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Failure to provide principal reductions to millions of U.S. homeowners under water and the prospect of further price declines in housing in 2012-2013. This would prevent a recovery in the U.S. economy.

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According to real estate data firm CoreLogic, 38% of U.S. home owners who took a second mortgage on their homes are under water on their loans. 18% of borrowers who did not take a second mortgage are under water and have negative equity in their homes. Second mortgages are loans taken out on a property that are subordinate to first mortgages, including home equity loans and lines of credit. Borrowers with second mortgages have an average of $83,000 in negative equity compared to $52,000 for borrowers without second mortgages according to CoreLogic. During the boom borrowers took out cash using home equity loans and lines of credit for everything from home renovations and automobiles to tution and other expenses. Federal Reserve Board data show homeowners took out a huge amount, $2.69 trillion, from their homes for 2004-2006. Overall the number of underwater homeowners, or homeowners with negative equity in their homes, remained steady, according to CoreLogic's report- 10.9 million Americans in the first quarter of 2011, compared to 11.1 million for the fourth quarter of 2010, 22.7% of all homeowners nationwide compared to 23.1%. The slight decline reflected completed foreclosures, suggesting that the market conditions have not changed. Roubini and other experts predicted large housing losses in 2011-2012. This also affects America's largest banks. While the large part of the first mortgages were bundled and sold as securities, the home equity loans remain on bank balance sheets. About three fourths of the $950 billion in home equity loans outstanding were held by commercial banks at the end of 2010. Over 40% of this is on the books of Wells Fargo, Bank of America, J.P. Morgan Chase, and Citigroup. A writedown on these loans could use up a significant part of the bank's capital....

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Samuelson looks at patterns of investing in stocks in the U.S. since 1982. He cites S&P's Howard Silverblatt that the P/E for the S&P 500 averaged 16.9 since 1935 and the current P/E for the U.S. is at 17.6.

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U.S. quarterly seasonally adjusted annual growth rate for GDP for the second quarter 2015 is revised to 3.7% growth from the earlier forecast of 2.3%. The first half GDP growth is still low at 2.2% because of a weak first quarter in 2015. Consumer spending representing two thirds of economic output was up 1.8% in the 1st quarter, and 3.1% in the second quarter of 2015. Another factor relevant to economic growth is gross domestic income or GDI, GDP uses expenditures data and GDI uses income data. GDI was up 0.6% for the second quarter 2015, an average of the GDP and GDI numbers provided by the Commerce Department shows a 2.1% annual growth for the U.S. economy for the second quarter.

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The Black teen jobless rate in 2011, the third year of the Obama administration- a shocking 46.5%!

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The WSJ/Vistage U.S. Small Business Confidence Index ends 2013 at a new high of 108.4 reflecting optimism of small business owners. The Index for 2013 shows a sharp drop by November 2012 to about 82 followed by a sharp increase for Dec. 2013 to about 94, and a similiar pattern is observed as it declines to about 95 in October 2013 and increases to 108.4 in December 2013. The sequester and deadlock in talks by Nov. 2012, and the government shutdown and its resolution by Dec. 2013 are likely causes. The Dec. 2013 Ryan-Murray budget agreement points the way out of political uncertainty that Vanguard CEO McNabb pointed to as a primary obstacle to investment and growth. This may be the strongest indicator of what lies ahead for 2014- 52% of 937 small business owners surveyed online in the Index in Dec. 2013, say the economy has improved in 2013, an increase from 36% in 2012. And 38% say they expect conditions to be still better in 2014, from the prior years 27%. Small business owners polled have sales less than $20 million and fewer than 500 employees. They are the main engine for growth in employment. Loten cites small business owners in construction and other industries who have increased hiring and expect to see a significant improvement in 2014. One owner who represents the pattern taken by small business, cut back employees by 2010, and held back on investment till 2012, increased investment in 2013 and is now expanding. Availability of credit with improved bottom lines and banks more willing to lend will be another positive in 2014-2015....

