Economist Chris Low, says that barring any more unforeseen credit crises, he believes that the housing slump has hit bottom and that it should be on the steady improvement and/or stabilization throughout this year.
Below’s audio broadcast on Jan 27th addresses housing starting at 8’25” in approx. But Low’s overall assessment of just when prices, GDP and recovery rate of America vs Europe and Asia are all worthy of a full listen.
This holds with what I am both seeing locally, and hearing nationwide from other friends. FHA loans are relatively prevalent, and convention loans on on the uptick. He dares to use the word “optimistic”…. oh my.
He does caution this doesn’t mean life instantly improves. Just as the problems manifest themselves in sequence, there is a recovery sequence as well. Overall, a couple of years of deflation, less money to spend, etal. But it’s likely that the US economy will recover before the foreign markets.
And speaking of the foreign economies, it’s uncanny how the news parallels the US consumers’ attitudes towards the too common government bail outs and meddling in the economy.
For example, this from Feb 9th in the Daily Express out of the UK, titled HOW LABOUR AND THE BANKERS ARE RIPPING US ALL OFF!
TOP bankers and Labour politicians are made for each other. Arrogant, hypocritical and incompetent, they are both groups of money-grabbing parasites.
The bankers have their endless bail-outs, the politicians their flood of generous expenses.
It is nauseating that ordinary taxpayers are forced to hand over a sizeable chunk of their incomes to maintain the privileged life-styles of these leeches while the rest of the country sinks deeper into recession and mass unemployment.
What is even more offensive is that they have done nothing to deserve a penny from the public. Instead, with their disastrous policies, they have dragged Britain to the brink of ruin.~~~
Equally reprehensible is the continuation of the lavish bonus culture in the banking system. This climate of greed
was bad enough when the banks were in the private sector but now, with most of them propped up by the taxpayer, it is wholly unjustifiable.
Yet without any sense of shame the Royal Bank of Scotland is talking about paying its staff £1billion in bonuses this
year, the money to come directly from the £20billion that the government recently handed over to RBS to stop it
completely collapsing. In the present banking shambles the belief that anyone at RBS should be entitled to a bonus is a disgrace.
Bonuses for what? For helping to create the biggest financial disaster this country has seen since the twenties? Anyone still working in top management at the banks after the recent debacle should just be grateful that they still have a job, unlike so many who been thrown on the scrapheap as a result of the financial sector’s epic recklessness.
Then there’s this gem from the Telegraph in UK, European bank bail-out could push EU into crisis.
A bail-out of the toxic assets held by European banks’ could plunge the European Union into crisis, according to a confidential Brussels document.
“Estimates of total expected asset write-downs suggest that the budgetary costs – actual and contingent – of asset relief could be very large both in absolute terms and relative to GDP in member states,” the EC document, seen by The Daily Telegraph, cautioned.
“It is essential that government support through asset relief should not be on a scale that raises concern about over-indebtedness or financing problems.”
The secret 17-page paper was discussed by finance ministers, including the Chancellor Alistair Darling on Tuesday.
National leaders and EU officials share fears that a second bank bail-out in Europe will raise government borrowing at a time when investors – particularly those who lend money to European governments – have growing doubts over the ability of countries such as Spain, Greece, Portugal, Ireland, Italy and Britain to pay it back.
The Commission figure is significant because of the role EU officials will play in devising rules to evaluate “toxic” bank assets later this month. New moves to bail out banks will be discussed at an emergency EU summit at the end of February. The EU is deeply worried at widening spreads on bonds sold by different European countries.
In line with the risk, and the weak performance of some EU economies compared to others, investors are demanding increasingly higher interest to lend to countries such as Italy instead of Germany. Ministers and officials fear that the process could lead to vicious spiral that threatens to tear both the euro and the EU apart.
“Such considerations are particularly important in the current context of widening budget deficits, rising public debt levels and challenges in sovereign bond issuance,” the EC paper warned.
But for the countries and phrasing, hard to tell much of a difference in the reporting, eh?
These parallel courses of many of Europe’s western economies with the US troubled financials is often ignored by the US media. The thing is, some of these countries are ahead of the US with government intervention and taxpayer funds injections… none of which seems to be working, but all seem to be jeopardizing their appeal for foreign investment loans.
But then, some of them are behind the US timeline in the status of their “meltdown”, as many like to call this. Just as Chris Low points out, New York state was the last to show the meltdown, it will probably be the last have the indicators of recovery. Economic healing takes time… and per history, less time if the government doesn’t help.
But all in all, some economists and many indicators are pointing to the slow 180 degree turn from freefall to some stability… which then leads to a recovery.
How can this be without Obama saving us from the “catastrophe” he promises if the stimulus doesn’t pass?
Because the stimulus never had one thing to do with turning around the economy. It was merely about using the economy as an excuse to a gullible public to accomplish just about every Dem dream for spending for the past decade and a half.
So how will this be received? Well, we just may have a few liberals chuckling over what they believe is going to be an Obama “coup” (yes, Larry… I heard what you said…).
