"Economists surveyed by MarketWatch had been expecting GDP growth to be revised up to 2.2% for the January-March quarter."

http://www.marketwatch.com/story/first-quarter-gdp-growth-remains-at-18-2011-05-26

 

Requests for unemployment benefits rise

Applications climb 10,000 to 424,000

 

"Economists surveyed by MarketWatch had expected claims to decline to a seasonally adjusted 405,000."

http://www.marketwatch.com/story/us-requests-for-unemployment-benefits-rise-2011-05-26

from the article on First Quarter GDP at 1.8%......

 

"Not adjusted for inflation, the economy grew 3.8% to $15.01 trillion"

 

That means the annual inflation rate for the first quarter was 2.0%.

 

Does anyone actually believe that inflation was running at 2.0% the past 3 months?

 

John Williams over at ShadowStats says inflation averaged around 5% for Q1 based on the formula that was in use back in the early '90s, before the government began to really butchering it (most people believe the current official formula understates actual inflation,and the 1990 method is much more realistic).

 

So using the inflation methodology that was in place 20 years ago, 2011Q1 GDP was negative by approx 1.2%.  And then if you factor out the average population growth of 1%, you see that the national per-capita GDP fell about 2.2% during the previous quarter using more realistic inflation numbers.

 

 

We should rename this thread.

 

The IMF tends to view GDP growth under +3% as recessionary.  And using a realistic inflation number would have yielded a negative actual US GDP growth in Q1 (even excluding the population growth).

 

So I think the title of this thread should stay unchanged.

 

 

"U.S Anemic Recovery and Metastatistical Debates: News & Discussion" doesn't have quite the same flow ...

from the article on First Quarter GDP at 1.8%......

 

"Not adjusted for inflation, the economy grew 3.8% to $15.01 trillion"

 

That means the annual inflation rate for the first quarter was 2.0%.

 

Does anyone actually believe that inflation was running at 2.0% the past 3 months?

 

John Williams over at ShadowStats says inflation averaged around 5% for Q1 based on the formula that was in use back in the early '90s, before the government began to really butchering it (most people believe the current official formula understates actual inflation,and the 1990 method is much more realistic).

 

So using the inflation methodology that was in place 20 years ago, 2011Q1 GDP was negative by approx 1.2%.  And then if you factor out the average population growth of 1%, you see that the national per-capita GDP fell about 2.2% during the previous quarter using more realistic inflation numbers.

 

 

We should rename this thread.

 

The IMF tends to view GDP growth under +3% as recessionary.  And using a realistic inflation number would have yielded a negative actual US GDP growth in Q1 (even excluding the population growth).

 

So I think the title of this thread should stay unchanged.

 

 

 

Thanks for the info CincyDad. You input has always be valued.

"U.S Anemic Recovery and Metastatistical Debates: News & Discussion" doesn't have quite the same flow ...

 

I am not sure that title could fit on the front page without taking up two lines. LOL

We should rename this thread.

 

The IMF tends to view GDP growth under +3% as recessionary.  And using a realistic inflation number would have yielded a negative actual US GDP growth in Q1 (even excluding the population growth).

 

So I think the title of this thread should stay unchanged.

 

Oh.... I wasn't suggesting something sunny.  I was thinking more along the lines of "All is Lost" or "The Sky is Falling" or "Turn the Lights Out When You Leave".  Something to forewarn people of the slant.

John Williams was a government statistician who calcualted a lot of the official economic data that was published.  That is, until he tired of the monkey-ing around with the numbers that kept happening.

 

Now he has an organization that produces it's own economic statistics using previous, long-standing formulas.  It's call "Shadow Government Statistics" and it's always interesting to take a look at their website periodically.

 

According to his (traditional) GDP calculation, year-over-year GDP has been negative every single quarter since the start of 2001, except briefly in 2004.

 

http://www.shadowstats.com/alternate_data/gross-domestic-product-charts

 

 

He also composed the scores for Jaws, Star Wars, Indiana Jones, E.T., and Harry Potter!  Quite multitalented.

