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American Economy Meltdown

For months, the American economy has been assailed by a wave of troubling news, from plunging housing prices to the soaring cost of oil, provoking gloomy talk of a possible recession. Yet so far the economy has found a way to shrug it all off and keep growing.

How much longer can the expansion carry on As a new year unfolds, analysts expect a verdict soon: Either the negatives finally metastasize and drag the economy down, or a fresh source of growth emerges, helping to sustain consumer spending despite the ongoing worries about housing and tight credit.

“There are even odds of a recession,” said Mark Zandi, chief economist at Moody’s Economy.com. “It literally could go either way.”

The year that just ended was not for the faint of heart. As mortgage debt became synonymous with toxic waste, banks got spooked and tightfisted. Job growth slowed. Inflation fears grew. Still, consumers kept spending, and unemployment stayed flat. American companies found enough sales abroad to compensate for weakness at home.

The bursting housing bubble remains a locus of concern. An era of free-flowing credit and speculation has led to a far-flung empire of vacant, unsold homes — 2.1 million, or about 2.6 percent of the nation’s housing stock, Mr. Zandi said. Even in the worst years of recessions in the early 1980s and 1990s, the share of vacant homes did not exceed 1.9 percent.

This assemblage of unsold properties will not be whittled down to normal levels, economists suggest, until national home prices fall by at least 15 percent from their peak, reached in the summer of 2006. So far, prices have dropped a little more than 5 percent, according to the Standard & Poor’s Case-Shiller home price index.

The glut could be exacerbated if an already alarming wave of foreclosures continues to broaden, claiming even those with supposedly good credit.

Last year, the trouble in the mortgage market was largely confined to subprime loans extended to homeowners with weak credit. Nearly one-fourth of such loans were in default as of November, according to data from First American LoanPerformance and the Federal Reserve Bank of New York.

Though default rates on loans to homeowners with relatively good credit are far lower, they are rising sharply, too. In November, 6.6 percent of so-called Alt-A home loans — those deemed somewhat less risky than subprime — were either delinquent by 60 days or more, in foreclosure, or had been repossessed. That was up from 4.3 percent in August.

This is a potentially ominous sign, because subprime and Alt-A mortgages issued in 2006 together made up about 40 percent of all mortgages. Like many of the subprime loans that have landed in trouble, Alt-A loans often begin with a low introductory interest rate that later escalates.

The spike in foreclosures is happening even before many mortgages have reset to higher rates, suggesting that borrowers are falling behind because their homes are worth less. Many are having trouble refinancing as banks tighten lending standards.

All of which explains why many economists expect national housing prices to fall by 5 to 10 percent more in 2008, and perhaps into 2009 as well, before hitting bottom.

Such a drop could ripple out to the broader economy by depressing consumer spending, which accounts for about 70 percent of all economic activity.

“It’s almost inconceivable that there won’t be severe constraints on the U.S. consumer economy,” said Bernard Connolly, chief global strategist at Banque AIG in London.

Through the recent era of multiplying housing prices, Americans have turned increased home values into cash via sales, refinanced mortgages and home equity loans — more than $800 billion a year from 2004 to 2006, according to several analysts. The pace of this flow has slowed sharply in recent months.

Fierce debate centers on how much of that money winds up financing consumer purchases, but estimates suggest that every dollar of lost housing value is likely to constrain 5 to 10 cents of spending by consumers that otherwise would have taken place over the next year or two. That could be enough to turn an expansion into an recession.

Forecasting the demise of consumer spending, however, is notoriously risky. The willingness of Americans to spend, whatever the size of their debts, seems to transcend the rules of economics

USA TODAY

No. 4 Missouri rallies past No. 8 Kansas USA TODAY (AP) – Marcus Denmon hit three 3-pointers in the final 2:05, the last for the go-ahead points, as No. 4 Missouri fought off No. 8 Kansas 74-71 in Game 1 of what could be the schools' final border showdown on Saturday night. By Dak Dillon, US Presswire ... and more »

No. 3 UConn Routs No. 13 Rutgers; Baylor and Stanford Also Romp New York Times Stefanie Dolson scored 16 points, Tiffany Hayes had 14 and No. 3 Connecticut beat 13th-ranked Rutgers, 66-34, on Saturday night for its 98th consecutive home victory. The Huskies (21-2, 9-1 Big East) grabbed control with a 17-0 run midway through the ... and more »

