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Goldman Sachs Sees (Even) Worse Recession, Higher Unemployment
Tweet Share on Facebook November 21, 2008 Comment (8)More bad news: Goldman Sachs issued another downward revision to its economic forecast this morning. The firm says the revision is a response to tightening financial conditions, which it blames on policy impasses in Washington.
We have marked down our forecasts for US real GDP in response to continuing signs of falling domestic and foreign demand, labor market deterioration, renewed tightening in financial conditions, and an apparent impasse in fiscal policy pending the transfer of power to the Obama administration in late January. As a result, we expect the unemployment rate to reach 9% by the fourth quarter of 2009, profits to fall 25% for 2009 as a whole following an estimated 10% drop this year, and the Federal Open Market Committee (FOMC) to use nontraditional policy tools more aggressively, as detailed below…
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Neel Kashkari Appears in People’s ‘Sexiest Men Alive’ Issue
Tweet Share on Facebook November 20, 2008 Comment (4)While the Bush Administration has been sharply criticized for its response to the worst financial crisis since the Great Depression, at least one member of Hank Paulson’s team apparently still has some fans.
After being grilled by lawmakers over his agency’s handling of the $700 billion bailout, Neel Kashkari received a warm (steamy?) reception from the editors at People magazine, who included the 35-year-old Treasury official in their annual “Sexiest Men Alive” issue, The Wall Street Journal reports.
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Sen. Dick Durbin: Let Bankruptcy Judges Alter Distressed Mortgages
Tweet Share on Facebook November 20, 2008 Comment (3)The issue of bankruptcy reform--allowing bankruptcy judges to change the terms of distressed mortgages on primary residences--is set to take a higher profile in next year’s congressional debate over how to fight foreclosures.
With the election putting a Barack Obama in the White House and expanding democratic majorities in Congress, bankruptcy reform’s outlook has brightened. But a tough fight with the industry looms, and enactment isn’t at all certain at this point. The industry argues that such changes to existing law would result in higher mortgage rates--the last thing the downtrodden housing market needs.
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Foreclosures in Detroit’s County Run 137 Pages (and That’s Newsprint)
Tweet Share on Facebook November 20, 2008 Comment (2)With the heads of Detroit’s automakers on Capitol Hill this week begging the Feds to bail them out, it’s a good time to check in on the area’s housing market. As you can see from this video, the situation in the Detroit area is pretty terrifying already:
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Housing Starts, Permits Hit Record Lows
Tweet Share on Facebook November 19, 2008 CommentThe government reported Wednesday that housing starts hit record lows in October, falling 4.5 percent from September and 38 percent from year-ago levels. Permits dipped to record low levels as well, plummeting 12 percent from September and 40 percent from October 2007.
And Richard Moody, chief economist at Mission Residential, says the residential construction sector isn’t done breaking records yet. “Just as in the sporting world where, we are always told, records are meant to be broken, coming months will likely see starts and permits set new lows,” he said in a report.
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How Much Bailout Cash Will Barack Obama Have?
Tweet Share on Facebook November 19, 2008 CommentDuring a hearing in the House Financial Services Committee Tuesday, Treasury Secretary Hank Paulson indicated that he would leave a significant chunk of the $700 billion bailout fund for Barack Obama's new administration to allocate.
"If we have learned anything throughout this year, we have learned that this financial crisis is unpredictable and difficult to counteract," Paulson said in his prepared testimony. "So early last week, we concluded it was only prudent to reserve our TARP [Troubled Asset Relief Program] capacity, maintaining not only our flexibility, but that of the next administration."
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Map of Pain: Cities With the Largest Home Price Declines
Tweet Share on Facebook November 19, 2008 Comment (1)The National Association of Realtors said Tuesday that home prices declined in 4 out of 5 metro areas in the third quarter when compared with the same period a year earlier. The trade group blamed distressed sales—that's foreclosures and short sales—for driving the median existing single-family home price down 9 percent, to $200,500, over the period.
Here's a map showing where the declines have been the steepest:
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Home Builders to Feds: Prop Up the Housing Market
Tweet Share on Facebook November 19, 2008 CommentAmid rising unemployment and continued turmoil in the financial markets, builder confidence in November dropped to record lows, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI).
With the index now at its lowest point since its 1985 inception, home builders are asking—you guessed it!—Uncle Sam for help:
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Are Bailout Funds for Foreclosure Mitigation? Frank Vs. Paulson
Tweet Share on Facebook November 19, 2008 Comment (9)I didn’t see the entire House Financial Services Committee hearing, but I did catch this exchange between Chairman Barney Frank, a Massachusetts Democrat, and Treasury Secretary Henry Paulson.
The exchange is a great illustration of the disagreement between Paulson and many Democrats--as well as FDIC Chairman Sheila Bair, a Republican--as to whether bailout funds should be used to prevent foreclosures.
From my transcript (I watched the hearing on C-SPAN):
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Deadbeat Trend: Distressed Homeowners Dodge Creditors in Texas
Tweet Share on Facebook November 18, 2008 Comment (1)If you’re behind on your mortgage and looking to dodge creditors, forget the Cayman Islands--Texas is the place to be.
Texas laws are apparently more lenient for debtors looking to shield assets form creditors. “Distressed borrowers can hang on to luxury cars, a primary residence, paychecks, retirement accounts, and even jewelry that creditors might claim elsewhere,” Bloomberg reports.
As a result, a growing number of troubled mortgage holders from housing boom states--like California and Florida--are moving to the “Lone Star State.”
