My dad says we've been in a recession for a couple of years. He has said that everyone that he talks to that owns a small business says business is pretty darn bad, and that no one has any spare money these days.
I question whether this is a result of overspending, recession looming, or if people are merely shopping at the big chains versus the local businesses.
Not to quibble with Mr. Buffet about whether we are in a recession or not, but rather to note to you that he is not an economist.Originally Posted by oregonpackfan
What does a parrot head know about the economy?Not to quibble with Mr. Buffet about whether we are in a recession or not, but rather to note to you that he is not an economist.
Perhaps "Respected Businessman" would have been a more appropriate description. In any event, I agree with Buffet that the U.S. is indeed in a recession whether the President agrees with him or not.Not to quibble with Mr. Buffet about whether we are in a recession or not, but rather to note to you that he is not an economist.
That is better. Because no econonist would say we are in a recession. The #s don't back it up.Perhaps "Respected Businessman" would have been a more appropriate description. In any event, I agree with Buffet that the U.S. is indeed in a recession whether the President agrees with him or not.Not to quibble with Mr. Buffet about whether we are in a recession or not, but rather to note to you that he is not an economist.
BTW, i'm in agreement with Mr. Buffet.
Read this crap....forgive part of the principal? WTF man......they signed the mortgage.
Bernanke Urges Banks to Forgive Portion of Mortgages (Update6)
By Scott Lanman and Steve Matthews
March 4 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke, battling the worst housing recession in a quarter century, urged lenders to forgive portions of mortgages held by homeowners at risk of defaulting.
``Efforts by both government and private-sector entities to reduce unnecessary foreclosures are helping, but more can, and should, be done,'' Bernanke said in a speech to bankers in Orlando, Florida, today. ``Principal reductions that restore some equity for the homeowner may be a relatively more effective means of avoiding delinquency and foreclosure.''
Bernanke's call goes beyond the stance of the Bush administration and previous Fed comments, indicating that he sees housing as a serious threat to the economy that can't be addressed by fiscal or monetary policy alone. The Fed's Feb. 27 report to Congress called for lenders to ``pursue prudent loan workouts'' through means such as modifying mortgage terms and deferring payments.
The Fed chief highlighted the threat posed by home values falling below mortgage balances, something Treasury Secretary Henry Paulson played down yesterday. Bernanke said the ``recent surge'' in delinquencies has been ``closely linked'' to the slide of home equity.
Paulson said in an interview with Bloomberg Television yesterday that ``almost too much'' has been made out of concerns about homeowners whose house prices have dropped below their mortgages. He also said the administration's strategy is ``the right approach and we are making substantial progress.''
`My Focus'
``There will be instances where lenders are going to clearly see that the best solution for them which is less costly than a foreclosure is going to be a writedown of principal on a mortgage,'' Paulson said today in an interview with American Public Radio's ``Marketplace'' program, according to a transcript on its Web site. ``My focus is on the homeowner who wants to stay in the home, is willing to reach out, talk to someone to solve the problem.''
Mortgage servicers ``should have a clear basis for concluding'' that borrowers are unable to make their payments, ``rather than simply being unwilling to do so'' before reducing loan principal, the American Securitization Forum said.
The forum, whose members include Goldman Sachs Group Inc. and Citigroup Inc., lobbies for investors, traders, underwriters, accounting firms, ratings companies and other institutions involved in the creation and sale of mortgage- backed securities. The group commented in a statement today.
The Mortgage Bankers Association also stopped short of endorsing Bernanke's call.
Legal Contracts
``It is not a casual thing to disrupt an existing legal contract, as those contracts are the basis on which our market system is based,'' the group's president, Jonathan Kempner, said in a statement. ``That said, there is an incentive for lenders, borrowers and investors to work together to maximize the value of the relationship.''
The American Financial Services Association, a 350-member trade group for the U.S. consumer-credit industry, is supportive of Bernanke's idea, as long as it's voluntary, said spokeswoman Lynne Strang.
