Home » Economic News » Economic News Articles in the Great Recession — Archive for the week of 03-18-2012
            

Economic News Articles in the Great Recession — Archive for the week of 03-18-2012

The euro crisis finally moved out of the headlines (almost) for a week. Don’t worry; it’ll be back soon enough … in spite of the sigh of relief by the European Central Bank chief, who said that we have now seen the worst of the euro zone crisis. Famous last words like the claim a hundred years ago by the U.S. Patent Office chief, who said that the patent office might as well close because everything had been invented that can be invented. The same day that the ECB’s chief heaved a global sigh of relief, Ireland was reported to be officially back in recession. I guess The Great Recession won’t be over until the fat lady, Merkel, sings.

Meanwhile, China stepped into crisis news for the first time. China is showing a few cracks from the Great Recession at last. You can’t hold out against mother nature, you know. Global storms affect everyone.

Treasury bonds have been slowly rising. This raises two concerns. As they go up, so other interest, such as on home mortgages, tends to go up. Mortgage interest has spiked upward recently, ending the greatest lows since the Great Depression. The other latent concern raised by rising interest is the ability of the U.S. government to pay its debts. While the economy has ratched up the most phenomenal deficits in history for the past four years, it has also paid the lowest interest on its debt that a nation could hope for, making those deficits temporarily affordable.

Of course, we’ve seen that the Fed has plenty of ways of playing with this interest for now to keep the cost of U.S. debt down, such as buying bonds indirectly to create demand for them in order to hold own the amount of the interest the government has to offer in order to sell enough bonds. Meanwhile, a former vice-chair of the Fed warned that we must keep up these lavish deficits, or the economy will fall off a cliff. Doesn’t that mean the U.S. is now fully caught in a trap of having to spend itself into oblivion in order to keep the old economic engine functioning?

Stocks entered a temporary dead zone. Don’t worry about that either. They’re likely to go back up soon, as the Fed will do whatever it needs to in order to pump the market back up … such as promising Quantitative Easing III … if necessary. That would mean more printing money out of thin air, which would also be used to buy bonds back from banks in order to create artificial demand for U.S. debt and keep interest on the debt down. It’s artificial in that the U.S. essentially becomes the buyer of its own debt.

Ben Bernanke believes the nation needs more debt at an individual level, too. He reported, as if it were a problem, that individual debt remains two low, as does consumption. Apparently, the only economic model the U.S. can conceive of is that we need to consume as much as possible in order to assure others of a good living. Is that really sustainable long term? Heck no, but it’s fun while it lasts. So, who cares?

Housing in the U.S. finally appears to be crawling like a mole out of its dark hole. I know that is certainly true in my own neighborhood where tiny houses that once belonged to cole miners have been selling for around $300,ooo in the past two months. Two homes sold in about two weeks time within a block of each other. Some buyers have even reported getting caught in bidding wars. Of course, my town was far less affected by the Great Recession than many others, but there were a few signs that new housing is on the rise across the U.S. That news is mixed, though. While permits for new home construction went up and prices of new homes went up, sales of new homes went down. Apparently, the market did not have much price elasticity, as the wistful rise in prices paralleled a fall in sales.

Shell bets that oil prices are up for the long-run. So do I. The Iranium Reaction is NOT going away. In fact, it remained the most prominent of news stories this week. Israel’s PM spent his week prepping the public for war with Iran. While Massad and the CIA announced that Iran has yet to build a nuclear weapon, this was not news. NO ONE thinks Iran already has a nuclear weapon. If they did, it would likely have been used. That’s the point: once they get a nuclear weapon, it is already too late. Their interest in the Middle East is aggression — creating an Islamic Caliphate — not self-defense. There is only one reason they would not use a nuclear weapon as soon as they have one — the mere having of one gives them huge bargaining power over all events Middle Eastern.

Here are the stories:

China syndrome — following the Great Recession to the Great Wall

  • 03/20 China’s outlook is shaken; Stocks Open Lower Worrisome economic data out of China, whose blistering economy helped sustain global growth during the economic downturn, sent the Dow Jones industrial average and the Standard & Poor’s 500 toward their biggest losses in two weeks.

Economic indicators seen in the news this week

  • 03/20 Don’t Ignore Quiet Surge in Bond Rates – Cause for Concern Rising for the fifth session in a row, the yield on the 10-year Treasury note hit 2.375% on Monday — its highest level since late October. Everyone is concerned that if you have a rapid rise in yields, you run the risk of at best slowing things down.
  • 03/20 Oil Price Set for Long-Term Rise: Shell CEO Priming the market, the CEO of oil giant Shell predicted that the cost of oil will continue to rise long-term. “In the very long term we will see prices going up because of high demand … as it gets more expensive to get the resources out of the ground.”
  • 03/21 Home building permits near 3.5-year high Permits for homebuilding neared a 3.5-year high in February, suggesting a budding recovery in the housing market was still on track even though groundbreaking activity slipped.
  • 03/21 Home sales show underlying strength, prices rise U.S. home sales fell in February, but upward revisions to the prior month’s pace and the first yearly increase in prices in 15 months suggested the housing market recovery remained on track.
  • 03/21 Oil Prices at $200 a Barrel? Some Think It’s Coming Signs that crude futures may hit much higher levels are converging, say oil traders and analysts, some of whom predict that Brent crude could reach $200 a barrel within the next 12 months.
  • 03/22 Jobless claims fall to four year low Initial claims for state unemployment benefits fell 5,000 to a seasonally adjusted 348,000, the lowest level since February 2008. This news is tempered by a slowdown in China while some euro zone economies are already in recession.
  • 03/22 Mortgage rates top 4% for the first time in three months The average U.S. rate on a 30-year fixed mortgage has popped above 4% for the first time in more than three months. The sharp increase suggests the window to buy or refinance a home at historically low rates may be closing.
  • 03/22 Stocks: ‘Deadzone’ trading Traders say volumes have been abnormally low this week, indicating that investors don’t have strong convictions about the direction of the market. Investors were rattled by global growth slowdown as both China and Germany reported soft manufacturing data.
  • 03/24 Fannie, Freddie Consider Mortgage Write-Downs Both firms concluded that giving homeowners a big break on their mortgages makes good financial sense in many cases, saying that principal reduction for many homeowners would prevent larger bank losses and keep people in their homes.
  • 03/24 Purchases of New Houses in U.S. Decrease for Second Month Purchases of new homes in the U.S. unexpectedly fell in February for a second month, a sign the recovery in the housing market may be uneven. Sales dropped 1.6 percent from a 318,000 rate in January that was weaker than previously reported.

Euro crisis updates as the Great Recession goes viral

Federal Reserve actions tracked in the economic headlines

The Iranium Reaction as it makes and shakes the news

Articles of Justice during the Great Recession

U.S. government moves (and blunders) in articles about the economy

Other economic updates / miscellaneous economic news articles

  • 03/20 Sweden moving towards cashless economy Sweden was the first European country to introduce bank notes in 1661. Now it’s come farther than most toward getting rid of them. Public buses don’t accept cash; fairs are purchased with a cell phone text. Some banks have stopped handling cash.
  • 03/20 Video: Are We Headed for Another Great Depression? The Great Recession’s economic situation, social unrest, and geo politics mirror the scenario that turned into the Great Depression.
  • 03/21 UK’s Chancellor Gives Rich Priority Over Poor The chancellor — and by extension the government — thinks that the U.K.’s super-rich deserve lower taxes while pensioners should pay more. The proposed budget indicates that Conservatives are reverting to type, eager to help out their friends in the City.

 

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