The news out today told a story of Americans going back to their puritan fiscal roots.
Americans Pay Back Debts Most Since ‘52 as Jobless Spur Savings
(Bloomberg) -- For the first time since Harry S. Truman was in the White House, Americans are paying back their debts, a phenomenon that just might help keep interest rates low as the Treasury sells a record $2 trillion of bonds and rising unemployment increases U.S. savings.
The stable rock of the American citizen, repairing his balance sheet so that the Great American Economy can recharge with a clean slate, healthy and ready to take on the world. American Capitalism in action, continuing to work in the same way it has worked for hundreds of years.
At least that is what the first paragraph implies. Once you scratch the surface the story isn't nearly so pretty.
One fact is no one knows what the hell is going on with U.S. taxpayer dollars and what the U.S. Treasury as well as the Federal Reserve are doing with it.
This hearing, is a TARP Inspector General Report hearing, otherwise known as Don't ask, don't tell.
While everyone has been focusing on the housing bubble bust, the commercial real estate market is collapsing at a record rate.
Commercial real-estate prices fell 7.6% in May, according to Moody's Investors Service, as both dollar volume and transaction count reached record lows in the nine-year history of the firm's Commercial Property Price Indices...The indexes are down 29% from a year ago and 35% from their October 2007 peak.
That 7.6% drop wasn't a year-over-year drop. It dropped 7.6% in just May.
In April it dropped 8.6%, thus making a two month decline of 16%.
As massive and as important as TARP is on its own, it is just one part of a much broader Federal Government effort to stabilize and support the financial system. Since the onset of the financial crisis in 2007, the Federal Government, through many agencies, has implemented dozens of programs that are broadly designed to support the economy and financial system. The total potential Federal Government support could reach up to $23.7 trillion.
Banks have failed to make adequate provision for the losses on loans and securities they face before the end of next year, Moody’s Investors Service said.
U.S. banks may incur about $470 billion of losses and writedowns by the end of 2010, which may cause the banks to be unprofitable in the period, the ratings company said in a report published today.
“Large loan losses have yet to be recognized in the banking system,” Moody’s said. “We expect to see rising provisioning needs well into 2010.”
So, if true, who is the zombie bank? Check this amazing quote from the Bloomberg Article:
It is almost universally received wisdom that when the turn comes, we will have a "jobless recovery" where GDP turns up anemically, but unemployment stubbornly rises. Indeed the most controversial notion in some parts of the econoblogosphere is that of the "jobless recovery." as in, can it truly be a "recovery" if the number of jobless Americans continues to increase? Much moreso than dry GDP figures, wages and employment are what matter to the average American. I too have generally accepted the idea that any GDP recovery would be jobless, such that in April I made a graph showing what an unemployment spike will look like if the recession bottoms this summer, but a "jobless recovery" similar to 1991 and 2001 ensues:
A little noticed report issued by the National Employment Law Project last Friday dropped something of a bombshell. By the end of this year 1.5 million Americans currently receiving unemployment benefits will have exhausted them.
A sobering analysis released today by the National Employment Law Project estimates that 540,000 Americans will exhaust their unemployment insurance benefits by the end of September, and a whopping 1.5 million will run out of coverage by the end of the year. NELP’s state-by-state analysis comes on the same day as the states announce their latest unemployment figures, and together they demonstrate the pressing need for more extensions.
State tax collections for the firstcquarter of 2009 showed a drop of 11.7 percent, the sharpest decline in the 46 years for which quarterly data are available. Combining the Census Bureau’s quarterly data with its annual statistical series, which extends back to 1952, the most recent decline in state tax revenues was the worst on record.
After adjusting for inflation, legislative changes, and known anomalies, tax revenue declined in 47 states.
Nothing drives me more nuts than to see a host of MSM articles on a report, translating a report, without being able to get the original document. Of course the report is not on the SIGTARP website, I had to go digging around and found it on scribd, released by Fox Business News.
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