Recession - On The Way Out?

Lately I have been hearing a lot about the fact that we are coming out of the recession. What exactly does that mean, let's investigate:

• Jobless claims rose by only 30,000 to 554,000 - the top analysts were expecting 557,000 so I guess that is good news, right? Jobs Report
  
  
• The FDIC have only closed 7 banks in the last week. Most of them located in GA. FDIC Failed Bank List
  
  
• GDP plunged 6% in the fourth quarter of 2008 and 5.5% in this year's first quarter. GDP
  
  
• New home sales rocketed up 11% in June (from the previous month) to a seasonally-adjusted annual rate of 384,000 units - What to Make of It
  
  
• The looming Commercial Real Estate bubble is about to pop - Banking's Next Headache
  
  
• President Obama is proposing a heal plan that will cost 1 Trillion dollars (we don't have) over the next 10 years. For the 85 percent of Americans who already have health insurance, the Obama health plan is bad news
  
  
• U.S. Home Vacancies Hit 18.7 Million on Bank Seizures - From Bloomberg

So, what does this all mean? It means that even if we are really on the way out of this 'recession' then we still have a long hard uphill battle on our hands. I for one can not figure out how we can 'spend our way out'. This was tried in the early 1930's and it actually CAUSED a depression within the depression. Without some drastic cost cutting and some major revamping of how the entire government (Local, State and Federal) operates, I don't see how this isn't more than the calm before the storm.

On the positive side, I do think that there are lot of opportunities for those that are willing to seek after them. I am a firm believer that Americans are some of the most ingenious, creative and resourceful people on this planet. I do think that we have become very comfortable as of late and it is high time that we all take a long hard look at our own households and local areas. I think the best way for us all to get through this and prosper is to join together and help each other not by handouts but by proving each other a hand-up.

Bernanke: Economy better, but ...

Fed chairman says the economy is showing signs of stabilization, but added that the housing and labor markets are still not recovering.

Just those two little things, labor markets and Real Estate. People are still losing their jobs left and right and you can't sell or buy a house in 80% of the Country. But hey, if you are a politician things are looking GOOD!



Full Article Here

Fannie & Freddie: The most expensive bailout

Efforts to use the troubled mortgage finance firms to fix housing market problems are likely to push the taxpayer bill for Fannie & Freddie above $100 billion.

NEW YORK (CNNMoney.com) -- The first big government bailout of the financial crisis -- the takeover of mortgage finance giants Fannie Mae and Freddie Mac -- is poised to be the most expensive and complicated to complete.

Since Congress essentially wrote a blank check to the Treasury Department in July 2008 to do what needed to be done to inject capital into the two firms, Fannie (FNM, Fortune 500) has received $34.2 billion of direct government support while Freddie (FRE, Fortune 500) has received $51.7 billion.

While that's lower than the $117.5 billion poured into insurer AIG (AIG, Fortune 500) by the Federal Reserve and the $200 billion given to the nation's largest banks through the Troubled Asset Relief Program, or TARP, the current cost of the Fannie and Freddie bailouts dwarfs original estimates from a year ago

Full Article

10 Things Your Real Estate Broker Won't Say

As a break from the typical economic news I thought I would throw in something that can help people in this tough market. This is not intended as a slam toward Real Estate Brokers because most of them are hard working people just trying to make a living. In fact I work with quite a few of them on a daily basis. However, I think these are good points to keep in mind when buying or selling a home as a consumer.

1. “Your open house is really just a networking party for me.”

Hire a real estate broker to sell your home, and one of the first things he’ll likely suggest is hosting an open house so that potential buyers can casually check out your property on a weekend afternoon. But while open houses are promoted as a great way of finding a buyer, a National Association of Realtors study found that their success rate is a mere 2 to 4 percent.

2. “My fees are negotiable.”

Brokers like to make it sound as if their fees are engraved in stone, but that’s rarely the case. During the housing bubble, for example, as the number of brokers sharply increased, so did the competition for listings—one broker says he lowered his fee by a full percentage point just to give himself an edge. But even in the wake of the recent crash, you have a good chance of negotiating a better deal—that same surplus of brokers is still out there competing for even fewer listings, giving you something of a leg up.

3. “Think you’ve had no offers? Actually, there’ve been several.”