Newsday

Pats' no-huddle designed to disrupt defense Newsday Giants Newsday > Sports > Football > Giants Pats' no-huddle designed to disrupt defense Originally published: February 4, 2012 6:12 PM Updated: February 4, 2012 9:46 PM By TOM ROCK tom.rock@newsday.com One of the most important things for a defense to ... Giants vs. Patriots: A Super Bowl with no quit in itLos Angeles Times No Prayer for Patriots' Tom Brady: Fan's TakeYahoo! Sports Torn Between Three Teams... No Longer Feeling Like a FoolHuffington Post (blog) Slate Magazine -National Post (blog) all 5,755 news articles »

The Hindu

No Chidambaram role in 2G plot: court The Hindu There was no sufficient ground in Dr. Swamy's plea for seeking the prosecution of Mr. Chidambaram, though he was party to keeping the 2G spectrum prices in 2008 at the 2001 levels and dilution of equity by two companies before the rollout of services, ... 2G case: No evidence suggests P Chidambaram subverted policy, says judge OP SainiTimes of India Nothing incriminating, no malafide: 2G court clears ChidambaramIndian Express no criminal culpability of Chidambaram: CBIEconomic Times IBNLive.com -Moneycontrol.com -Deccan Herald all 787 news articles »

ABC News

Trump's endorsement is no help to Romney Macleans.ca (blog) He was no threat. There was no way he would divulge the details of his wealth or his taxes for the sake a presidential run. These publicity antics have more to do with his show than the good of the country. This should have been Romney's best week, ... A Trump endorsement: Where imagination and reality meetsCNN (blog) Trump Backing Romney as Candidate Defends Remark on 'Poor'BusinessWeek Trump Endorses, Romney Grins and Bears ItThe Atlantic ABC News (blog) -Huffington Post all 2,213 news articles »

The Guardian

Job growth no guarantee of smooth path for Obama Vancouver Sun The problem may not be fatal for the Republicans, but if the growth continues through the spring and summer, "there's no way in the world that you can deny it helps Obama's case," said Whit Ayres, a Republican pollster. The election-deciding question ... Jobs numbers are good, but no Reagan recovery, GOP saysCBS News White House: Jobs Report Shows Economy Is HealingABC News (blog) Romney Remarks After His Silver State TriumphTIME CNN (blog) all 2,560 news articles »

Los Angeles Times

No Parcells? Shame on Hall of Fame ESPN (blog) By Rich Cimini INDIANAPOLIS -- When Bill Parcells came up for discussion Saturday during the Hall of Fame selection meeting, the 44-member committee spent nearly an hour debating the pros and cons of his candidacy, according to people in the room. Curtis Martin, Cortez Kennedy, Dermontti Dawson, Doleman, Roaf make Pro ...Washington Post Mark Purdy: Hall of Fame snubs of former 49ers owner Eddie DeBartolo Jr. and ...San Jose Mercury News all 891 news articles »

Globe and Mail

Eurozone loses patience with Greece, says no rescue without reforms Times of India "If we were to establish that everything has gone wrong in Greece, there would be no new programme, and that would mean that in March they have to declare bankruptcy," he said in advance copy of comments to news weekly Der Spiegel. Germany: no need for public-sector contribution to Greek bond haircut dealWashington Post all 1,869 news articles »

New York Daily News

Belichick says no setbacks for Gronkowski Wall Street Journal During the hour-long session Friday, players ran no faster than at a trot. Coach Bill Belichick said earlier Friday that Gronkowski had no setbacks after Thursday's practice, his first for the Super Bowl. "He practiced yesterday. Tom Coughlin has no problem with Super Bowl XLVI trash talk between NY Giants ...New York Daily News No Kidding: Fairy Dust Can Swing Super BowlNew York Times Belichick: No setbacks for GronkowskiChicago Tribune all 15,536 news articles »

Newsday

No. 4 Missouri rallies past No. 8 Kansas 74-71 Newsday Click here No. 4 Missouri rallies past No. 8 Kansas 74-71 Published: February 4, 2012 11:27 PM By The Associated Press RB FALLSTROM (AP Sports Writer) (AP) -- Marcus Denmon hit three 3-pointers in the final 2:05, the last for the go-ahead points, ... and more »

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 Comparing Mortgages  Fixed Rate vs Variable Mortgage  Equity Mortgages  hire independent professional home inspection  moving house   American Economy Collapsing  Margin call for The USA  Margin call for The USA  American Economy Meltdown  American Economic Meltdown 

 Comparing Mortgages  Fixed Rate vs Variable Mortgage  Equity Mortgages  hire independent professional home inspection  Links 

American Economy Meltdown

For months, the American economy has been assailed by a wave of troubling news, from plunging housing prices to the soaring cost of oil, provoking gloomy talk of a possible recession. Yet so far the economy has found a way to shrug it all off and keep growing.

How much longer can the expansion carry on As a new year unfolds, analysts expect a verdict soon: Either the negatives finally metastasize and drag the economy down, or a fresh source of growth emerges, helping to sustain consumer spending despite the ongoing worries about housing and tight credit.