"U.S Anemic Recovery and Metastatistical Debates: News & Discussion" doesn't have quite the same flow ..."

 

Excellent

But yeah, these leading indicator numbers recently posted, like that durable goods number, are not good.  "Anemic is probably the best description right now, but we could be moving into a second recession in the future if they continue low or drop more. 

 

According to his (traditional) GDP calculation, year-over-year GDP has been negative every single quarter since the start of 2001, except briefly in 2004.

 

Which tracks with the weak jobs growth (or was it jobs stagnation) in Ohio, and the  flatlining in the GMP (Gross Metropolitan Product) calculations during the 2000s, for metro areas like Dayton. 

 

 

 

 

Doug Henwood, of the Left Business Observer, concurs that the 2000s where a sort of "lost decade"

 

What a Damn Mess (from 2010)

 

Let's start with that fetishized measure, GDP growth. As the graph above shows, the average growth in real GDP per capita for the 2000–2010 decade has been 0.7%. (Yes, the decade isn't over, but it's only got a quarter to go. It would take a Chinese rate of growth—almost 13%—in the fourth quarter of this year just to get the decade average up to 1%.) You might object that decades are arbitrary forms of periodization, which they are (and what isn't?), though they do have some cultural purchase.

 

If you look just at trend rates of growth, using a statistical technique called a Hodrick–Prescott filter, the underlying rate of growth in the U.S. economy is now 0.3% a year, the slowest ever by a long shot, and less than a fifth its long-term average.

 

The recession contributed a lot to this record low, but even if you stop the trend computation at the peak year, 2007, you get the lowest growth rate in 80 years. The 2001–2007 expansion was the weakest of the ten since 1948, when quarterly GDP data became available. Combine that weak expansion with the deepest recession since the 1930s—more than twice as deep as the average of the last ten downturns—and you get truly a miserable decade.

 

 

We have discussed this before, but I'm more and more convinced that we are in the midst of a neo-Gilded Age economy (circa 1870s-mid-1890s). You have massive expansion of the global economy, dramatically high levels of creative destruction, and dramatic growth in wealth inequality. It turned out in retrospect that the there was a amazing amounts of economic activity, but it didn't really begin to better the lives of most until late 1890s and more the 1900s and beyond.

If wealth inequality is your only metric, then you can make that pitch, though we have a ways to go yet before we reach that level of wealth inequality.  Even with the welfare state scaled back to levels that would balance the budget, we wouldn't be approaching those levels just yet.  However, I think it was a lot more than just the distribution of wealth itself that made the Gilded Age what it was.

Take into account that the FED is not correctly showing how much inflation is really taking place and you have negative consumer spending.

 

Consumer spending loses momentum in April

Adjusted for inflation, spending nudges up a mere 0.1%

 

"WASHINGTON (MarketWatch) — Consumer spending rose by the smallest amount in three months during April, government data showed Friday, in a further sign of erosion in spending momentum due to higher prices at the gas pump."

http://www.marketwatch.com/story/consumer-spending-loses-momentum-in-april-2011-05-27

 

When you get a month over month drop in home sales in the spring things are really in bad shape. Year over year we are now down 26.5% and its not getting better. Once we get into late summer and fall these numbers are really going to look ugly, since month over month starts going negative even in a normal year.

 

Pending home sales slump 11.6% in April

 

"The drop in April pending home sales followed two months of gains.The index is 26.5% below its April 2010 peak, when buyers were rushing to beat a contract deadline for the homebuyer tax credit."

http://www.marketwatch.com/story/pending-home-sales-slump-116-in-april-2011-05-27-1050360

 

Hey look, one stat that up, well sort of.

 

Consumer sentiment rises in May

 

"The overall sentiment gauge increased to 74.3 in May from 69.8 in April. However, the gauge remains below a reading of 77.5 in February before prices for gasoline spiked."

http://www.marketwatch.com/story/consumer-sentiment-rises-in-may-2011-05-27

If wealth inequality is your only metric, then you can make that pitch, though we have a ways to go yet before we reach that level of wealth inequality.  Even with the welfare state scaled back to levels that would balance the budget, we wouldn't be approaching those levels just yet.  However, I think it was a lot more than just the distribution of wealth itself that made the Gilded Age what it was.

