Thursday, February 14, 2008

Home Prices In Steepest Quarterly Drop

The largest investment for most Americans has taken a really nasty fall.
Home prices continued their plunge during the last three months of 2007, setting a real estate trade group's record for the biggest-ever quarterly drop.

The national median price drop of 5.8%, to $206,200 from $219,300, was the steepest ever recorded by the National Association of Realtors (NAR), which has been compiling the report since 1979.

NAR officials blamed the liquidity squeeze that began last summer for much of the drop. Home buyers had trouble obtaining mortgage financing, especially for more expensive properties.

"The continuing crunch in the jumbo loan market that began in August has disproportionately reduced the number of transactions in higher price ranges," said Lawrence Yun, NAR's chief economist, in a statement.

Fewer expensive homes were sold, bringing down median prices.

"California, south Florida, D.C., many of the high-cost markets are reflecting that," said Walter Molony, a spokesman for NAR.

Each of the four U.S. regions recorded losses compared with the fourth quarter of 2006. The West took the worst hit, at 8.7%. Prices dropped 4.8% in the Northeast, 5.4% in the South and 3.2% in the Midwest.
Prices would not be dropping so quickly if it wasn't for the fact they were artificially high as a result of the subprime mortgage debacle and other mortgage products that allowed people to bite off more than they could chew.

It was a catch-22. You really couldn't afford the house but you also could not afford not to buy the house because next year it would be even less affordable. Like any giant ponzi scheme the market eventually collapsed and took a whole lot of people with it. Our economy is a mess as a result of bad decisions on Wall St. and the endless desire for ever larger profits. The Federal Government will bail the companies out at taxpayer expense and leave the citizens twisting in the wind.

It has once again been proven that we must regulate the financial industry with strict standards. This idea that industry will police itself is utter bullshit and the proof is in the economic state we find ourselves in.

Tuesday, February 12, 2008

Budget Deficit Nearly Doubles

Who would want to be the next President after this administration has run us into a whole so big we may never get out?
The federal budget deficit is running at a pace that is more than double last year's imbalance through the first four months of the budget year.

In its monthly review of the government's finances, the Treasury Department said Tuesday that the budget was in surplus in January, but totals $87.7 billion so far this budget year, double the $42.2 billion imbalance recorded during the same period in 2007. The new budget year started last Oct. 1.

The Bush administration sent its final budget request to Congress last week, projecting that the deficit for all of 2008 will total $410 billion, very close to the all-time high in dollar terms of $413 billion in 2004.
The amount owed by every American just continues to grow. They talk so much about the death tax but what about the birth tax? That is the amount of debt each citizen is saddled with as a share of the national debt. Oh and always remember that these figures do not include the war costs which are considered "supplemental". Do you still think the tax cuts are generating this supposed extra revenue? The proof is in the numbers and they are getting down right ugly.

Monday, February 11, 2008

G7: No Quick Fix

The world's leading economies pledged on Saturday to work together to secure stability in volatile markets but brushed off the idea of a single uniform remedy for the Group of Seven industrialized nations.
A joint statement, issued at the end of an afternoon meeting in Tokyo of the G-7 finance chiefs and central bank governors, acknowledged that "downside risks" remain for the global economy. It also warned of the dangers of the U.S. housing crisis, while assuring that U.S. growth was expected to continue in 2008.

The officials from the United States, Japan, Germany, France, Canada, Britain and Italy also urged oil-producing nations to boost output and encouraged China to accelerate the appreciation of its currency.

"Going forward, we will continue to watch developments closely and will continue to take appropriate actions, individually and collectively, in order to secure stability and growth in our economies," the statement said.

The G-7 had faced calls for increased coordinated action to deal with the U.S. housing problems in subprime mortgage loans, financial market turmoil, high oil and commodity prices, and heightened inflation expectations.

The various countries, however, have differed on what measures were appropriate. The U.S. has urged other countries to pursue policies to boost domestic demand, while the Europeans said their economies were resilient and focused more on regulatory coordination.

Japanese Finance Minister Fukushiro Nukaga, who hosted the gathering at a Tokyo hall, said the economic conditions in each nation were so different that a single remedy was not feasible.
The pain will continue for some time with the world's poor being disproportionately affected. It never ceases to amaze me that those that cause economic distress are usually those least effected. The subprime crisis which has sent world markets into a tailspin, has made millionaires of many who helped create the crisis. It seems crime really does pay, at least here in the good old USA.