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The House passes the $819 billion tax and spending bill. Every Republican in the House voted against the bill in the 244-188 vote. Most of the money to be spent of about $526 billion will be spent in 2009 and 2010, though some spending on student loan programs, clean water projects and housing assistance will carry over into future years. To help workers with the downturn $27 billion will go to continue unemployment insurance benefits till December 31, 2009. $9 billion will go to increase the current benefit from $300 to $325 per week. This is money that will be spent as workers lose jobs. The bill also lets former employees to get COBRA coverage, It funds 65% of individual's premiums for upto 12 months. And workers over 55 or with more than 10 years service will get to keep their COBRA coverage until they get a new job or get Medicare. A big departure is allowing those who are unemployed enroll in Medicaid, and Medicaid will temporarily expand to include millions of unemployed workers. See the link to Education spending for the $125 billion going into Education spending that will save the jobs of hundreds of thousands of teachers and create jobs for construction as schools are repaired and renovated....

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What is theaverage income of a Ohio plumber and how many have health insurance? Is he a working class man? Well it turns out that Joe the Plumber Republican candidate for President 2008 refers to could be an exception but the average plumber makes $47,930 according to the Bureau of Labor Statistics occupational earnings report for May 2007 for plumbers in Ohio. And the Ohio plumbers income was only 15% higher than in the 2000 report when the consumer prices in midwest rose by 17%. According to the Kaiser Family Foundation in 2007 only 45% of companies with fewer than 10 employees offered health benefits, down from 57% in 2000. And 2007 was a good year, the statistics for 2008 and 2009 would look much worse as the downturn takes shape. As Chapman another Nobel prize winning economist wrote in the WSJ oped pages the stimulus checks were spent on more purchase of consumer goods merely continuing a high debt low savings spendthrift pattern of consumer behaviour and delayed the economic crisis for 6-12 months. Underlying incomepatterns like the one above where working class Americans were actually more and more worse off in an accelerating pattern may have become glossed over in consumer debt and housing boom behaviour....

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Chinese are saving for the future as there is no safety net, no social security and no welfare or food stamps.And this means there will be a strong cutback in consumption and in sales of most products in China. Even before this global economic crisis China was becoming even more export oriented. In the last decade consumption as percentage of GDP actually declined from 47% to 37%. And the $586 billion stimulus has some measures to boost consumption but most of the money will go to infrastructure like new highways, railroads and airports. Housing construction is coming to a halt with home prices down 15% in Shenzen. And layoffs among exporters in the area north of Hong Kong like Li Kai which made 9 million sneakers for New Balance in 2007 will make 7 million in 2008, and is laying off 22% of its workers. Migrant workers are headed back home. The sales of foreign firms will be affected. GM's Buick brand saw sales decline an estimated 12% this year and JD Powers estimates decline in 2009 by 21%. Researcher BDA China sees cell phone sales down to 9% growth each year for next 5 years, down from 30% increases in the past 5 years....

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The US housing market in 2022 with sharp increase in cash out refinancing and home equity financing. Total home equity increased 20% in the first quarter to $27.8 trillion, a record high, according to the Federal Reserve, the US central bank. About 60% of equity was withdrawn through cash out refinancing in 2021, according to mortgage data. Cash out refinancing simply adds the amount borrowed to the existing mortgage balance. The amount borrowed through such financing by homeowners adds to inflationary pressures with more cash borrowed on the house for home improvement projects, gardening projects, appliance spending and automobile purchases. The increase in the interest rates by the US Federal Reserve including the 0.75% increase in the rate announced on June 15 slows the amount of borrowing through cash out refinancing. The supply chain disruptions disrupted flow of goods at a time of high demand in 2021 following the lockdowns, and then the war in Ukraine added another layer of inflation from high gas prices. The combined effect with housing price pressures created the perfect storm in inflation the US is facing with the rest of the world. ...

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The percentage of borrowers with loans overdue 30-90 days is at 7.4% at the end of the 1st quarter 2012, down from 8.3% for the prior year, according to the Mortgage Bankers Association. About 4.4% of mortgages were in foreclosure at the end of the 1st quarter of 2012, close to the 4.5% the prior year. Florida had foreclosure rate of 14.3%, New Jersey 8.4%, and Illinois 7.5%, at the end of March 2012. The inventory of loans in foreclosure is at 4.39%.

