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economic crisis: Ben Bernanke Spoils the Urgency Argument for Home Sellers - 08/22/11 03:11 PM
Just when you think the housing market can’t get more difficult, Ben Bernanke spoils the urgency argument for home sellers. The Fed’s recent commitment to maintain historically low interest rates for the next two years has erased hope for many who were waiting for buyers to purchase due to concerns over the potential for rising rates. Additionally, concern over falling home prices has many buyers confident that playing the waiting game is to their advantage. And with conditions as they are, it’s hard to disagree. 
 
Overall, this is not good news for sellers—and not good news for the rest … (14 comments)

economic crisis: Forget Consumer Confidence and Focus on Jobs - 08/16/11 12:11 PM
News reports and politicians continue to remind us that our economy won’t recover until consumers feel more positive, but it’s time to forget consumer confidence and focus on jobs.  Confidence isn’t created by oratorical prowess; it follows when real and positive events occur.  Show consumers a trend of significant jobs creation and the U.S. will be deluged with confidence.
All too often our leaders focus upon the symptoms, ignoring the actual problem.  And sometimes (actually, most of the time) it appears that politicians, economists and pundits are trapped in an alternate reality where the laws of economics do not apply.  … (14 comments)

economic crisis: Coping with the Structural Changes in Housing - 05/18/11 05:04 PM
Coping with the Structural Changes in Housing
 
I recently received an email from a Twitter follower accusing me of “yellow journalism,” the practice of presenting biased, exaggerated or distorted stories as objective fact with little or no effort to substantiate the claims being made.  The email even included a definition of “yellow journalism” from Wikipedia.
 
The writer was complaining about my constant posting of negative news regarding the housing market and implying that my posts as well as negative stories in the media were responsible for consumer perceptions of the housing market; and to a degree, that part is … (12 comments)

economic crisis: Confused by the Employment Numbers? - 02/04/11 07:14 PM
Don’t be embarrassed if you are confused by the January employment numbers; even the Labor Department admitted that this week’s report, on the surface, didn’t make sense.  And that’s really the key—looking at the numbers on a weekly or even monthly basis provides little understanding of where we’re headed.
 
While the Administration and some pundits seemed elated that unemployment dropped from 9.4% to 9%, a quick study of the trends and overall numbers reveals that we’ve made no progress towards providing employment for the millions who lost their jobs during the recession.  On average—and there’s some disagreement on the exact … (15 comments)

economic crisis: Unemployment and Why Housing Continues to Struggle - 12/03/10 01:36 PM
Unemployment and Why Housing Continues to Struggle
Each month when the Labor Department releases the statistics on unemployment and job creations, the numbers often do little more than confuse. Some months it looks as if they’re improving and others they seem to reflect a recession that won’t leave.
 
The employment numbers as reported often have little significance in the short-term, as they do sometimes fluctuate wildly; and they don’t always paint an accurate picture. For instance, while this month’s report showed an increase in the unemployment number from 9.6% to 9.8%, it only includes those who are actively seeking jobs. … (14 comments)

economic crisis: The Unholy Alliance of Wall Street, Big Banks and Government - 10/22/10 03:07 PM
Foreclosure-Gate, as it has aptly been named, has exposed yet another layer in the dishonesty that seems pervasive in our culture; and far from an anomaly, it seems emblematic of the unholy alliance of Wall Street, big banks and government.  And we have all become jaded to the stories.  Sure, we may protest and complain, but we do nothing to bring about the dramatic changes necessary to reverse the trend.  And if we fail to let our political leaders know that we are unwilling to tolerate their continued participation in the destruction of our economy, we’ll deserve the ultimate consequences.
 
… (66 comments)

economic crisis: A Foreclosure Moratorium Won't Solve The Problem - 10/13/10 08:26 PM
While recent news stories have focused upon the “robo-signing,” of foreclosure documents, including some allegations of forgery and fraud, a foreclosure moratorium won’t solve the problem.  The securitization of mortgages and the potential processing of illegal foreclosure documents are merely components of the crisis they helped spawn; the issue that has yet to be addressed is negative equity.  Until the banks and political leaders can agree upon a solution, the economy cannot begin a path towards robust growth. 
 