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Of 161 million people employed in 2024 about 40-50 million in vulnerable groups living from paycheck to paycheck and without savings to support them in a medical emergency is a real problem in the US economy. It is why even as unemployment looks good at 4% and inflation down to 3% there is a lot of angst for Americans for cost of living. Fifteen million baby boomers who will turn 65 years for retirement between now 2024 and 2030 face a situation where they have less than 250,000 in savings. Many who were born between 1945 and 1962 called baby boomers are in this group with diminished savings. In the prime of their careers they were hit by the 2009 financial crisis caused by bank speculation risk taking. They also were hit by the pandemic in the peak years of income growth. Other such vulnerable groups are young people with high student who are being helped by president Biden. There are also the low income groups that have been hit by medical costs and a family emergency that were pushed into poverty. Other groups in the millions are the people at the low income levels who are working paycheck to paycheck because of housing costs. About one fourth or 25% of apartment renters are people whose households budget shows 50% or more going to housing costs which have increased 20% in the last 2-3 years, which includes the pandemic years 2022 and 2023. President Biden seeks to limit apartment rent price increases to 5% and Kamala Harris has proposed help for families for the portion above 30% of household income going to rent. The jump in cost of living from automobiles, automobile repair and housing, cost of groceries have affected other groups with large credit card debt. This is a result of the supply chain concentration in China which comes from American business overconcentrating production in China and previous administrations doing little about this. Biden's answer is to bring jobs and manufacturing knowhow and investment back to America. During the pandemic some people resisted getting vaccinated and lost their jobs, a million people lost their lives, others took early retirement seeing the stress ful lives during the pandemic, others including women quit to take care of children. This has reduced the labor supply to business leading to tight supply higher prices.The result is that there are about 5 such vulnerable groups each with about 5-10 million people for a total of about 40-50 million people at risk. For these people the cost of living presents huge challenges, including childcare. It includes young people and retirees, single women and families on low income hourly wages that have not kept up with inflation.  ...

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Layoffs by Cisco, Borders, Goldman Sachs, Lockheed and other companies will lead to higher unemployment. With poor job creation levels the layoffs add to the problem.

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California lost 79,000 jobs in January, 2009. The California Employment Development Department said the unemployment rate was 10.1% for January 2009, up from the revised figure of 8.7% in December 2008. California expects to pass 11 or 12% unemployment in 2009. A total of 1,863,000 Californians are unemployed, up 754,000 from January 2008, with 3.3% fewer jobs in January 2009 compared to January 2008.

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Anne Lowrey looks at the situation facing the 7.4 million Americans working parttime in March 2014 because they cannot find full time jobs. She cites Alan Krueger, former chairman of President Obama's Council of Economic Advisors, for research that shows only 1 of 10 workers who were counted as long-term jobless betwen 2008 and 2012 had a full time job a year later. In Nov 2013 7.2 million worked parttime because they could not find full time work showing an increase of 0.2 million by March 2014.

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Jeremy Stein tells Eisinger that it is important for the Fed to recognize when a bubble is taking place and take action including jawboning and regulatory action to limit bubble behaviour in capital markets. Fed chairman Yellen did this for social media stocks and bio tech sector stocks in 2014 by pointing out that that the rise in stock prices were excessive, resulting in a pullback.

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The German Statistical Office reported that GDP growth in Germany was 0.1% in the second quarter of 2011. This compares with GDP growth of 1.3% in the first quarter. This is slower than Italy which came in at 0.3% for the second quarter. France had no growth in the second quarter. The German Statistical Office said the causes were: lower household consumption and construction investment, imports rising faster than exports and a buildup of inventories. Analysts at Commerzbank say the warm spring resulted in construction activity starting earlier and taking out some of the growth in the second quarter, in its absence the growth would be 0.4% for the second quarter. The statistics office said an additional 553,000 persons were added to employment compared to the prior year, with a total of 41 million employed.

