Thread: Signs of Recovery And Signs of Warning

Signs of Recovery And Signs of Warning

February 20 2010

Some recovery noted, finally, subprimes proven unsustainable, insurers and secret payments, tax credit may boost real property, Fed sits on Bear Stearns garbage, The massive markdown of Maiden Lane, warning signs for the market says Greenspan

Industrial production in the U.S. rose more than anticipated in January as factories churned out more consumer goods and business equipment, leading the recovery of the world’s biggest economy.

The 0.9 percent increase in production at factories, mines and utilities followed a 0.7 percent gain the prior month, according to the Federal Reserve in Washington. Figures from the Commerce Department today showed housing starts climbed to a 591,000 annual pace, exceeding the median forecast in a Bloomberg News survey.

Fannie Mae and Freddie Mac would no longer be able to rely on subprime mortgages to meet their government-mandated goals for helping lower-income Americans obtain mortgages, according to proposed regulations.

The Federal Housing Finance Agency is seeking to restrict the companies from using so-called private-label securities backed by risky mortgages to achieve certain affordable housing goals, the agency said in proposed rules on its Web site today.

Fannie Mae and Freddie Mac, the largest sources of money for U.S. residential mortgages, have relied on private-label debt backed by Alt-A and subprime mortgages to satisfy federal goals of financing loans for low- and moderate-income homebuyers, according to FHFA. Fannie Mae and Freddie Mac were seized in 2008 largely because of regulators’ concern that the companies wouldn’t have enough capital to cover losses on that debt.

“The results of providing large-scale funding for such loans were adverse for borrowers who entered into mortgages that did not sustain homeownership and for the enterprises themselves,â€

[quote][b]Andrew Sum and Ishwar Khatiwada at the Center for Labor Market Studies, Northeastern University: "Labor Underutilization Problems of U.S. Workers Across Household Income Groups at the End of the Great Recession: A Truly Great Depression Among the Nation’s Low Income Workers Amidst Full Employment Among the Most Affluent."

The number of employed civilians (16+) in December 2009 was more than 9 million below its estimated level in November 2007, the month before the recession got underway. Total unemployment has more than doubled over the past two years, with double-digit unemployment rates prevailing between October and December. At the same time, the number of underemployed; i.e., those persons working part time for economic reasons, has also more than doubled, reaching a new record high of 6.4% of all of the employed in the fourth quarter of 2009.1 In addition, the nation’s civilian labor force has actually shrunk by nearly one million over the past year rather than rising by 1.5 million as earlier projected by the U.S. Bureau of Labor Statistics.

Over 20 percent of the employed in the bottom decile of the income distribution were underemployed as were 17 percent of those in the second lowest decile (Table 1). The incidence of underemployment problems fell in the 5 to 6 percent range for those workers in the middle two deciles and declined to lows of 2.5 and 1.6 percent for those workers living in households in the top two deciles.

From the National Employment Law Project: WITHOUT CONGRESSIONAL ACTION, NEARLY 5 MILLION JOBLESS WORKERS WILL LOSE BENEFITS BY JUNE - NELP: Long-Term Unemployment Crisis Requires Extension of ARRA Benefits by February 12th.

Today, the National Employment Law Project (NELP) released new national and state-by-state analyses finding that nearly 1.2 million jobless workers will become ineligible for federal unemployment benefits in March unless Congress extends the unemployment safety net programs from the American Recovery and Reinvestment Act (ARRA). By June, this number will swell to nearly 5 million unemployed workers nationally who will be left without any jobless benefits.

Retiring Senator Evan Bayh (D-IN): "But if I could create one job in the private sector by helping to grow a business, that would be one more than Congress has created in the last six months…â€