Recession, What Recession?

There’s no recession, or so says the Treasury Department.  Old Washington still using old ways to measure things. I am not saying the GDP doesn’t matter, but when people have to leave their jobs due to high gas prices or move closer to work, why not measure that impact?  And the impact on the common items we have to buy (like breakfast cereal and bread) whose prices have been driven up by high fuel costs.  Oh and I won’t mention the housing problem.  Poor Ed McMahon.

Treasury Department official says the US is not in a recession

Figures – Barack Obama wants More Government

Earlier this week John McCain stayed in the news by addressing what he feels the role of government should in addressing the mortgage crisis. Basically, he takes a hands off approach. There is some justification for this. Bailing people out who made bad decisions shouldn’t be the job of the government. What happened to personal responsibility? That’s the basis behind what McCain is saying.

Then along comes communist Barack Obama – he says to tighten government regulation on the mortgage industry. That’s just another way of saying more government control on free enterprise. That’s a typical socialist democrat way of looking at it. Cast the blame on places other than the source. I have said before and I’ll say it again ; the people who signed those mortgages didn’t do so at gunpoint. That was an uneducated move on their part and Obama would like to use our tax dollars to fund those bad moves. Where will he get the money? From Iraq?

Obama Urges Tighter Regulation in Wake of Housing Slump

Is Renting more Prestigious now?

George Bush has tried to bail out the Subprimes. What do we give him? C Minus for some minimal effort? Even he said it’s not a complete solution, only a band-aid on a big problem.

I wonder if this will finally deflate the bogus “American Dream” image of home ownership. Home ownership at any cost and you’ll be living your American Dream! Will people still buy that now?

It used to be that renters were considered the bottom of the home barrel. Renters were the scum of the neighborhood, the low life. I wonder if that’s true anymore? Renters in most places have to jump through more hoops than the people who signed onto those subprime loans. Except for the real slums, renters have to submit to credit checks and provide income verification. Much of the stringency that is placed on renters was simply overlooked in the subprime loans.

What will that do to some of the ‘bubble markets’ like Florida and California? Will this create ’subprime ghettos’? It’s beginning to look like renting is not such a bad option after all.

No Quick Fix for Subprime Mortgages

Brownback – Give us Lower Rates for Christmas

Ben Bernanke gave his report to the Doolittle Congress this week and it was not sounding good. Now that Brownback is out of the President business, he has Christmas to worry about:

In an early sign of the political pressure that the Fed is likely to face if the economy falters next year, Senator Brownback, who recently abandoned his Republican campaign for president, pleaded with Mr. Bernanke to cut rates in time for the Christmas shopping season. “It seems to me that now is the time,” Mr. Brownback said. “When those gas prices get up to $3 a gallon, it seems to hit some sort of psychological point in consumer’s mind that I have less to spend, and that’s a reality for them.”

When those gas prices get up to $3 a gallon? I guess gas must be cheaper in Kansas because it’s around $3.30 here and has been for quite a few weeks. The next hop is $4 a gallon. But gas prices are not the only problem.

Last summer I ran across this article from the Seattle Times One thing missing in jobs boom – high pay. The article analyzes the recovering job market of the past few years in light of what it considers to be high paying jobs. It found that in the so called recovery, these types of jobs were few and far between. While that article talks about the Seattle region, I suspect it can be applied to lots of other places in the US.

More and more people are working at Mcjobs now and have less to spend this Christmas. Spending power is decreasing. All of which leads me to wonder: Did we ever actually get out of the last recession?

Fed Chief Warns of Worse Times in the Economy

Foreclosures – Who is Surprised?

Sub prime foreclosures continue to haunt the financial news. Had I started this blog back in ‘02 or ‘03 when these loans were being peddled, I would have said then “that’s a bad idea”.  Any adjustable rate mortgage, based on payments when interest rates were as low as they were, is like playing Russian Roulette with all the chambers loaded!  The only sensible things to buy when interest rates are low are short term assets like cars (where you can pay them off in a few years) or other short term loans. 

A bigger question is who’s to blame here?  It’s easy to blame the buyers for not reading between the lines and not applying some critical thinking before they signed on the lines.  Not everyone can do that however, and the lenders need to bear some responsibility here as well.  They knew the danger of such sub prime lending in low interest rates yet they led the buyers into these deals.  The buyers merely bought the “American Dream” pitch of owning your own home.  Few people really “own their home”; the banks own them.  People just make payments.  In the right market and under the right conditions, those become equity payments.  But in the wrong market, it’s worse than paying rent!

Foreclosure Filings Soar in 3rd Quarter