“There are even odds of a recession,” said Mark Zandi, chief economist at Moody’s Economy.com. “It literally could go either way.”

The year that just ended was not for the faint of heart. As mortgage debt became synonymous with toxic waste, banks got spooked and tightfisted. Job growth slowed. Inflation fears grew. Still, consumers kept spending, and unemployment stayed flat. American companies found enough sales abroad to compensate for weakness at home.

The bursting housing bubble remains a locus of concern. An era of free-flowing credit and speculation has led to a far-flung empire of vacant, unsold homes — 2.1 million, or about 2.6 percent of the nation’s housing stock, Mr. Zandi said. Even in the worst years of recessions in the early 1980s and 1990s, the share of vacant homes did not exceed 1.9 percent.

This assemblage of unsold properties will not be whittled down to normal levels, economists suggest, until national home prices fall by at least 15 percent from their peak, reached in the summer of 2006. So far, prices have dropped a little more than 5 percent, according to the Standard & Poor’s Case-Shiller home price index.

The glut could be exacerbated if an already alarming wave of foreclosures continues to broaden, claiming even those with supposedly good credit.

Last year, the trouble in the mortgage market was largely confined to subprime loans extended to homeowners with weak credit. Nearly one-fourth of such loans were in default as of November, according to data from First American LoanPerformance and the Federal Reserve Bank of New York.

Though default rates on loans to homeowners with relatively good credit are far lower, they are rising sharply, too. In November, 6.6 percent of so-called Alt-A home loans — those deemed somewhat less risky than subprime — were either delinquent by 60 days or more, in foreclosure, or had been repossessed. That was up from 4.3 percent in August.

This is a potentially ominous sign, because subprime and Alt-A mortgages issued in 2006 together made up about 40 percent of all mortgages. Like many of the subprime loans that have landed in trouble, Alt-A loans often begin with a low introductory interest rate that later escalates.

The spike in foreclosures is happening even before many mortgages have reset to higher rates, suggesting that borrowers are falling behind because their homes are worth less. Many are having trouble refinancing as banks tighten lending standards.

All of which explains why many economists expect national housing prices to fall by 5 to 10 percent more in 2008, and perhaps into 2009 as well, before hitting bottom.

Such a drop could ripple out to the broader economy by depressing consumer spending, which accounts for about 70 percent of all economic activity.

“It’s almost inconceivable that there won’t be severe constraints on the U.S. consumer economy,” said Bernard Connolly, chief global strategist at Banque AIG in London.

Through the recent era of multiplying housing prices, Americans have turned increased home values into cash via sales, refinanced mortgages and home equity loans — more than $800 billion a year from 2004 to 2006, according to several analysts. The pace of this flow has slowed sharply in recent months.

Fierce debate centers on how much of that money winds up financing consumer purchases, but estimates suggest that every dollar of lost housing value is likely to constrain 5 to 10 cents of spending by consumers that otherwise would have taken place over the next year or two. That could be enough to turn an expansion into an recession.

Forecasting the demise of consumer spending, however, is notoriously risky. The willingness of Americans to spend, whatever the size of their debts, seems to transcend the rules of economics

USA TODAY

Giants coach Tom Coughlin is no turkey Chicago Sun-Times “There's no question you change,'' Coughlin said. “… You better have an ability to self-analyze, make it honest, try to adjust and try to do the things that you think are necessary to make your presentation and your team respond better to you on a ... New York Giants quarterback Eli Manning no longer the 'other Manning'San Jose Mercury News No Kidding: Fairy Dust Can Swing Super BowlNew York Times Manning's status no longer in doubtChicago Tribune Yahoo! Sports -CNN -ESPN (blog) all 13,037 news articles »

USA TODAY

Rivers leads No. 5 Duke past Virginia Tech 75-60 USA TODAY Duke made lots of changes coming into its game at Virginia Tech on Thursday, and the No. 5 Blue Devils put together one of their most complete performances in a 75-60 victory. "Once we get going and our offense gets going and our defense plays at the ... and more »

New York Times

No 'Trump bump' from endorsement of Romney, pundits say San Francisco Chronicle GOP hopeful Mitt Romney (center), with wife Ann, receives Donald Trump's endorsement at Trump's hotel in Las Vegas. A day after getting blasted by liberals and conservatives alike for saying that he was "not concerned about the very poor," GOP ... A Trump endorsement: Where imagination and reality meetsCNN (blog) Trump endorses Romney as Republican candidateCBC.ca Trump Endorses Romney in a 7-Minute AppearanceNew York Times (blog) ABC News (blog) -Huffington Post -The Atlantic all 2,475 news articles »