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Merkel's leadership as Germany goes through the economic crisis. There is not much enthusiasm for further reforms among the Social Democrats or the Christian Democrats. Other than raising the retirement age to 67, the mood is not for any changes in that direction. The economy will contract by 6.1% but Merkel's decision is not to go in for a big stimulus under pressure from the US, and instead stay with the status quo combined with help to workers for unemployment benefits and for retention of workers by companies. As elections approach Merkel is considered favorably, and according to a recent poll by Forschungsgruppe Wahlen nearly 60% are satisfied with the grand coalition of the CDU and the SPD, 78% think Ms Merkel has done well as chancellor, and 58% want her to remain on the job. Actually Merkel's popularity is behind the CDU's prospects, the CDU itself is popular among only 35% of voters. Her analytical habits from her training as a physicist show in the way she is governing, which is thoughtful, and connects well with voters. Merkel benefits from the reduction in unemployment. Unemployment fell from around nearly 5 million in 2005 to around 3 million in 2008. The risk is that Merkel's popularity may be affected by an increase in unemployment to 5.1 million from the averaage of 3.3 million in 2008, according to an OECD estimate. Merkel stands behind a German response to the crisis which is to support the priciples of a social-market economy, make unemployment as least painful as possible to the jobless, to keep every job that can be saved in the nonfinancial sector with a 115 billion euro "Germany fund" providing guarantees and credits to companies that are in trouble because of the credit crisis. Stimulus packages of 64 billion euros supported the auto industry with subsidies to car buyers, and subsidies to keep workers intheir jobs. The idea was to come up with a German version of the response to the crisis by balancing the need to respond based on German conditions, and the concerns for inflation and the budget deficit, that is shared by most Germans. THe vision offered by Merkel is that of a physicist daughter of a protestant minister in East Germany, who is low on the rhetoric and good on substance, and willing to make decisions based on careful study and discernment rather than ideology, without sharp swings in any direction. Her vision comes from her days as environment minister, which is quietly pushing Germany into the forefront of countries developing renewable energy, moving ahead in energy efficiency, with anational goal of cutting emissions by 40% by 2020. The other areas are immigration and education, both key to the future of Germany because of the huge demographic change happening there. She has afamily minister Ursula von der Leyden, who introduced "parents pay", a14 month stipend for parents of newborn children linked to salaries, and to to improve daycare by providing places for 35% of children aged three or less by 2013. And Merkel has approved 18 billion euros of additional funding for research and universities. Says Leyden Merkel has made "daycare" an acceptable term in the CDU, and made Germans accept that they are an immigration country. Which tells you that you have to look closely to find the reasons for Merkel's popularity, which does not carry the rhetoric of an Obama, but is just as effective in German conditions. There are deepseated demographic changes going on in German society, which require a cultural change, and change in mindset, such as that for daycare, immigration, and blending the best of the old in the social market economy with the new like the changes in the educational system. The Economist says that in big cities today nearly half of the children under 15 are immigrants or their children and grandchildren, who are more likely to be poorer, unemployed and with less education. ...

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U.S. Fed Governor Stein says he is is concerned about the costs of the accomodative stance taken by the Fed under Bernanke, even though he understands the reasons for the accomodative policies.

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Steven Rattner points to the decline in U.S. median household income as a result of globalization. At $7 an hour GM's Mexican auto workers are just as efficient as workers in the U.S. The result is a shift in jobs to Mexico and the two tier wage system in the U.S. auto industry, now formalized in new UAW contracts with Ford, GM and Chrysler. The UAW agrees to hire entry workers at $14 and hour. A new VW Chattanooga plant pays $14.50 an hour. Rattner points to the need to create new jobs with high intellectual content in service industries such as education, digital media, entertainment, and financial services. This requires a greater committment to education.

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Some startling statistics on U.S. wages and incomes and the increase of part-time workers, by the publisher of U.S. News and World Report, Mortimer Zuckerman. He cites the Pew Research Center reports that show one third of Americans identifying themeselves as lower class or lower middle class compared to one quarter before 2008. This affects social mobility with the increasing gaps in incomes, education and social behaviour acting to reinforce each other and leading to even lower future mobility. Industries that are showing growth are in low wage occupations. The Bureau of Labor Statistics shows growth in future in industries noted for low wage part time work- health care, social assistance and retail, with some jobs lacking minimum wage and overtime protections. Revealing in this respect is that in the last 2 years fully 43% of net employment growth is in the 1.7 million jobs added in low wage work in food service, retail and employment services industries. The number of Americans working full time declined by 5.9 million since Sept 2007, part time workers increased by 2.6 million. The effects of higher part time workers and job recovery predominantly in lower wage industries is likely to affect consumer spending and slow growth....