The inequality issue is tertiary to the similarities (why I listed it last). The onrushing globalization and the extraordinary levels of creative destruction meant that era felt more economically perilous than the results when the period was over actually felt like (the completion of the railway system, the creation of the modern consumer economy in its nascent forms, and the like).

If wealth inequality is your only metric, then you can make that pitch, though we have a ways to go yet before we reach that level of wealth inequality.  Even with the welfare state scaled back to levels that would balance the budget, we wouldn't be approaching those levels just yet.  However, I think it was a lot more than just the distribution of wealth itself that made the Gilded Age what it was.

 

Unfortunately this speculation is irrelevant as income distribution estimates do not turn up until the 1930's. For what it's worth, the GINI estimate in 1929 was 46. In 2006 it was 47.

 

Since the lowest occurred in 1968 at 34, all "gains" in income distribution due to the creation of the welfare state were erased between 1970-2005.

 

Therefore today, regardless of your political perspective, we have debt, an *increase* in income inequality, and no economic growth. The ONLY available wealth to pay down the debt resides with the wealthy. Increasing their tax is a mathematical inevitability.

Bubble-debt Denialism

blog by Paul Krugman

 

For a project I’m working on, I went back to the famous 2004 speech in which Alan Greenspan not only denied that there was a national housing bubble, but denied that it was even possible to have a national housing bubble.

 

What I somehow never realized, however, is that the speech was actually largely devoted to pooh-poohing concerns about household debt. Here’s what was actually happening:

 

Household debt as % of personal income

 

But Greenspan said hey, no worries:

 

In summary, although some broader macroeconomic measures of household debt quality do not paint as favorable a picture as do the data on loan delinquencies at commercial banks and thrifts, household finances appears to be in reasonably good shape. There are, however, pockets of severe stress within the household sector that remain a concern and we need to be mindful of the difficulties these households face.

 

In addition, a significant decline in consumer incomes or house prices could quickly alter the outlook; nonetheless, both scenarios appear unlikely in the quarters immediately ahead. If lenders, including community bankers, continue their prudent lending practices, household financial conditions should be all the more likely to weather future challenges.

Wow. And now, having demonstrated his ability to call it, he’s lecturing us on fiscal responsibility.

http://krugman.blogs.nytimes.com/2011/05/30/bubble-debt-denialism/

Bubble-debt Denialism

blog by Paul Krugman

 

For a project Im working on, I went back to the famous 2004 speech in which Alan Greenspan not only denied that there was a national housing bubble, but denied that it was even possible to have a national housing bubble.

 

What I somehow never realized, however, is that the speech was actually largely devoted to pooh-poohing concerns about household debt. Heres what was actually happening:

 

Household debt as % of personal income

 

But Greenspan said hey, no worries:

 

In summary, although some broader macroeconomic measures of household debt quality do not paint as favorable a picture as do the data on loan delinquencies at commercial banks and thrifts, household finances appears to be in reasonably good shape. There are, however, pockets of severe stress within the household sector that remain a concern and we need to be mindful of the difficulties these households face.

 

In addition, a significant decline in consumer incomes or house prices could quickly alter the outlook; nonetheless, both scenarios appear unlikely in the quarters immediately ahead. If lenders, including community bankers, continue their prudent lending practices, household financial conditions should be all the more likely to weather future challenges.

Wow. And now, having demonstrated his ability to call it, hes lecturing us on fiscal responsibility.

http://krugman.blogs.nytimes.com/2011/05/30/bubble-debt-denialism/

 

Something tells me Alan will not look so good in future history books.

At least the stock market is currently up on all the positive news.