The packaging of mortgages and Wall Street’s insatiable thirst for more—more profits required that more mortgages be created, causing banks to … (46 comments)

economic crisis: The Recession’s Over—Too Bad They Didn’t Tell The Folks - 09/20/10 04:35 PM
A report released today from the National Bureau of Economic Research announced that what we’ve been affectionately referring to as The Great Recession is over. In fact, most of us missed the celebration because the official ending was June of 2009. I can’t imagine how I could have been unaware of such a significant event.
 
I’m embarrassed that I failed to notice when the recession ended and want to spread the word to all those who, like me, may have missed such a monumental occurrence. I especially want to share the good news with the following:
 
● The 20 … (23 comments)

economic crisis: The Real Unemployment Picture - 09/04/10 01:37 PM
While politicians keep telling us that the unemployment picture is improving, a quick look at the numbers for home, auto, and retail sales, as well as the consumer confidence index paints a different picture. With millions of unemployed and millions more underemployed, we may be bleeding jobs less rapidly, but we’re far from being “on track.”
 
Take a look at the following graphs from Calculated Risk; they paint the real unemployment picture, a stark portrayal of how far we’ve fallen and how far we have yet to go.

 
 
 
 
 
 
 
 
 
 
 
… (12 comments)

economic crisis: Burst Bubbles Don't Re-inflate - 09/02/10 08:42 PM
Those awaiting the "recovery" and anticipating a return of their home's pre-recession value will probably have a longer than expected wait. Home prices of 5 years ago were artificially inflated by the housing bubble, and burst bubbles don't re-inflate. A couple of examples can be seen in the stock market bubble that led to the Great Depression and the Dot-com crash of 2000.
 
The Roaring Twenties and the Dot-com bubble created many pseudo investors who for a brief time may have profited handsomely, but fortunes were also lost when the bubbles burst. And a look to the stock market trends … (26 comments)

economic crisis: I See a Bad Moon Rising - 08/24/10 10:14 PM
In 1969, and during a time of national turbulence, the group Creedence Clearwater Revival (CCR) released the song, Bad Moon Rising which rose to the top of the charts. Some of the words remind me of where we are today.
 
I see a bad moon rising
I see trouble on the way
I see earthquakes and lightin’
I see bad times today.
 
Today bad news is breaking records: Home sales have fallen off a cliff; foreclosures are up; long-term unemployment is at record highs; consumer confidence is retreating; bankruptcy has climbed to highest since 2005. … (23 comments)

economic crisis: Inflating the Next Bubble - 07/31/10 05:41 PM
In the beginning of the first George W. Bush administration the U.S.  was experiencing the aftershocks of what is referred to as the “the bursting of the dot com bubble,” the collapse of tech stocks. Wanting to avoid beginning an administration with a serious economic downturn, the President, in concert with his financial advisers, decided to cut taxes and pump money into the economy as a means of avoiding recession.
 
Their strategy seemed to work. As the country drifted into an eight month recession—near the end of which September 11th occurred--Fed Chairman, Alan Greenspan, lowered interest rates and the economy, … (26 comments)

economic crisis: The Precarious Position Of The American Economy - 06/04/10 05:27 PM
I’ve recently been planning a comprehensive blog post on unemployment and how it will impact the economy for years to come; and I had planned another on the explosive impact of the sovereign debt crisis. But the two issues are so inseparable that I will deal with both as well as other serious problems facing our nation.