Legally, the broker you hire to sell your home is obligated to tell you about all offers that come in. In reality, some do not. Perhaps he thinks the offer is insultingly low for you, but more likely, “the broker thinks it’s too low for his own purposes,” says McNeill. “He wants to hold out for a bigger commission.” Another possibility is that there’s an outside broker (or “co-broker”) circling your house, and the primary broker is waiting for one of his own clients to make an offer so he can keep the full 6 percent to himself.

4. “I’m not obligated to keep my mouth shut for you.”

You spot your dream house as you’re driving through a neighborhood and call the broker listed on the “for sale” sign. That’s how a lot of buyers stumble on a broker—who, in turn, happily shows you other houses, asking about your needs, laughing at your jokes. It’s easy to get loose-lipped and forget whom you’re dealing with: someone else’s agent. “Legally, brokers are obligated to provide their sellers with any information that can help them get the best prices for their homes,” says Stephen Israel, president of Buyer’s Edge, a Bethesda, Md.–based company that represents home buyers. “If you tell the broker that you’re willing to pay $500,000 but want to offer $450,000, they’ll pass that on to the seller. They have to.”

5. “Sometimes I forget whose side I’m on.”

The past 15 years have seen the proliferation of the buyer broker, agents who are supposed to work strictly in the buyer’s interest, helping him get a fair price on a home as well as avoid pitfalls along the way. Unfortunately, things don’t always unfold so nicely. While buyers may think they’re getting a broker who isn’t commission-hungry, many buyer agents are just that: They usually get about 3 percent, the same amount any broker typically earns when he gets involved with another agent’s listing. “Buyer brokers are sometimes too focused on closing the sale and getting that commission,” says Max Gordon, an Overland Park, Kan.–based real estate broker and attorney, so it’s often in their best interest to see you pay as high a price as possible.

6. “I know zilch about zoning.”

Real estate agents love to suggest big ideas to prospective buyers—say, removing trees to enhance a view, or even squeezing a rental unit out of a roomy garage—meant to happen once the deal is done and they’re out of the picture. But just because it sounds like a good idea doesn’t mean it’s legal.

7. “I won’t let termites—or pesky inspectors—kill a deal.”

If a broker is selling a house, you figure he knows the place pretty intimately—after all, he talks a good game about the new kitchen, the big closets, the heated garage. What you need to worry about, though, are the home’s features that he keeps to himself. Steve VanGrack, former chairman of the Maryland Real Estate Commission, says, “We have had cases where [brokers have] been deceptive about termites and flood damage.”

8. “I sometimes forget I’m not a lawyer.”

Most states strictly regulate the contracts used in real estate transactions, stipulating the use of boilerplate agreements that offer little room for creativity—but some brokers can’t keep their clause adding instincts in check. “I see [brokers] pushing the envelope all the time with amendments and addenda,” says Gordon, the Kansas broker and attorney. “They draft language that can have consequences without really understanding it, but they want to keep the sale going.”

9. “My website is a dead end.”

Considering that 77 percent of house hunters look on the Web, according to the National Association of Realtors, sellers might assume that using a broker with a site can help make a sale happen. But some brokers’ sites are better than others, and you need to look beyond a well designed home page to figure that out.

10. “You can probably do this without me.”

Brokers like to create a lot of mystique about selling homes, insisting that the process is complicated and best left to professionals. Not so, say homeowners who have sold their homes themselves (about 20 to 25 percent do so each year). William Supple, publisher of the sale-by owner real estate magazine Picket Fence Preview and author of How to Sell Your Own Home, says that “properly priced and advertised, a house sells itself.” Supple adds that sellers should plant a yard sign and post online ads for the property on local sites aligned with print publications (call current advertisers to see if a site is effective).

Full Article Here

TARP cop: Get tough on banks - What about The Fed?

I don't get it, why is it that we are 'getting tough' on banks in the USA but we are not SCREAMING for insights in to the real source of our money -- The Federal Reserve.

The irony of this whole situation is that the TARP program was intended to be a way for banks to borrow money from the federal government and NOT a bailout program. That was of course before the government got their hands on all the rules and regulations. Once you start to control the free trade markets and how they operate they will cease to exist.

A lot of people have recently told me that they blame corporate America for the problems that we are currently facing but if you look at the housing bubble for example you will notice that two of the largest holders of home loans were government backed entities. PLUS when the banks get in trouble they are covered by the FDIC who has unlimited funds DIRECTLY from the Fed. Just some food for thought...

Neil Barofsky says a lot could go wrong with bailouts. He wants better disclosure and stronger conflicts rules. Sparks controversy over total cost.