 

S&P/Case-Shiller signals double dip in housing

 

"WASHINGTON (MarketWatch) — U.S. home prices fell in March for the eighth straight month, confirming the beleaguered housing market has entered a double-dip recession, according to a closely followed index released Tuesday."

http://www.marketwatch.com/story/sp-data-signals-double-dip-in-housing-2011-05-31

 

Chicago PMI decelerates sharply in May

 

"WASHINGTON (MarketWatch) -- The Chicago PMI dropped sharply to a reading of 56.6% in May from April's 67.6%..."

http://www.marketwatch.com/story/chicago-pmi-decelerates-sharply-in-may-2011-05-31?link=MW_story_latest_news

 

U.S. consumer confidence declines in May

Expectations for economy six months from now worsen

 

"The nonprofit Conference Board said its consumer-confidence index fell to 60.8 in May — the lowest reading in six months — from a revised 66 in April. Economists polled by MarketWatch had forecast an increase to 67.5."

http://www.marketwatch.com/story/us-consumer-confidence-declines-in-may-2011-05-31

 

Sure seems to be a lot of hoping going on in the US, European and World economy.

 

Oil nears $103 a barrel as dollar slips

Pressure mounts in Libya

 

"SAN FRANCISCO (MarketWatch) — Oil futures rose Tuesday as fresh hope that Europe is moving closer to a solution to its sovereign-debt woes helped prop up the euro against the dollar."

http://www.marketwatch.com/story/oil-advances-as-dollar-slips-2011-05-31

A great article. Weather you believe the economy is in for another fall or not, its hard to ignore the MASSIVE derivatives market that still is growing. One of the many issue with the derivatives market is, if its starts to convulse again, their is not enough money in the world to fix it.

 

Mobius Says Fresh Financial Crisis Around Corner Amid Volatile Derivatives

 

“There is definitely going to be another financial crisis around the corner because we haven’t solved any of the things that caused the previous crisis,” Mobius said at the Foreign Correspondents’ Club of Japan in Tokyo today in response to a question about price swings. “Are the derivatives regulated? No. Are you still getting growth in derivatives? Yes.”

 

"The total value of derivatives in the world exceeds total global gross domestic product by a factor of 10, said Mobius, who oversees more than $50 billion. With that volume of bets in different directions, volatility and equity market crises will occur, he said."

http://www.bloomberg.com/news/2011-05-30/mobius-says-fresh-financial-crisis-around-corner-amid-volatile-derivatives.html

Companies hired far fewer workers than expected in May and output in the manufacturing sector slowed to its lowest level since 2009, raising concerns that the U.S. recovery is running out of steam.

 

http://money.msn.com/business-news/article.aspx?feed=OBR&date=20110601&id=13599199

 

ADP reported private-sector job growth at just 38,000.  Economists were looking for numbers in the 180,000 range.

 

Also,

 

" the Institute for Supply Management (ISM) said its index of national factory activity fell to 53.5 in May from 60.4 the month before.

 

The reading missed economists' expectations for 57.7.

 

New orders, a barometer of demand ahead, fell to 51.0 from 61.7 in April, the lowest since June 2009."

 

-----

What I find most disturbing about these numbers, and other recent numbers showing a significant slowdown in the US economy, is that the 2011Q1 GDP was only 1.8%.  If we are slowing down significantly for that, then what can we expect Q2 GDP number to be?

 

Companies hired far fewer workers than expected in May and output in the manufacturing sector slowed to its lowest level since 2009, raising concerns that the U.S. recovery is running out of steam.

 

http://money.msn.com/business-news/article.aspx?feed=OBR&date=20110601&id=13599199

 

ADP reported private-sector job growth at just 38,000.  Economists were looking for numbers in the 180,000 range.

 

Also,

 

" the Institute for Supply Management (ISM) said its index of national factory activity fell to 53.5 in May from 60.4 the month before.

 

The reading missed economists' expectations for 57.7.

 

New orders, a barometer of demand ahead, fell to 51.0 from 61.7 in April, the lowest since June 2009."

 

-----

What I find most disturbing about these numbers, and other recent numbers showing a significant slowdown in the US economy, is that the 2011Q1 GDP was only 1.8%.  If we are slowing down significantly for that, then what can we expect Q2 GDP number to be?

 

 

Probably about .5% to 1% that will be revised lower in the future. I think we can also expect a growing support for a QE3 which will do nothing but increase debt loads and kick the can down the road another 6 months. I can tell you from the industry that I work with, things have noticable slowed from last year and this is from an area of the country that has preformed well compared to most.

