Financial Times: US Faces Worst Recession In 26 Years

The US economy appears to be plunging into what many experts believe will be its worst recession since 1982.

Senior officials at the Treasury and Federal Reserve are confident that the rescue plan for US banks will succeed in preventing a financial system meltdown and ensure there will not be a repeat of the Great Depression. But they know that a sharp economic downturn is already baked in the cake. They do not,however, know how deep or protracted it will be.

The focus of concern is shifting from the markets - although these remain dangerously stressed - to the wider economy, where the consumer finally appears to be cracking.

The Fed and Treasury were expecting the economy to weaken but not as rapidly as it has, with collapsing consumer confidence, falling home starts, slumping retail sales and falling industrial production.

"The actual deterioration in the data in the last few weeks has been much more severe than anyone was expecting," said Frederic Mishkin, a professor at Columbia university and former Fed governor.

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Comments

[PT6]

TECHNOLOGY CAN SPUR THE ECONOMY, REMOVE CORRUPTION, AND AVOID MORE BAILOUTS!

FIVE KEY FACTS:

1. American Taxpayers Own Fannie, Freddie, and a group of Banks!
2. Mortgage Companies and Banks were at The CENTER of the Housing and Financial CRISIS!
3. Crisis Continues Because Homeowners can not Afford TRICKY Loans and are Walking Away!
4. The Current FED RATE is 1.5%!
5. Technology and the Internet are Sophisticated Tools for Automating Loans!

Why not use the Internet and the New Taxpayer Owned Banks to provide direct low cost loans using Automation while Eliminating the Corrupt Middle Men (i.e., Mortgage Companies and Banks)?

The rate on the new loans would be 2.5% to 3% to provide the New Taxpayer Owned Banks with a 1% to 1.5% margin!

Automation can be used to verify employment, verify home title, check credit, and do 98% of the loan Preparation. This eliminates all the mortgage fees, all bank fees, all title fees, most verification fees, and most documentation work done via internet and technology.

This could easily be accomplished using today's technology at a much LOWER COST!

The Savings for AMERICANS will spur the Economy more than any added Bailout Plans

The Savings can be used to paying debts, buy American Cars, buy American Real Estate, and all kinds of American goods plus help other countries in crisis by buying their goods!

[RichardfromHB]

Housing is still tanking in California. There's good and bad news: Sales are up by 65% over last year. But 50% of the sales are from foreclosures. Don't be on a recovery before at least another birthday or two.
http://www.dqnews.com/News/California/Southern-CA/RRSCA081020.aspx

[PT6]

At Camp David Saturday, President Sarkozy reiterated what we ALREADY KNOW, that the blame for this CRISIS should be placed at the FEET of BUSH and WALL STREET, particularly in what was translated as "Hateful Problems":

1. No Regulatory or Supervisory Controls
2. Hedge Funds - implying unregulated Brokerage Firms who run them
3. Tax Havens - implying that is where the LOST money from Wall Street is stored

He also said those that created this Crisis must be Punished.

And Sarkozy said, this "Capitalism is a Betrayal of the Kind of Capitalism we all Believe in."

He pointed out that the US and Europe make up 77% of the Financial Markets but Asia must also be included in a solution.

Since Europe has acted this past week, he calls for the Bush Administration combined with Europe and Asia to take action before the END of November.

Bush is hesitant and said it will take time implying the NEXT ADMINISTRATION CAN DO IT!

However, with the US Markets losing 50% of their value in 12 months and with nearly three months left in the Bush Term inaction could cause the loss of from 20% to 35% more.

This Delay could cause college students, retirees, and investors to see their funds be driven to near a total loss.

[rkimball]

it's a depression no matter what the feds say. many companies are freezing pay or asking their workers to take pay cuts. the cost of good & services dropping triggering rounds of price cuts. depressed housing & others costs result in more rounds of depressed costs,thus a depression.

i volunteer at the food bank once a month. we used to feed only the homeless. the homeless have been replaced by families in recent months. also people that still can find jobs after loosing their higher paying jobs & homes are now living in their cars.