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The Zillow index from Zillow Inc., the real estate web site, shows home values increasing by 5.8% in June 2013 over a year ago, and up 2.7% in the first six months of 2013. The Case-Shiller index shows home prices up 12.2% in May from one year ago. Economists say the Case-Shiller index overstates the price increases compares to the Zillow index because it includes foreclosed homes. During a period when foreclosures are slowing as in the past year, this tends to show a faster increase in prices in the Shiller index, with the reverse happening when foreclosures are high. This is because foreclosed homes sell at a large discount. The Zillow index excludes foreclosed homes removing this volatility in the index. Increase in mortgage rates by one percentage point, and future expectations of increases, are likely to keep price gains down in pricier markets of Boston, New York and San Francisco. Inventories are tight in some cities. Dallas, Los Angeles, San Diego, Washington D.C. and Orlando, have less than 3 months supply, according to John Burns Real Estate Consulting. Phoenix, Seattle, Denver less than 2.5 months supply, according to a WSJ quarterly survey of 28 metro areas....

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Price declines in housing markets just after the mortgage crisis hit in August. Detroit and San Diego hardest hit.Also Phoenix, Las Vegas. Portland due to population shifts in western states and Seattle because of boom in industries there bucked the trend. Worst still to come as credit tightens.

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U.S home prices declined by 3.9% for the third quarter compared with the prior year, according to the S&P/Case-Shiller index of 20 major metropolitan areas. Prices are expected to be affected by an increase in foreclosed properties put by the banks for sale in coming months. Affordability has increased as prices are down by 31% from the 2006 peak and mortgage rates are at 4%. Yet as one appraiser puts it the problem remains one of tight credit and strict mortgage lending standards, and further home price declines could depress the market.

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Will the housing slowdown impact the rest of the economy, industries like auto, airlines, oil. How much slowdown in growth is to be expected? Both sides of the picture. Oil price declines and the fact that consumers are spending less out of cash from home equity may mitigate the slump.

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Export growth, Fed rate cuts and other efforts to promote lending, some smaller growth in job creation, and the smaller role of housing investment in the economy, should offset the credit crunch. The worst hit in the mortgage crisis represent a smallpart of consumption spending and cosumption may hold up.

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Captures the mood in 2007 end optimistic but do most people have their head in the sand, and not grasped that he problems created in housing and credit won't just go away. See the related end of the year piece in Abreast of the markets, Gaffen WSJ, Dec. 24, 2007.

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Changes in Venzuela to address day to day problems of Venezuelans that were not addressed in the rhetoric of the last few years. Changes at cabinet and other levels to address housing, garbage collection, crime and to get food to poor neighborhoods. Decline in the value of the currency the Bolivar.