 

If this type of decline in the data continues much longer another deep recession will be hard to avoid.

You have to love headlines, until you read the fine print. Add in inflation and construction spending is about 0% or negative and this is during the main surge of the construction season.

 

April construction spending up 0.4%

 

"Construction spending was forecast to fall 0.3%, according to a MarketWatch poll, though when factoring in revisions, the number was below expectations. Spending is 9.3% lower than the April 2010 level."

http://www.marketwatch.com/story/april-construction-spending-up-04-2011-06-01-103540

 

Looks like car sales are not going to be up like some had predicted.

 

GM, Ford post May U.S. sales declines

 

"SAN FRANCISCO (MarketWatch) — General Motors Co. and Ford Motor Co. on Wednesday posted May U.S. car sales declines, setting the tone for what looks to have been a tough month, especially for Japanese auto makers."

 

“With the shortages in some key vehicle segments, as well as some added uncertainty around price increases, incentive reductions, the industry’s volume was actually down from the first four months of the year and down a little bit -- probably 3% to 5% -- year over year,” GM sales chief Don Johnson said in a conference call."

http://www.marketwatch.com/story/gm-posts-may-us-sales-decline-2011-06-01

I'm of two minds. One is that this is one of the periodic sky is falling moments that lets up when we stop having massively crazy weather, a industry all but shut down because Mother Earth decided to rearrange the continent, and an entire region deciding that their old gov'ts sucked. Since home construction is going to keep sucking the loss of energy from the auto sector really hit hard and well there really has been crazy weather/natural disasters that did affect the economy. My other mind is that we are seeing the economy as it really is w/out a lot of gov't driven fluff. The gov't clearly is exacerbating the down aspects of the economy right now w/ sharply contracting local and state gov't expenditures as well nervously related to the debt limit and the coming Euro crack-up. I fear we accelerated the 1930s and have skipped past the 1932-1936 crash and recovery and went to straight to the '37 recession - driven also by dramatic removal of gov't stimulus among other causes (WWII was looming ever closer by then and lot of other stuff as well).

" the Institute for Supply Management (ISM) said its index of national factory activity fell to 53.5 in May from 60.4 the month before.

 

The reading missed economists' expectations for 57.7.

 

New orders, a barometer of demand ahead, fell to 51.0 from 61.7 in April, the lowest since June 2009."

 

This is one of the leading indicators, so it looks like we could be setting up for a recession, or at best stagnation or very slow growth. 

 

I wonder if this fuel price surge choked off a higher growth rate?

 

 

It often happens that way, and this one has been particularly bad on that front because a solid portion of the increase was caused by a weak dollar rather than real economic activity.

 

Under normal circumstances, higher fuel prices (which retard economic growth) are actually a consequence of economic growth, and lower fuel prices (which accelerate economic growth) are a consequence of *low* economic growth (gas went down to something like $1.50 in the depths of the recession in 2008-2009), so there's a balancing effect there.  That's hardly the only thing that affects fuel prices, though.  That's just the demand side of the equation.  There's also the supply side (e.g., events in the Middle East, new discoveries, new drilling rights), and then the currency side.  One of the key pros of the "sound money" (or "King Dollar," as some of them call it) movement is that it would keep a lid not only on fuel prices, but on almost every other industrial, agricultural, and energy commodity as well.  Right now, they have a point--the increase in fuel prices isn't arriving alongside increased economic growth (which essentially compensates for the increase and then some); it's just a flat out impediment to growth.

OUCH

 

http://money.cnn.com/2011/03/28/real_estate/us_housing_vacancy_rates/index.htm

 

 

NEW YORK (CNNMoney) -- There is a correction on this story.

 

High residential vacancies are killing many housing markets, as foreclosed homes sit on the market and depress sale prices and property values.

 

The national vacancy rate at 11.4% according to a release Tuesday from the Census Bureau.

 

"Vacant homes equal more downward pressure on home prices," said Brad Hunter, chief economist for Metrostudy, a real estate information provider.

