Home » Economic News » Economic News Articles in the Great Recession — Archive for the week of 04/08/2012
            

Economic News Articles in the Great Recession — Archive for the week of 04/08/2012

Pessimism is creeping back into the U.S. business world, and even the Fed is now warning, as I did earlier, that student loans are in danger of becoming another economic crisis. This is the climate where desert dwellers like me thrive.

According to the Federal Reserve last week, nearly one third of all student loans are now delinquent. I guessed ahead of these statistics that it would be a large percentage of student loans now in default, and it turns out that it is. That’s a third of a trillion dollars in delinquent debt that has little chance of repayment because the student’s are leaving college to find no jobs. If they do find a job, it pays far below what they anticipated getting in good faith when they took on all the debt. I posted a blog entry about this student loan bubble last week, which was an article I actually began about a month ago. I had to get back to the article in a hurry because I’d left it half done, and my predictions were coming true before I could get the article finished.

Meanwhile, a key rating agency downgraded U.S. credit for the second time in its history (both the agency’s history and the U.S. government’s history). This was a side-note that most of the press passed over without comment. I say this is a key agency because it was the first agency on earth bold enough to downgrade U.S. credit last summer — a month before the more infamous downgrade by Standard and Poor’s. This agency may be a bellwether.

U.S. stocks were up in a “rally,” then plunged, then edged up and then dived again to close the week as the worst week of the year for the stock market. What caused all this lurching? After some preliminary good news on corporate profits, unemployment claims went back on the rise in the U.S., and interest on Spanish debt went back to rising in Europe. With this, began the fulfillment of another prediction I’ve made a few times since the beginning of the year: Spain will become a eur0-zone problem this spring that will make the Greek crisis look like a minor tragedy.

While Spain and Greece have problems, the U.S. — which tends to think of itself as too big to fail — now has more sovereign debt than all the euro-zone countries combined plus the U.K. People investing in the stock market weren’t too smart because their concerns over the euro crisis eased last week (raising the market midweek); but, by the end of the week, Spain slid into the orange zone for catastrophic collapse. (And today Spain hit the red zone.) So, don’t look for some kind of collective wisdom from Wall Street’s investors. It isn’t there.

Never mind. Those making money in the stock market do so by gambling in the Wall Street Casino on where others will put their money in the week ahead, not on where the economy is headed longterm and not by buying ownership in businesses they think will succeed in the long run. The stock market has devolved to mostly short-term speculation about how other people will cast their bets. Some make a lot of money even in a bad economy just by speculating well as to what the other lemmings will do.

The mainstream press saw reports of new mortgage apps on the rise at major banks last quarter and called this a sign that housing is “on the mend.” In doing so, most news reporters missed the obvious again, which is that mortgage interest hit the lowest level it has seen in fifty years last quarter, prompting numerous homeowners to refinance and creating a mini-burst in housing purchases as well. That will not be sustained any longer than the record-low interest rates, which quickly shot back up. I have a strong feeling, however, rates will dip back down into that zone again soon.

Reporting this as a housing market on the mend is more than looking at the bright side; it’s staring at the sun and going sun blind. It ignores the fact that another half a million foreclosures are already working their way down the pipeline now that that the foreclosure fraud case was settled, paving the way for another summer quarter like last one.

If you want the low-down on where the economy is going in the near future, check The Great Recession Blog tomorrow or the next day. Things are happening along the path that I have anticipated so quickly, that I’ll be posting another update on my predictions in the next day or two. For now, here’s the recap of last week’s news as summarized above:

 

China syndrome — following the Great Recession to the Great Wall

Economic indicators seen in the news this week

Economic predictions / forecasts that made news headlines

  •  buy zolpidem online canada will clamp down on proprietary trading. “Regardless of how the final rule turns out, it will be a shock to the financial system.”” href=”https://www.moneynews.com/StreetTalk/Coming-Shock-Volcker-Rule/2012/04/13/id/435788″ target=”_blank”>04/13 Coming ‘Shock’ From Volcker Rule? For Wall Street, the fork in the road is dead ahead: In July, the Volcker Rule will clamp down on proprietary trading. “Regardless of how the final rule turns out, it will be a shock to the financial system.”
  • 04/13 Treasury predicts all federal bailouts likely will turn profit Good news on Friday the 13th? The Obama administration expects to recoup all bailout money spent on banking, insurance, auto companies, mortgage companies and struggling homeowners from 2008 to the end of the Great Recession — and even turn a profit.

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

U.S. banking / financial crisis as it shapes the economic news of our times

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

Other economic updates / miscellaneous economic news articles

 

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