Outrageous Economic Shorts - Labor Be Damned

Welcome to our round up of economic shorts.  These are the latest outrages that caught our eye which you might have missed.  Probably the biggest disaster happening today is the Senate pushing forward with a corporate written cheap labor immigration bill regardless of the negative impact this will have on jobs and the economy.

HARP Another Siren Song for Homeowners

siren with harpWith much fanfare and headline buzz, Obama announced a new program to help homeowners.  What is it?  They simply lifted the 125% refinancing cap for mortgages attached to residential properties.  Previously one could not refinance a home more than 125% of it's current value.   Now you can refinance your mortgage where the principle is twice what the value of your home is.  Nice huh?  Mortgages only held at Fannie Mae and Freddie Mac will qualify and the program is only open until 2013. Your bank must approve and any mortgage sold to Fannie, Freddie after May 31, 2009 also doesn't qualify.

house mazeWe have a name, HARP, for this program. Yet another mnemonic, similar to hopeless HAMP which was also released with much fanfare. Homeowners found HAMP to be a labyrinth of bureaucratic no help, designed to be a rat maze pretending somewhere there was some cheese.

Washington Post:

The Federal Housing Finance Agency, working with the Obama administration, said that up to 1 million “underwater” borrowers might benefit from an expanded program that targets homeowners who owe more than their properties are worth.

The IMF evaluate the Chinese government's Five Year Plan and property bubble

In its latest Article IV country report on China, dated June 27 2011, the IMF reported on the potential for a property bubble, on the state of China’s banks and on the policy measures underpinning the 12th Five Year Plan. It also looked at the international implications stemming from China’s efforts to rebalance its economy by de-emphasising exports and raising domestic consumption. (Another strand to this “rebalancing” is a commitment to supporting the relocation of industries to the interior instead of having them clustered at the seaboard metropolises.)

Rebalancing, in the sense of moving from being export driven to having a much higher domestic consumption component, is something that it is far harder to say than it is to do. The Chinese authorities can, of course, decree anything they want, but that doesn’t always mean that their decrees will play out in the way that they expect.

The State of the Economy, Independence Day 2009 (IV.)

Part I of this series can be found here.

Parts II and III of this series can be read at The Bonddad Blog.

IV. The Federal Government must intervene to Rescue the States, in a morally responsible way

By far, the biggest threat to a bottom being put in to this Recession, is the continuing drumbeat of new layoffs. Thursday's June employment figures over - 450,000 and new jobless claims that have stubbornly, week after week, remained above 600,000, put the kibosh on any idea that the bottom is already here. We simply cannot stand 600,000 people putting in for jobless benefits, week after week after week. And the source of the continuing drumbeat of jobs lost appears to be coming more from anywhere else from the location of what Paul Krugman has called the "50 little Hoovers", i.e., the state (and municipal) governments, which are obliged to balance their budgets and so must throw employees out of work and cut back on spending projects, exactly when they are needed most.

The State of the Economy, Independence Day 2009 (I.)

ABC News reported an interview with with Paul Krugman last week his opinions that:

"I would not be surprised if the official end of the U.S. recession ends up being, in retrospect, dated sometime this summer," he said June 8 during a lecture in London.

However, Krugman argues people didn't listen to his entire speech, which included dire predictions about lingering unemployment. "There's a big difference between the end of a recession, which is really only when some things start to turn up, and the return to prosperity," Krugman told ABC News. "I think what people don't get is the difference between the end of a recession in a technical sense and actual recovery, which matters to people."

In my opinion, Krugman is exactly correct. In this four-part "Big Picture" look at the economy as of Independence Day 2009, I will argue that:

More evidence housing sales may be near a bottom

The NAR released its Housing Affordability Index for February this morning:

NAR’s Housing Affordability Index rose 0.9 percentage points to a record high of 173.5 in February from an upwardly revised index of 172.6 in January, and is 36.3 percentage points higher than a year ago. The HAI, a broad measure of housing affordability using consistent values and assumptions over time, shows that the relationship between home prices, mortgage interest rates and family income is the most favorable since tracking began in 1970.

Existing home sales nearing bottom?

Last week we received the last data for housing through February. New home sales as reported by both the Census Bureau and the NAR ticked up on a seasonally adjusted basis, but have not yet broken trend - a trend that would take them to zero by this time next year!
I've laid out my scenario for the housing market in transition in several posts beginning last December, on Feb. 27 for new home sales, and on March 16 for existing home sales. As of March 17, Calculated Risk adopted the virtually identical analysis.

While there are certainly other bloggers who get many more page views than I do, and there has been much commentary on the February sales data, there is a nugget of interesting information that nobody else has teased out of existing home sales.

More evidence the Housing market is transitioning (Updated)

Today the Census Bureau reported on Housing permits and Housing starts.

New housing starts for February came in at a seasonally adjusted 583,000, up from a revised 477,000 in January.

This ~20% increase is by far the biggest increase in any month's data since the top of the housing market at the beginning of 2006.

Permits had a similar increase.

This data is more evidence that the Housing market is transitioning from Cliff-diving to rubble-bouncing. This is good news!

How long until the bottom in Housing? An overview

I have been saying for a long time now that housing was a leading component of the economy. Housing peaked in late 2005 - early 2006, long before the recession started in December 2007. Just as clearly, it is likely that housing will bottom first, and will be a primary component leading us out of this "Great Recession." By now housing is so far into the downturn that we ought to be able to make educated projections about housing prices and sales over the next several years.

Recently I noted that new home sales are falling so fast that they almost have to bottom this year - or come very close - unless you think that new homes sales will be 0 by early 2010!

But new home sales are a smaller part of the housing market. Existing home sales are much larger. In this post I will examine what I think are reasonable projections about the volume and prices of new home sales in 2009-2010 and beyond.