September 25, 2011

Are We Once Again In A Bear Market Now?

Readers suggested a topic on the current economic situation. “Are we once again in a bear market now?”

A reply, “Darnit, I seem to remember predicting that this country would go to pot in Summer 2011. It’s the only time they could allow it to happen and still have time for a ‘turnaround’ before the 2012 elections. Fannie’s 6% –> 4% will probably go nowhere and Op Twist is not enough liquidity and too hard for people to understand anyway. I suspect that somebody shut off the spigot, which is why BoA is rushing to the exits and why the stock market is reverting to goods and services.”

One added, “China’s been escalating their threats. Maybe they’ve finally made a move that supports the idea they finally mean it and we’ve moved beyond the saber rattling.”

Another said, “If I were owning both parties, I’l let them switch places in 2012. It will settle the sheep down for a while, while they wait for change that isn’t on its way.”

One had this, “Let’s look at some basic facts: America is old and tried and broke.”

A reply, “I take it your a non-skateboard, non-iPhone, non-wii-chess user. How about Kite-surfing ever try that?”

The Associated Press. “The world economy is in a world of hurt. Europe is wrestling with a debt crisis. Economic growth in powerhouse China appears to be slowing. And in the United States, political paralysis has left policymakers with few tools to fight a slowdown.”

“U.S. markets sank this week even though the Federal Reserve offered a bigger dose of economic stimulus than investors had expected: The Fed plans to reshuffle $400 billion of its investments in hopes of pushing down interest rates on mortgages and other long-term loans. But economists say the Fed’s effort probably won’t make much difference. Rates on mortgages and other loans are already the lowest in decades. The Fed’s announcement underscored the fear that the American central bank had run out of tools to stimulate the economy.”

“Despite China’s rising power, experts say its economy is still not big or strong enough to compensate for meltdowns elsewhere: Chinese investment and spending is only one-sixth that of the European Union and United States. ‘From a global perspective, China’s domestic demand is still way too small to offset the impact of a recession’ in Europe and the U.S., Deutsche Bank economist Ma Jun said in a report.”

“To make up for a 3 percentage point drop in growth in those economies, China would have to grow by 18 percent this year, he says. ‘This is mission impossible.’”

The Kansas City Star. “Kansas City Power & Light Co. officials were optimistic that 2011 would be the year the economy — and electric meters — started humming along again. But after six months some troubling figures emerged. The utility’s residential customers were using 4 percent less electricity than a year ago, when the numbers were adjusted for the weather’s ups and downs. Commercial and industrial electricity use also was down, but just 1 percent.”

“Frugal homeowners’ conservation measures, such as replacing inefficient furnaces and air conditioners, had something to do with the decline. But a starker symbol of the troubled economy also played a part: A growing number of vacant, foreclosed homes are using little or no electricity. ‘These are homes that were getting bills, and now they aren’t,’ said Chuck Caisley, a spokesman for Kansas City Power & Light, which has 725,000 residential customers in Missouri and Kansas.”

The Salt Lake Tribune. “Utah has the nation’s 10th-highest foreclosure rate in the country a new report shows. But the Beehive State, which has been in the top 10 for more than two years, has a foreclosure problem that pales in comparison to No. 1 Nevada, according to RealtyTrac. Nevada was followed by California, Arizona, Georgia, Idaho, Michigan, Florida, Illinois and Colorado.”

“There are about 3.7 million more homes in some stage of foreclosure now than there would be in a normal housing market, according to Citi analyst Josh Levin. ‘This bloated foreclosure pipeline now presents the greatest obstacle to a housing market recovery,’ Levin said in a client note this week.”

The Providence Journal. “The average monthly rent in 2010 for a two-bedroom apartment in Rhode Island, $1,165, is more than 50-percent higher than it was in 2001, when it was $775. The ‘affordable’ rental price for a two-bedroom apartment, the amount that is 30 percent of the average private-sector wage in Rhode Island ($41,808), is $1,045.”

“Despite declines in home values, affordability continues to be an issue for home ownership as well, the report found. The income required to afford a $210,000 house (the 2010 median sales price) in Rhode Island is $64,766. But the median annual household income in Rhode Island is $54,120. Rhode Island’s unemployment rate, 10.6 percent in August, has been in the double digits since March 2009.”

“‘I still think we’re seeing the numbers artificially depressed due to delays [in the foreclosure process],’ said Joy Riley, broker-owner of Westcott Properties, of Providence, which specializes in selling foreclosed properties. As a result, ‘the shadow inventory of at-risk properties is continuing to grow.’ ‘There are hundreds of foreclosure cases in limbo due to the pending legal actions,’ she said. Riley said it’s taking close to 400 days to process a foreclosure.”

The Douglas County Sentinel. “Georgia ranked fourth nationally in foreclosure rates for the month of August, with Douglas County posting the state’s second highest foreclosure rate. Chris Collier, executive officer of the Westside Homebuilders Association, said seasonal factors may also contribute to a rise in foreclosures.’

“‘The summer selling season is coming to an end for people who want to buy homes before school starts. Banks may be saying that now that the season is over, they have no choice but to move forward with foreclosures. Government regulations can force banks to process foreclosures as well,’ said Collier.”

“Kim Hargrave, a real estate broker who works with Douglas County on neighborhood stabilization programs, was not surprised by the statistics. ‘I don’t see it getting better in the near future. We are trying to use local companies to get some foreclosures occupied. The county is doing a lot to try to combat that through classes for new homebuyers and other programs, but the biggest thing right now is we need more jobs,’ said Hargrave.”




Bits Bucket for September 25, 2011

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