 

Maine had the highest proportion of empty housing stock, at 22.8%. Other states with gluts of empty houses included Vermont (20.5%), Florida (17.5%), Arizona (16.3%) and Alaska (15.9%).

http://money.cnn.com/2011/06/05/news/economy/economic_stimulus/index.htm

 

 

NEW YORK (CNNMoney) -- Congress will not be riding to the rescue.

Economic indicators are pointing to slower growth. More Americans are looking for jobs, and the housing market is in a confirmed double dip.

 

In another time and place, lawmakers might have responded with economic stimulus measures to get the country back on track.

 

This time around, it's not in the cards.

 

Having spent the majority of the current legislative session operating at a truly glacial pace, Congress is sitting on the sidelines, waiting to see how the debate over the debt ceiling pans out.

 

"I am not sure you could even get the votes [for a stimulus package] if it was clear we were headed for a depression," said Norman Ornstein, a resident scholar at the conservative American Enterprise Institute.

 

To be fair, lawmakers have tried quite a few tactics to help the economy since 2008. Banks were bailed out, the auto industry was rescued and unemployment benefits were extended. Congress passed a gigantic stimulus package that included tax breaks and money for infrastructure projects.

If anyone's seen the HBO docudrama "Too Big to Fail," it's mentioned at one point in the movie that an executive told Hank Paulson to use the federal treasury to "buy up all the empty houses and burn them."

 

Maybe we should have.

Why do we have to wait on the federal government to do that??? We could always follow Detroit's inspiration and hold a few nationwide Devil's Nights..... :-P

 

In another time and place, lawmakers might have responded with economic stimulus measures to get the country back on track.

 

This time around, it's not in the cards.

 

History repeats itself as farce. 

 

Back in the 1930s the government (Congress and FDR) backed-off from stimulus ...AKA "New Deal"....spending due to concerns about deficits and not balancing the budget, and there was a double dip in the Great Depression, which we didnt really start digging out of until the later 1930s,  partly due to "prepardness" defense spending, which was another form of simulus.

 

As we can see there wont be any defense spending stimulus,  either, this time around, since we should be widing down from the shooting war aspect of the WOT, and theres no Cold War competition in the offing, yet, with a rival superpower (which helped goose the post WWII economy).

 

This economic situation should get interesting, should we slip back into recession. 

 

 

 

 

 

 

 

 

 

 

Britain was buying armaments in the United States to  fight the Huns.  That spending is what started the recovery. 

 

At that time, Republicans like Ohio Senator Taft played to the isolationist electorate.  They were on the wrong side of history, again.

An article well worth reading. Its nice to see some of the MSM starting to connect the dots and see just how much junk has been feed to the American public.

 

Housing rebound? Let’s find the bottom first

 

"By now it’s obvious to all that housing, like tulips and dot-com stocks, was a classic speculative bubble. But the thing most people don’t appreciate about speculative manias is that it can be decades, if ever, before asset values or prices revisit the lofty levels seen during the peak of the mania."

 

"For all the gold fever of late, prices when adjusted for inflation remain more than 40 percent below the all-time peak in 1980. Or, consider the tech stock-dominated Nasdaq index, which is 46 percent below its 2000 peak. Tulips, meanwhile, found a bottom 475 years ago."

 

"Baker was among the first to warn that the run-up in home prices was a speculative mania that would end badly. His 2002 paper was met with scorn far and wide. The Joint Center for Housing Studies of Harvard University responded with its own study that declared there was little basis for concern about a housing bubble."

 

"Few were as dismissive of Baker’s research as David Lereah, then the chief economist for the National Association of Realtors. Lereah’s 2006 book, “Why the Real Estate Boom Will Not Bust — And How You Can Profit From It,” occupies a special shelf in the business canon, alongside James Glassman’s late 1999 tome, “Dow 36,000.”

 

"Baker worried in 2002 that housing prices nationally could fall as much as 22 percent, wiping out $2.6 trillion in household wealth. The plunge proved even deeper because the bubble kept inflating for four years longer. Nationally, average home prices are 34 percent below their 2006 peak, according to the S&P/Case-Shiller Index."

http://www.startribune.com/business/123127288.html

Britain was buying armaments in the United States to  fight the Huns.  That spending is what started the recovery. 