[lejman]

now it becomes clearer why the military has been redeployed due to domestic concerns...the 1% are afraid that their gated communities will be stormed and they may lose some of their "stuff", as the late, great george carlin used to say.

[olephart]

It's time for a reality check. Many here have noted the decline in economic activity in the private sector. For the past 7 years wages have not increased for the bottom 75% and have actually fallen for many relative to inflation. Many people maintained their lifestyles by borrowing or by selling their homes and keeping the profits out for spending. Now many of those who engaged in these activities are upside down in their mortgages or have pilled up more debt than they can afford. Also, the spend your house method of financing purchases has come to an abrupt halt.

This is not good for the 70% of the economy that relies on both essential and mindless spending. A year ago I noted in a posting by Bonddad that non essential spending would fall dramatically. The quant shops in Malls and strip shopping outlets catering to these non essentials would begin closing up and laying off employees. This would reinforce the downtrend. Big ticket items are the next domino.

A reality check is due for Government spending as well. Those calling for more should be cautious as the Federal Government is both broken and broke. I have also noted that no progress can be made on Domestic issues while our Foreign Policy is one of Empire. The Wars must end and the Military/Security budgets reined in by half ($500 billion). Guns and butter will yield either a total collapse or ruinous stagflation. Time is rapidly running out.

[Erdgeist]

The national debt can be easily eliminated by the imposition of a 40% revenue tariff on all imported goods (2 trillions dollars). This would generate about 8 trillion dollars in 10 years -- and in the first year reduce the deficit significantly.

Going back in history, we eliminated the national debt in 1835 with a lot of courage shown by Andrew Jackson (http://www.business.auburn.edu/~whittdo/THE%20ELIMINATION%20OF%20THE%20NATIONAL%20DEBT%20IN%201835.htm)

Presently, we haven't the political courage to do it. It is easier to pile on debt by borrowing and spending -- something the Republicans believe takes courage!

[lejman]

ol' hickory sure was great for the native americans, too. bush/cheney treated the middle class on down the same way....a trail of tears.

[MilwaukeeDan]

72% of the economy can't be based on debt driven consumption, the bill has come due. Now lets move the rest of the high paying jobs overseas and lets see what happens. "All empires end, this one is on its last legs", did some flaming "un-patriotic" liberal say that? No, it was Pat Buchanan.

[rkimball]

in our area there are still jobs to be found. that's the good news.

the bad news is many seniors retired for ten years or longer are now going back to work after seeing inflation & lost nest eggs distroy their retirment dreams.

nothing is guaranteed anymore,not even retirement. we have been reduced to dog eat dog.

[Choicelady]

We have another choice - mutuality. We all have skills we can share and resources we can pool. Rather than dog eat dog, potlucks! We are in trouble, some in dire straits, but we can pull together and help. Figure out with friends and family what you can trade off among yourselves that can help. Small businesses - this IS the time to reduce your prices to make up in volume. I am watching LOW end businesses think about closing instead of figuring out ways to attract people. Maybe you need to pare down costs, but you CAN figure out new ways to do business - is that NOT the essence of innovation? Our mechanic charges $90 per hour for labor but does not remotely PAY that to his employees - how about charging what you pay plus costs instead of gouging because I'm not going BACK. That's business lost to you. Think all this through instead of throwing in the towel. We got through the Great Depression. We can get through this.

[rkimball]

good advice. unfortunately,we have people suffering under our noses & won't lift a finger to help. many workers have lost their high paying jobs for minimum wage jobs then lost their homes. many are now living in their cars as they go to their minimum wage jobs that they are thankfull to have.

[Sundialsvc4]

Quit worrying about it.

The US Government still "borrows from itself" $1 million a minute. It still passed a defense spending bill much larger than the bailout... which of course never made the news at all.