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President Obama in his speech at Georgetown, April 13, 2009, describes the thinking behind the decisions made in the first 12 weeks of his administration- why the actions are not aggressive and overreaching as some critics say, and why they are not timid as other critics have said. This was not a typical downturn of the business cycle, but a perfect storm arising from irresponsibility and poor decisionmaking in Washington, Wall Street and Main Street- in effect several crises colliding for something like an explosion, if not dealt with at once, and with strong action. He says "the key to dealing with our deficit and debt is to get a handle on out-of-control health care costs, not to stand idly by as the economy goes into free fall." The recognition that the crisis itself brings with it new possibilities, the opportunity for coming to grips with and forging a good solution to health care, energy and education issues that were neglected while Wall Street directed investments to areas other than investment in building for the future. To the critics like Krugman, Rosenfeld and others who say that the takeover of insolvent banks should be done quickly before the situation worsens, he says it is not because of any ideological or political judgement he has made about government involvement in banks, but because it is more likely to undermine than create confidence at this point. He goes on step by step, through the process of decisionmaking, first to step in and boost spending vigorously, second to get lending flowing again to businesses and families, strengthening the non-bank credit market for consumer purchases and loans, the housing plan, the auto plan, and the work at the G-20. Then President Obama goes on to project his vision and the road to getting there. The five pillars he sees for the future are: redirecting Wall Street and banking to constructive investments for the future, investments in education, investments in renewable energy and technology to create new industries and new jobs, investments in health care to cut costs for businesses and families, and new savings in the federal budget to bring down the deficit. Obama says he will look for savings line by line in every corner of the budget, and has already identified two trillion dollars in deficit reductions over the next decade. And the goal is to reduce discretionary spending for domestic programs as share of the economy by more than 10% over the next decade. Procurement reform will greatly reduce no-bid contracts and save $40 billion. Secretary Gates is attacking th problem of hundreds of billions of dollars in waste and cost overruns that have bloated the defense budget, without adding to the nation's safety. And education programs that don't work will be removed, and waste, fraud and abuse in the Medicare program will be controlled. Finally, Mr Obama points to the nation's political system as one more reason we are in this perfect storm- "a fundamental weakness in our political system." He cites the putting off hard decisions for another day, scoring political points instead of rolling up up sleeves to solve real problems, an impatience that is only worsened by the 24 hour news cycle, and a short attention span that focusses on the immediate results and on poll numbers. And there is too much responding to the "tempest of the moment until the furor has died away and the media coverage has moved on, instead of confronting the major challenges that will shape our future in a sustained and focussed way." After these 12 weeks President Obama says, for the first time there are glimmers of hope, and way off in the distance can be seen a vision of America's future that is far different than its troubled past. And citing the parable in the Sermon on the Mount about that "house built on a rock", he sees America's house built on a rock, a house for which we use this moment to lay a new foundation, come together and begin the hard work of rebuilding, persisting and persevering in the face of disappointments and setbacks that surely lie ahead. Then he has no doubt "that this house will stand and the dreams of our founders will live on in our time." Its a remarkable speech in its directness, its simplicity in approaching the subject, and its borrowing from the Bible for that story of that house built on a rock, and its Lincolnesque reference to the house that will stand. And more than a speech, it describes a vision, and the set of actions and steps taken and to be taken to get there. ...

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Bad loans in Spain's banking system reached a high of 8.16% of total loans by banks in Feb. 2012, according to the Bank of Spain. The total amount of bad loans was 144 billion euros.

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A study by the Pew Research center shows minorities are the ones hardest hit in the millions of foreclosures taking place in the US. Counties with black or Latino majorites and the New York region are hit severely. What appeared to be a boon five years ago as black home ownership rose sharply after decades of discriminatory lending and zoning practices, has now turned into a curse with families losing homes to foreclosure, neighborhoods seeing increasing crime and declining house values, and renters being evicted. Lenders like Mozilo's Countrywide and other similiar lenders simply used the idea of home ownership as a flag to get political support for a wild west in lending practices, which allowed predatory lending to take place in the deregulatory atmosphere of the time. See the link to the impact on minorities. Nowhere has it been shown more pointedly that prudence and character in leaders in all areas is the essential conditon for progress, making free enterprise a necessary condition but subject to this essential condition, than in the way the housing and foreclosure crisis is hitting the American and the world economy in so many ways. This is evident in neighborhoods like this one on 145th st. in Jamaica, Queens, whaere black households making more than $68,000 a year are five times as likely to hold high interest subprime mortgages as whites of similiar incomes. Defaults occur three times as often in minority census tracts as mostly white ones. And 85% of the worst hit neighborhoods have majority of black and Latino homeowners. Which may also explain why there is not agroundswell of support for serious government foreclosure prevention measures like bankruptcy legislation and other legislation such as that suggested by Martin Feldstein and others for homeowners nearly or already under water, when faced with fierce lobbying by the banks and financial institutions. Consumer advocates say years ago many banks drew red lines around black neighborhoods and refused to lend, then as deregulation became the rage five years ago, these banks under unscruplous leaders targeted these neighborhoods for subprime lending. A dozen banks and lending companioes that made big profits from subprime loans accounted for half the loans given to the New York region'sblack middle -income borrowers in 2005 and 2006, a case of reverse redlining that the N.A.A.C.P. says in its lawsuit against these lenders. Housing and Urban Development Sec. Shaun Donovan, in aspeech to New York University said that 33% of the subprime mortgages given out in New York City in 2007, went to borrowers with credit scoresthat should have qualitifed them for conventional prevailing-rate loans. For anyone taking out a $350,000 mortgage, says the NYT, a difference of three percentage points - a typical spread between conventional and subprime loans- tacks on $272,000 in additional interest over the life of a 30 year loan. ...

