U.S. President Barack Obama pledged $275 billion to a program that includes cutting mortgage payments for as many as 9 million struggling homeowners and expanding the role of Fannie Mae and Freddie Mac in curbing foreclosures.
The plan will help as many as 5 million homeowners refinance loans owned or guaranteed by Fannie and Freddie, the president said. Treasury will buy as much as $200 billion of preferred stock in the two mortgage companies, twice as much as previously promised, he said.
This morning the Census Bureau reported housing starts at an annual rate of 464,000 for January 2009. At a nearly 80% decline from the high of 2,273,000 starts of January 2006, the collapse in housing starts is now not just the worst since the modern data series was started in 1959, it is also worse than the 75% decline during World War 2. The only worse decline is the 90% decline between 1927-1935.
So says Tim Iacono of "The Mess that Greenspan Made", and who am I to disagree? After all, I've been writing about the dangers of deflation for awhile now.
Actually, Tim makes the comment in a mocking sense, noting that
In the U.S., the latest consumer price data will be reported on Friday and we may be in for a veritable "Deflation Tsunami" from the mainstream media since we were teetering on the brink of a negative consumer price index last month.
Tim's essential point, if I read him correctly, is that the deflation we have experienced is really just the popping of the Oil price bubble.
So, am I going to get into a mud-pie flinging contest with Tim? Hardly. Actually our two views aren't that far apart.
Merrill Lynch has a real unemployment estimate out and it ain't pretty.
what the official unemployment rate misses is the vast degree of ‘underemployment’ as companies cut back on the hours that people who are still employed are working. Those hours have declined 1.2 percent in the past 12 months.
The BLS still counts people as employed if they are working part time, but the number of workers who have been forced into that status because of slack economic conditions has ballooned nearly 70 percent in the past year, according to the study. Rosenberg said was that was a record growth rate for the 15-year period he has studied.
"To rescue the ailing U.S. economy by increasing government borrowing will create a record-high federal deficit," said Yu Zuyao, economist with the Chinese Academy of Social Sciences, a government think tank.
"This can further lead to catastrophic consequences such as serious inflation and U.S. dollar depreciation," he said Tuesday.
"Buying U.S. government bonds amid an economic downturn, [a purchase] that is not based on the sound performance of the U.S. economy itself, indicates a huge bubble," said Zuo Xiaolei, chief economist of China Galaxy Securities.
e in the interests of the United States and other countries and would exacerbate the crisis."
Europe recorded the biggest trade deficit in 2008 since the euro’s introduction 10 years ago as higher oil prices boosted energy costs and the global financial crisis curtailed exports.
The region’s trade deficit of 32.1 billion euros ($40.5 billion) compared with a surplus of 15.8 billion euros in 2007, the European Union’s statistics office in Luxembourg said today.
The spreading of the global recession is curbing demand for European products, adding to pressure on the economy, which shrank the most in 15 years in the fourth quarter. Volkswagen AG, Europe’s largest carmaker, said deliveries fell about 20 percent last month and that sales in the export markets of Brazil, Russia, India and China have been “particularly hit” by the credit freeze.
General Motors Corp. said it needs as much as $16.6 billion in new U.S. loans, more than doubling the aid to date, and must get some of the cash next month to survive. GM plans 47,000 more job cuts worldwide this year.
Chrysler LLC, propped up like GM with federal assistance, said it’s seeking $5 billion more from the government and will shed 3,000 more positions.
GM says 47,000 jobs will be lost world wide. GM is selling Hummer, shutting down Saturn, bankrupting Saab (which Sweden is going to salvage and return to it's nation), and shutting down 5 additional U.S. plants. It is completely not stated which countries and plants will lose which jobs. It looks bad that most of the losses will be against U.S. workers and other nations where they pay living wages.
From Open Left, one commentator put it succinctly:
A tale of two continents
In Europe, state aid is contingent on the firms preserving jobs. In the US, state aid is contingent on the firms cutting their workers wages and benefits.
The story is about government expenditures being used for the benefit of it's citizens, their workers.
France unveiled a plan on Monday to give €6 billion ($7.8 billion) in low-interest loans to Renault SA and PSA Peugeot-Citroën in exchange for promises that they won't close factories in France or lay off workers for the duration of the loans. The government also will offer €500 million in loans to auto-sector firms with operations in France.
An interesting report is coming from Germany. Their steel is coming up radioactive.
German authorities in recent months have found a disturbingly large amount of radioactive steel in factories across the country. Much of the contaminated metal is thought to have originated in India.
Think we're having problems with quality control on just food?
by Zach Carter, Media Consortium MediaWire Blogger
In this week's Audit, we're examining Treasury Secretary Timothy Geithner's thoroughly uninspiring bank bailout plan, which fails on almost every level. What's more, some of the most insightful (and stinging) critiques of the proposal are coming from progressive media.
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