The US Government can "borrow from itself" enough money to pay-off every mortgage in the land. So maybe you should just ask your Congressman and Senator to do that.

I'm not being cynical... not at all. If it's good enough for the United States Department of Defense, then it's good enough for me. "I want mine."

[MilwaukeeDan]

Sundial, I agree, I just wouldn't call it "defense" spending.

[PT6]

Another PIECE of the CORRUPTION PUZZLE is now In Place! McCain is involved through Hagel and Schmidt with FANNIE AND FREDDIE!


Lets Review TRICKLE DOWN ECONOMICS:


GRAMM/McCAIN DE-REGULATE = Crooks Run Wild and High Mortgage & Broker Profits

REGULATORS TURN BLIND EYE ON THEIR JOBS = "TRICKS" and High Corporate Profits

Block States with Lawsuits from Regulating = High Corporate Profits

WAR = High Corporate Profits We pay $75 to $150 for every soldier's breakfast in IRAQ!

"TRICK" MORTGAGES ALLOWED BY FED AND NO RULES = High Corporate Profits

McCain's Friend Hagel destroys legislation to regulated FANNIE and FREDDIE = High Corp Profits

BUNDLED "TRICK" MORTGAGES SOLD AS "AAA" = High Corporate Profits

ILLEGAL NAKED SHORTS = High Corporate Profits

LEVERAGED OIL = Highest Corporate Profits IN HISTORY!

JOBS SHIPPED OVERSEAS = High Corporate Profits

HUGE BONUSES and SEVERANCE PAY = High .1% Profits

BAILOUT = High Corporate Profits

LET THE MARKET FALL AND EVERYONE SELLS = High Broker Profits

MARKET REBOUND AND EVERYONE BUYS AGAIN = HIGHER BROKER PROFITS

BLAME Fannie and Freddie for IT - Deflect YOUR Culpability for THIS CRISIS
==========­==========­==========­==========­==========­==========­==========­====

What is left for the Middle Class? DIRT

This has been the WORST DESTRUCTION OF THE MIDDLE CLASS IN HISTORY!

[Choicelady]

That about sums it up. And the McCain camp says IT cares about the middle class? Hah! Todd Palin and his "hunting and fishing are American values" perspective is perfect. for this group of thieves. The rich know that for this working class group, as long as you keep 'em happy with guns and sixpacks, you can steal their jobs, health care, pensions, and ultimately Social Security and they won't even notice. It's what the rich planters did to the poor whites after the Civil War. If you can make the "enemy" out of the natural ally, then the rich white planter keeps power. Molly Ivins said we should NOT be thinking left and right in politics. We should be thinking up and down. But with the Palins in the rip-off camp, the people who should be part of the solution just keep supporting their own oppression.

[imsosure]

worse in 26 years, ya don't say. . .

[frenchie25]

i am woman hear me vote!

http://www.youtube.com/watch?v=JPRfVD5Q0dI

[peepeeray]

Gray's Papaya for Obama!

http://graphics8.nytimes.com/images/2008/03/02/nyregion/03papaya.2.large.jpg

[planetjeffy]

I am 50 yrs old and this will be the worst economy I have ever seen. As the article says, we have yet to see the effect from the meltdown ripple throughout the consumer economy. Small businesses are reporting 30% or more declines - restaurants are empty, malls are empty, stores are empty, car lots are empty (it always seems to hit around Xmas).... High unemployment and the commercial real estate meltdown are next. Very low tax receipts will force governments to cut payrolls, flooding the unemployment ranks even more. Look at the bright side - cheap real estate, cheap cars, cheap workers, cheap oil...

[mad as hell]

"Look at the bright side - cheap real estate, cheap cars, cheap workers, cheap oil..."

I wont say the "dark side" - instead the "Not so bright side" - No Paycheck!

OUCH - this hurt is going to last.

[MajorKong]

Where are we going and why are we in this hand-basket?