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Eduardo Porter compares Italy's propensity to collect and invest tax dollars in healthcare and public services to a much greater degree than the U.S. In 2007 he points out Italy spent 25% of its output on social programs such as health, food and housing, compared to 16% in the U.S. He reflects on the possible reasons for this based on research. Italians see the tax dollars at work in a health care system that works for them and their children, as in this example of Eduardo and his child at a health clinic in Liguria, Italy. In the U.S. there is less evidence of this and the sense that government is likely to waste tax dollars, that the individual is better able to make choices. The less homogenous society in the U.S. also means there is less support for public services that might benefit other lingusitic and cultural groups.There is also the feeling that in American society there is greater oportunity for the less well off to join the upper class given the open capitalist framework, as compared to Italy where connections and traditional advantages matter. Some experts attribute this to smaller taxes leading to economic growth, but Porter says the examples of Sweden, Norway, and Japan showed growth was higher or similiar to that in the U.S. ...

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Paul Volcker outlined the work remaining to be done to make the U.S. financial system safe in an interview with Gretchen Morgenson in October 2011. On Fannie and Freddie he says it is important to get rid of Fannie and Freddie at the first opportunity, because they simply shouldn't exist, and it was a mistake to have institutions of this type that mix profit making private opportunities with an implicit government guarantee. If a government wants to help low income people find housing, subsidize them directly, don't do it in this way by hiding the liability behind a quasi-private institution, says Volcker, in the interview with Gretchen Morgenson of the New York Times. Volcker sees a point of vulnerability in the industry of money market mutual funds, which operate without reserve requirements and capital requirements. The money market funds did a huge amount of lending to European banks and aggravated the pressures on them when they pulled back. One way to correct this is to require mutual funds to post the value of their assets every day to reflect market fluctuations. Safeguards on bank deposit accounts, such as FDIC insurance and bank capital requirements, do not exist for money market mutual funds. Other areas Volcker emphasized are strong enforceable capital requirements for banks, making derivatives transparent and standardizing them, and rotating auditors....

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Didi Kirsten Tatlow describes the experience of Angel Feng, a 26 year old Chinese graduate from a business school in France, fluent in English, French, Japanese and Chinese. She intervews with Chinese companies in 2010, who always ask a last question about whether she is planning to have a baby and refuse to believe her when she says she does not plan this for five years. Her first job is with a company promoting Chinese brands, which turns out to be bad as the company fires people immediately to slash costs, maintains long working hours and does not respect basic rights. One woman has a miscarraige and is ordered back to work in three days. The socialist era structures have been removed in China and this includes some of the protections for women, and the old ideas are returning in force. Angel decides to work for a semi-state organization run by the Ministry of Education. Women's rights are better protected in state sector companies. The pay of $625 a month is abit lower but it has benefits, including lunch at the canteen, housing allowance, and hours are 8.30 to 5 pm for 5 days a week. Her employer, China Education Association for International Exchange, covers childbirth with employees given at least 90 days maternity leave with full pay....

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The U.S. ranked first in an annual survey of executives rating places with favorable prospects for foreign direct investment. The survey by consulting firm A.T. Kearney has questions for executives of 302 large companies, all with sales above $500 million, about how likely they are to invest in countries over 2013-2015. It was done in October and November of 2012. On a scale of 0 to 3, the U.S. scored 2.09, China 2.02, Brazil 1.97, Canada 1.86, India 1.85, followed closely by Australia and Germany at 1.83 and the UK at 1.81. Mexico and Singapore are at No. 9 and 10 with 1.77. The survey shows the U.S., and Mexico gaining, China and India slipping, and English speaking countries UK, Australia and Singapore, as part of the 6 that are English speaking of the top 10 countries. Brazil's hosting of the Olympics and World Cup helped it maintain its position. The emerging market countries performance has slipped further since the survey, including Brazil, and the U.S. has made further gains in investor sentiment. The unrest among young people in Turkey, India, China, and Brazil as seen in street protests and credit financed booms may have further affected investor sentiment. The increase in natural gas production, revival of the midwestern economies, and a recovering housing market have boosted the U.S. economic prospects compared to emerging markets and the eurozone....