Telegraph.co.uk

Fed still divided as Fisher sees no need for QE3 Reuters By Jonathan Spicer | AUSTIN, Texas (Reuters) - A third round of large-scale asset purchases by the Federal Reserve is not needed and would compound the difficulties of tightening monetary policy when the time finally comes, a top Fed official said on ... Bernanke on Fiscal Policy: 'Do No Harm'Wall Street Journal (blog) Bernanke Sees No Signs of Higher Inflation or Weaker DollarBusinessWeek all 1,163 news articles »

Los Angeles Times

Abortion Had No Role in Planned Parenthood Move, Komen Group Says MedPage Today By Emily P. Walker, Washington Correspondent, MedPage Today WASHINGTON -- The Susan G. Komen for the Cure Foundation, facing a hail of criticism for cutting off funding of breast exams at Planned Parenthood, has denied that abortion played a role in ... Joe and Jill Biden: Susan G. Komen Supporters No MoreU.S. News & World Report (blog) Planned Parenthood: Sen. Alex Padilla a Komen 'Pink Tie Guy' no moreLos Angeles Times Shame to politicize pink ribbonThe Seattle Times Dallas Morning News (subscription) (blog) -CBS News -CNN all 2,655 news articles »

AllAfrica.com

No Time to 'Give Up' on HIV Fighting Gel AllAfrica.com By Julie Frederikse, 2 February 2012 Durban, South Africa — Africans tracking the worldwide HIV epidemic have not found much to celebrate since Aids began ravaging the continent 30 years ago, but researchers are optimistic that they are learning as ... and more »

ABC News

LAUSD finds no records of complaints against teacher Mark Berndt Los Angeles Times Despite emerging reports of past suspicion of misconduct, Los Angeles school district officials have found no record of complaints against former teacher Mark Berndt, who is accused of bizarre acts of lewd conduct against students in his classroom. Old-style film processing led to CA teacher arrestCBS News all 2,191 news articles »

USA TODAY

No, We Won't Be At The Super Bowl This Year Forbes There may be no worse fate to advertisers than to have one of their Super Bowl commercials deemed a “failure” or “irrelevant” from the chorus of advertising “critics” who seem to appear on morning talk shows and the like each year. Super Bowl advertisements: Six ways to get noticedEntertainment Weekly (blog) all 944 news articles »

Inquirer.net

'Did Corona commit a high crime?' ABS CBN News "No, your honor. It is not a high crime," Barzaga replied. Enrile then said: "All right, you read the Constitution. Culpable violation of the Constitution, treason, bribery, graft and corruption, and other high crimes could be the basis for impeachment ... No proof on '45 assets' of Renato CoronaInquirer.net all 28 news articles »

The Guardian

Germany: no need for public-sector contribution to Greek bond haircut deal Washington Post BERLIN — Germany's finance minister says he sees no need for a public-sector contribution to cutting Greece's debt load as the country works toward a deal with its private creditors, and is insisting that Athens put promised reforms on track to get a ... No more public aid needed for Greece, says GermanyReuters Greece Likely to Need Another $20 Billion to Cut DebtVoice of America all 1,029 news articles »

Common Misspellings include almsot, alomst allready alreayd, aready adn, anbd becamae baceause, beacuse, becasue, beccause, becouse, becuase bedore, befoer, befor beggin bu cheif consern constaints coudl, sould dispite eearly ecomonic eceonomy eiter eveyr exerbated exapansion fedral, fedral fianlly, finaly firt, firts foudn fouth fomr, frome hapening ahev, ahve, haev, hvae, hvea hvaing heigher, higer howver inclreased intrest inot jstu lead, leaded liek, liuke litterally littel maked milion, millon moeny monts moreso, mroe, omre morage, morgage, morgtage, morgate, mortage enxt nto, onot ofen oftenly omnious, ominus perhasp, perheaps, perhpas, perphas palce possable, possibile reched relutively, relativly, realitvely, relitavely severeal sieze sose standars suposedly, supposably, supposably, supposingly synonomous tahn, thna taht, tath, thast, thgat, thta, thyat hten, tghe, ther, thge, tjhe ther, theri, thier, thier their, ther htey, tehy, tyhe htis, thsi, tihs ethose, thsoe toghether twpo untill wass, weas, ws vell hwihc, whcih, whic, whihc, whlch, wich iwll, wille, wiull willingless owudl, woudl eyar, yearm, yera eyars, eyasr, yeasr, yeras, yersa
 Comparing Mortgages  Fixed Rate vs Variable Mortgage  Equity Mortgages  hire independent professional home inspection  moving house   American Economy Collapsing  Margin call for The USA  Margin call for The USA  American Economy Meltdown  American Economic Meltdown