Now, in the interest of fairness and disclosure, Larry W, tho one of our resident liberal-think types, is also not in favor of this massive spending spree planned. But he does point out some very astute political points on just how Obama may be going to be perceived as the savior. And, if timing is correct, the nation will attribute his spending with his “cure” of the “catastrophe”.
Factually wrong, of course. But then… “give it to Mickie… he’ll eat anything” applies here.
Larry’s “coup” theory?
Strictly as a political move, Obama is in the process of pulling off one of the great coups in history. He’s
(1) convinced everyone that there’s a financial crisis of epic proportions;
(2) he’s got the GOP on record as being squarely against him;
(3) he’s got a stimulus package passed and shortly signed into law which fulfills most of his major campaign promises relating to economic matters. When the economy rebounds ahead of schedule, which it will, he’s going to look like a hero and the GOP is going to look like fools.
I believe that Larry is correct…. at least for the short term. Take for example an “inspirational” Obama, visiting a Virginia construction site yesterday where he announces that Caterpillar… who just laid off about 22,000 people from their plant in the last couple of weeks… is ready to rehire those employees *when* the stimulus package gets passed.
My my… in one fell swoop, this big time spending “saves or creates” at least 22,000 out of those promised jobs, right? How magical…
Or as a Money Morning article from the day before stated, lamenting the doom’n’gloom of the layoffs:
Caterpillar is viewed as an economic bellwether for its connections to the construction and mining industries, its forecast focuses even more attention on the details of President Barack Obama’s $825 billion economic stimulus plan and, in particular, what it might hold for infrastructure spending.
As political fodder goes, this is gold. But what’s the actual truth? Again from the ODEO site, another radio broadcast from Jan 27th speaking of Caterpillar’s layoffs, and why.
Summary? Much of Caterpillar’s contract business comes from international government projects. This includes not only a slow down in new construction for US projects, but for the other developed nations in the world. As existing projects wound down, and no new contracts on the horizon for contractors globally, they tightened their belt. They are not, however, expected to ask for bailout cash.
And this is what Obama banks on – full re’employment immediately to fill orders – to gain personal points and future political capital with the stimulus passage. Remember, with Obama, it’s only about making him look good for his duration. After that, the history books can pass the blame on to someone else.
But it’s a big bet on the POTUS’s part. Will Caterpillar need so many employees to return to building new equipment to meet new orders? Or will much of the privately owned equipment – sitting idle after finishing current contracts – just be activated to fill new contracts?
Proof only comes in the pudding. But no one follows up on promises. For now, it sure sounds good on the post-campaign trail to promise full return to work when drumming up public support for proposed exorbitant spending. Truth becomes optional…
But back to Larry’s spot on “Obama coup”… is it possible that Obama will end up taking credit for an economic cure for which he deserves no credit? This is where I disagree with Larry.
Forming his foundation is the basis that the Iraq spending is less effective or popular than what the stimulus proposes. But there is a huge difference, IMHO.
The Iraq spending is considerably less outlay financially. Larry’s overblown costs are including everything from anticipated medical costs for veteran care, etc.
Even factoring in those regrettable costs – much of which could be offset by not offering medical care to illegal aliens – there is nothing comparable between the justifiable federal expenditure on national security and this stimulus. Iraq costs are not likely to trigger inflation, raised interest rates to control that inflation, and the effect of this on a recovering economy.
Then, of course, Iraq spending doesn’t entail socialization or (part or full) nationalization of private industry. Spending on our national security doesn’t impose government limitations – and intrusive marketing/production decisions – on a private industry. Defense spending does not open the door to to nanny micromanagement by the feds when they accept government bailouts.
On one hand, I absolutely agree that federal contract bids for construction and improvement of roads can have a beneficial effect. On the other, it truly depends upon how those bids are awarded and how wisely that money is spent.
As with most government agendas, not only is money *not* wisely spent, but agendas are imposed. And in an Obama administration, we are already promised an affirmative action agenda on government bids.
Per Robert Reich, Obama’s economic advisor:
… criteria can be set so that the money goes to others [not “white construction workers] … the long term unemployed, minorities, women…people who are not necessarily construction workers, or high skilled professionals…
Charlie Rangel doesn’t do much better in the video, BTW…
H/T to Sweetness & Light for the easily findable link
In the meantime, how goes the battle to drive America’s future generation into unbelievable debt for the Obama/Pelosi/Reid’s economic experiment?
Well… there’s no doubt it will be passed. But there will be the disgruntled on both sides.
For the GOP pretending, for a change, to be fiscally conservative, it matters not. As long as Reid has Collins, Spectre and Snowe in tow, it’s a done deal in the Senate. For the House? The GOP can just take a vacation. They needn’t bother to show up for the day because even with a full united “nay” vote, they are powerless to stop the bill.
But according to even the Obama devotee, McClatchey’s there’s more than a few disgruntled on the Dem side as well. Not because, mind you, they are against the philosophy of spending. But merely because their particular pork is some of the expendable garbage being tossed out for show.
Yes… it could actually be that Obama may be able to take credit for an economy that is improving despite him. The question for our nation’s future is, for how long? And is the damage he and the Dem controlled Congress can impose reversable?
Vietnam era Navy wife, indy/conservative, and an official California escapee now residing as a red speck in the sea of Oregon blue.