WASHINGTON (CNNMoney.com) -- The top cop tracking the $700 billion bailout program said Monday that he's concerned federal officials are ignoring his proposals for preventing tax dollars from being wasted or pilfered.

Neil Barofsky, the special inspector general overseeing the Troubled Asset Relief Program, released a 260-page report detailing a long list of concerns about government efforts to prop up hundreds of banks, Wall Street firms and auto companies.

The report criticizes the Treasury Department the most for its unwillingness to adopt some of his recommendations.

Barofsky cites two examples: He wants Treasury to force bailout recipients to keep track of how exactly they are spending TARP funds. He also wants officials to erect a "firewall" to prevent private investment managers -- the kind hired to manage and invest taxpayer dollars -- from taking advantage of insider knowledge.

Full Article Here

The Federal Reserve (Fed) Under Fire

This is being called "The Black Hole In American Democracy". I am not sure if we will ever get the Federal Reserves books open. This is the entity that controls our interest rates, 'lends' money to the US Treasury and prints every US monetary instrument in circulation. Where are the checks and balances for this system? Do we really want to be giving them MORE power?



Some Federal Reserve Facts
The Federal Reserve System (also the Federal Reserve; informally The Fed) is the central banking system of the United States. Created in 1913 by the enactment of the Federal Reserve Act (signed by Woodrow Wilson), it is a quasi-public and quasi-private (government entity with private components) banking system that comprises:

1. The presidentially appointed Board of Governors of the Federal Reserve System in Washington, D.C.;
2. The Federal Open Market Committee;
3. Twelve regional Federal Reserve Banks located in major cities throughout the nation acting as fiscal agents for the United States Department of the Treasury, each with its own nine-member board of directors;
4. Numerous other private U.S. member banks, which subscribe to required amounts of non-transferable stock in their regional Federal Reserve Banks;
5. Various advisory councils.

$1 Trillion Deficit Complicates Obama's Agenda

Annual Budget Gap Passed Benchmark in June, Dimming Outlook for Economic Recovery and Appetite for Big-Ticket Policies

WASHINGTON -- The U.S. federal budget deficit broke through the $1 trillion mark in June, potentially complicating the Obama administration's efforts to revive the economy and enact its longer-term policy agenda.

The U.S. Treasury Department on Monday said the government's annual deficit reached almost $1.1 trillion by the end of June, a once-unthinkable level that could threaten any nascent economic recovery by undermining the dollar and driving up interest rates.

Surging deficits could also tie the administration's hands in responding to the economy's problems, by eroding support among voters and making Congress leery of adopting policies -- such as an overhaul of the health-care system -- that the administration believes are necessary for sustainable growth.

Full Article Here

A Picture is Worth a Thousand Words

U.S. Budget Deficit Tops $1 Trillion - Next Stop $2 Trillion

Well I guess it is good to have something to strive for...

WASHINGTON — The federal deficit has topped $1 trillion for the first time ever and could grow to nearly $2 trillion by this fall, intensifying fears about higher interest rates, inflation and the strength of the dollar.

The deficit has been widened by the huge sum the government has spent to ease the recession, combined with a sharp decline in tax revenues. The cost of wars in Iraq and Afghanistan also is a major factor.

Always those darn wars! If we could only figure out a way to mesh our initiative to 'go green' and a war in desert we would have a surplus. Maybe the troops could generate electricity via treadmills since according to the mainstream media they have nothing better to do with their time.

Full Article Here

O Really? Let's Have Pie!

I love that they always give the least amount of information possible. No proof, no statistics, not REAL data. "The economic policies that have been put in place are working" Considering that 90%+ of our elected officials haven't even READ the policies I find that to be amusing at best. "Have helped contain, I mean arrest the crisis".

Why is he stammering, is he afraid that if he says "Our Administration is starting to realize that your oil supplies are running out and we will soon no longer need you" he will lose his head - Maybe.

On Track to a 1.2 Trillion Dollar Deficit This Year

When did it become no big deal to throw around "billions" of dollars like it is the weeks grocery money. What a difference 6 months make...

President-elect Barack Obama said Tuesday the deficit appears on track to hit $1 trillion soon. Speaking to reporters after meeting with top economic aides, Mr. Obama said: "Potentially we've got trillion-dollar deficits for years to come, even with the economic recovery that we are working on."
— Associated Press, Jan. 6

Actually, the deficit is on track to hit $1.2 trillion this year, but what's $200 billion among friends?

How to Understand a Trillion-Dollar Deficit - A good article from Time to help you understand what this means.