I believe the U. S. economy to be in the most precarious position of my lifetime; and though I’d like to believe there is a pathway leading towards recovery, I fail to see it. I’m not optimistic about the recovery in the stock … (74 comments)

economic crisis: The Economic Crisis May Not Be Resolved - 05/10/10 07:40 AM
Every day I become more concerned that the economic crisis may not be resolved—at least not in the short term. I believe that those who are waiting for some magical government effort will still be waiting a year from now. High unemployment and economic turmoil have become the norm. When we look to what’s happening in Europe, and Greece in particular, we may be looking into the potential future of the U.S.
 
So why would my analysis of current events generate such a negative point of view? Are there facts that might give credence to my pessimism? I believe so. … (22 comments)

economic crisis: Unemployment Experiencing A “Structural” Increase - 03/31/10 09:24 PM
In a presentation made today, Dennis Lockhart, President and CEO of the Atlanta Fed has predicted only a modest economic recovery with unemployment experiencing a “structural” increase. Lockhart pointed out several reasons why employment may be establishing a new normal, with rates to remain above those of past years as jobs are eliminated, workers have difficulty relocating, and a great number of applicants lack the skills necessary for employment.
 
While the report attempted to add a positive spin to the facts, it seems clear that the expectation is for a recovery unlike those of past recessions and one that will … (37 comments)

economic crisis: What Do The Employment Statistics Really Mean? - 01/09/10 09:22 AM
Okay, we’ve heard that the jobless rate increased in December, but what do the employment statistics really mean? Friday’s employment report indicated that nonfarm payrolls fell by 85,000 workers, with total job losses for 2009 standing at more than 4 million. Additionally, the report indicated that the November number had been revised to show a gain of 4,000 jobs. Some reports seem to place a positive spin on the numbers, pointing out that the overall unemployment rate failed to climb above 10%, and that December was the fifth consecutive month that hiring at temporary help services has increased.
 
So, what … (20 comments)

economic crisis: The Effect Of Unemployment Upon Housing For 2010 - 10/02/09 07:34 AM
For the eighth consecutive month, year over year job losses have increased in all 372 U.S. metropolitan areas, and many are concerned about the effect of unemployment upon housing for 2010. How do job losses relate to the recovery and, more importantly, to the coming year? As a lagging indicator, employment is said to follow the economy, so it’s logical that we not expect joblessness to decline until the economy is improving. However, while employment may follow economic trends, it is an important indicator of what we can expect in the short term; and the relationship to the housing market is … (96 comments)

economic crisis: Housing Predictions For 2010 And Beyond - 09/20/09 05:15 PM
Okay, I’m going to do something I normally avoid; I’m going out on a limb and publicize my housing predictions for 2010. While I occasionally discuss general trends and opinions about the market, I think it’s important for all of us to have as much information as possible in order to properly plan our futures. And while this is only my opinion, after all, it’s the only one I can offer; it’s based on 4 decades of experience combined with careful observations of current trends and conditions. Here is what I see for the future of housing:
 
I think the … (206 comments)

economic crisis: Banks Seem More Stressed-Out Than Stress-Tested - 09/05/09 09:15 AM
Perhaps the bank “stress tests” should have included a prescription for Valium, for many banks seem more stressed-out than stress-tested. When the results of the bank stress tests were announced, the government proudly proclaimed that the banking system was sound, that banks would be able to handle whatever adversities the economy could dish out. The results also showed an expected baseline for unemployment and a worst case scenario, and Treasury Secretary, Geithner assured us that their calculations demonstrated that our banking system could withstand a worsening economy.
 
But the stress tests didn’t imagine that the economy might sink below their … (11 comments)

economic crisis: Can The Financial Crisis Be Attributed To Our Educational System? - 09/02/09 03:14 PM
I was recently thinking—something I try to do weekly—about the collapse of the housing market and some of the more subtle causes. And I came to a conclusion that I found astounding, or at least it was for me. More than the greedy bankers, and self-serving Realtors®, who have been blamed by many, I believe the economic crisis was in great part due to our pathetically poor educational system; and I have some solid facts to back my conclusion.  And there are consequences of this problem that require action, consequences  which reach far beyond consumers lack of financial prowess.
 
The … (30 comments)

 

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