Last Friday, Ben Bernake, the Chairman of the Federal Reserve, said that the "US economic storm 'has not yet subsided.'" To tell the truth, I hadn't noticed much of a "storm" going on, until I started looking out of the window of my own life.
True, I've read a lot about auto sales slowing, and some plants closing. Yesterday, my other half e-mailed me a couple of stories about the big three auto makers--GM, Ford, & Chrysler--asking for some pretty big bailouts: $25 billion initially, and an extra $25 billion in installments over the next several years to develop more gas-efficient, "green" vehicles. This comes after a $24.1 billion loss over the past year, as people haven't been able to afford gas for the ginormous SUVs they bought, and are selling them, or opting for voluntary repossession. The companies have, for the first time, started taking losses on leases, leading them to get rid of that program. Many families have opted to downsize to one car, while others are buying used Toyotas and Hondas with far better reliability and gas mileage.
I also know that the mortgage mess is still, well, a mess, with Fannie Mae and Freddie Mac still deeply in debt; however, Freddie Mac claims to be turning it around. Freddie's board said that they sold about $2 billion in their debt (I have no idea how that works--can individuals sell their debt, too?). The board also said that it and "Fannie Mae can fund operations without a government takeover."
Government takeover?!? Not just (as if that's not bad enough) bailout? Gah! Who are we, Russia?
I've also heard that there've been a lot of bank closures and buyouts. We had Bear Sterns earlier in the year. I heard that JP Morgan and USB are having trouble. Friday, a Kansas-based bank, Columbian Bank and Trust, closed its doors on FDIC orders. According to the FDIC's website, they've closed nine banks this year alone. The FDIC is getting ready for even more, coming up. Well, today, the market tanked on banking fears.
Criminals are dumping the dollar as their currency of choice. Current currency relative strengths discussed here.
We're not in a recession now, according to the textbook definition, as well as some researchers. However, we may be heading that way, if things don't start turning up.
Whether we actually have one or not is not up to the Federal Reserve. It's not up to any government bureau. It's up to the consumers and the market. Since the consumers are influenced by the media, which have been wrongly calling the current turbulence a recession (possibly for ratings impact, possibly for political impact), it's likely to become one soon. In my opinion, Chairman Bernake (and the media) simply needs to get out of the way and let the market work.
Update: The FDIC has released a story that they have 117 banks on their troubled list, up to 13% of which could go splat soon, according to statistics.
20 minutes ago
"The sky may not be falling, but I don't know what to call it."
ReplyDeleteI know what to call it. Lies and deciet by our government, and greed by the market. Our government has let us down by not protecting our interest. They are not addressing the real underlying issues facing us today such as our aging population. In a few short years, we will no longer be able to afford Medicare and Social Security benefits for our seniors. This will dwarf the economic issues we are dealing with today. Our representatives continue to ignore the Medicare and Social Security issue to avoid making the tough decisions so they may protect their personal interest. Corporate and individual greed has caused the mortgage and credit crises, which is now spilling over into all other areas of our economy. What our government and the media aren't telling the public is that we have just started to feel the impact. At the peak of Option ARM mortgage resets in 2011, the number of foreclosures and economic impact will make today's numbers very small in comparison. I guess you could call these times "the good old times" as we accelerate into a full economic collapse. (Think that is to harsh. Consider today's news about our government considering repudiating our debt. http://online.wsj.com/article/SB121936581501662161.html?mod=special_page_campaign2008_mostpop)
Well, with the Medicare/Social Security fiasco...I have to say I've been tempted by the idea of becoming a youth pastor, partially because that would ensure that I could keep teaching no matter what, and partially so that I could opt out of the government's Ponzi scheme.
ReplyDeleteBritian's already facing the problem that we're going to have soon: as many (if not more) people retired and/or on the government dole as they have working and paying in in taxes. Their economy is collapsing faster than ours, but not by much.
I didn't know when Option ARMs were going to start resetting. I made the honest mistake of assuming that people were smart enough to refinance before they reset. I forgot to consider that most will be upside down, have run up too much other debt, not have good enough credit, or otherwise are too irresponsible to refinance. Or maybe just too lazy, or too uninformed.
In any case, I know the worst is yet to come. So, if the sky isn't falling yet, what do we call it? The gathering storm?
-h