 

At that time, Republicans like Ohio Senator Taft played to the isolationist electorate.  They were on the wrong side of history, again.

 

I'd check your math on that.  The British were so broke they had to give away their empire to finance weapons aquisitions.  For instance the US received new bases in return for World War I era destroyers via the Lend Lease act.

 

Much of the defense spending was domestic.  The problem today is we have never stopped spending on defense, so a good war doesn't even help our economy. 

Britain's quicker recovery in the Depression had more to do with certain changes made within the British Empire that boosted metropole economy than their spending heading into WWII - GBR was rather late to the arms run-up to WWII anyway.

Food prices climb further at grocery stores

Milk up 16 cents a gallon, cereal up 12 cents a box, says survey

 

"SAN FRANCISCO (MarketWatch) — Shoppers paid 4% more for a basket of 16 food items at the supermarket in May compared to February, the American Farm Bureau Federation said Thursday in its latest informal survey."

 

"Whole milk was up 16 cents to $3.62 a gallon, while toasted oat cereal cost was up 12 cents to $3.17 for a nine-ounce box, the American Farm Bureau said in its quarterly poll based on 72 shoppers in 30 U.S. states."

http://www.marketwatch.com/story/food-prices-climb-further-at-grocery-stores-2011-06-09?dist=afterbell

....while toasted oat cereal....

....which is I guess another way of saying "Cheerios".

 

My  breakfast is frequently Cheerios and milk (non fat or low fat, now whole) (with honey for sweetners & berries sometimes)

 

Even basic stuff is going up. 

 

 

 

 

When this discussion began, many where convinced that Cincy and other would never fall like this. Clearly the numbers are not Arizona, Florida, California, Nevada looking, but they are now in the signficant decline catagories. What is noticeable is that the price declines are increasing in places like Cincy, Cleveland, and Columbus.

 

Home prices fall in Cincinnati-Middletown MSA

 

"Quarter-over-quarter home prices in Cincinnati-Middletown fell 4.1 percent and 12.5 percent compared to last year – ranking the area 12th-worst among major metros – according to Clear Capital’s monthly Home Data Index Market Report."

 

"Cleveland and Columbus both performed worse than the Queen City, according to the data."

 

Read more: Home prices fall in Cincinnati-Middletown MSA | Business Courier

http://www.bizjournals.com/cincinnati/news/2011/06/09/home-prices-fall-in-cincinnati-middletow.html

 

Below is quick look from the Ohio Realtors Assocation Data for average sale price. The summer of 2005 was the general peak in prices in Ohio with May, June, July being some of tops. Unless average prices increase noticably in May, June,and July the percent declines will grow rapidly in the next few months. Quick example -  in May 2005 (Cincy) the Average price rose to $182,336, June $184,226, July $190,567 (peak in sales prices). If price declines stop in April the overall decline will be about 25% for Cincy. Of course most are not predicting that the market is at the bottom yet. Up to this point for the big 3, Columbus has preformed the best, then Cincy and finally Cleveland.

 

Cincy:

April 2005 - $171,413

April 2011 - $143,650

 

Columbus:

April 2005 - $173,143

April 2011 - $154,205

 

Cleveland:

April 2005 - $167,340

April 2011 - $118,955

http://www.ohiorealtors.org/news/stats/index.aspx

 

Another point of view on these numbers. Cincy is now back to where prices were in 2000, Columbus has returned to their price points of 2001, and Cleveland has now fallen back into the 1990s. This means that the price gains over the last decade are now gone and further decline is still expected. Good news for affordability, bad news for most that bought over the last 10 years or took out some nice Home Equity along the way.

"Cleveland and Columbus both performed worse than the Queen City, according to the data."

 

Cincy:

April 2005 - $171,413

April 2011 - $143,650

 

Columbus:

April 2005 - $173,143

April 2011 - $154,205

 

Looks like Cbus did better, based on these data.