The Standard & Poor's 500 Thrifts and Mortgage Finance Index, based on seven stocks including Fannie Mae and Countrywide Financial Corp., fell 2.5 percent to 42.61 today. That compares with a 0.3 percent drop in the full S&P 500 benchmark stock index.
Democrats in Congress have said relying on lenders to alter loan terms hasn't yielded enough progress and are pushing for a stronger government response.
House Declines
Bernanke warned today that the housing crisis may deepen.
``Delinquencies and foreclosures likely will continue to rise for a while longer,'' Bernanke said in the comments to the Independent Community Bankers of America. A surfeit of homes for sale indicates ``further declines in house prices are likely,'' he said.
The Standard & Poor's Thrift & Mortgage index, which includes Countrywide Financial Corp. and Washington Mutual Inc. slumped 4.2 percent today to 40.83 at 1:56 p.m. in New York.
Bernanke spoke in a state that's among the worst affected by the housing collapse. Miami home prices have dropped 17.5 percent in the past year, the most of 20 large U.S. cities, according to the S&P/Case-Shiller index. Foreclosures in Florida jumped at more than double the nationwide pace, rising 158 percent in the past year, according to RealtyTrac.
Subprime borrowers are about to see their mortgage rates increase more than 1 percentage point, he said. ``Declines in short-term interest rates and initiatives involving rate freezes will reduce the impact somewhat, but interest-rate resets will nevertheless impose stress on many households.''
`Vigorous' Response
In the past, homeowners could refinance, though that option is now ``largely'' gone because sales of bonds backed by subprime mortgages ``have virtually halted,'' Bernanke said. ``This situation calls for a vigorous response.''
Bernanke didn't comment on the outlook for interest rates. Traders expect the Federal Open Market Committee to lower the benchmark rate by 0.75 percentage point by or at the panel's next meeting on March 18, based on futures prices.
Fed Vice Chairman Donald Kohn told lawmakers today that officials are considering whether ``we have adequate insurance'' against the risks of a deeper downturn in growth. He also reiterated policy makers' call for banks to raise capital, and added that they ought to review their dividend plans.
``Lenders tell us that they are reluctant to write down principal,'' Bernanke said. ``They say that if they were to write down the principal and house prices were to fall further, they could feel pressured to write down principal again.''
Short Payoffs
The Fed chairman countered that by reducing the amount of the loan, this ``may increase the expected payoff by reducing the risk of default and foreclosure.''
Bernanke also urged investors in mortgage bonds to accept ``short payoffs'' of loans by allowing borrowers to refinance at a lower principal.
For investors, a reduction in principal that's ``sufficient to make borrowers eligible for a new loan would remove the downside risk'' of further writedowns or defaults, Bernanke said. Investors may be able to share in future gains in home prices under some plans, he said, citing a proposal by the Office of Thrift Supervision.
Paulson, by contrast, has declined to endorse the OTS plan. John Reich, director of the OTS, last month proposed a program where borrowers would refinance mortgages at current home values. The lender would receive a ``negative equity'' certificate that could be redeemed if the house is sold.
Owners' Responsibility
The Treasury chief yesterday stressed that it's the responsibility of borrowers to get in touch with lenders if they're facing payment problems. He said 80 percent of homeowners who were sent letters by the Hope Now alliance of mortgage servicers haven't responded.
The number of U.S. homeowners entering foreclosure rose 75 percent in 2007, with more than 1 percent in some stage of foreclosure during the year, according to RealtyTrac Inc. of Irvine, California. For the year, more than 2.2 million default notices, auction notices and bank repossessions were reported on about 1.3 million properties.
Yesterday, the Fed and other regulators sent letters to institutions they supervise, encouraging the banks to report on their efforts to modify mortgages at risk of default.
``This will make it easier for regulators, the mortgage industry, lawmakers and homeowners to assess the effectiveness of these efforts,'' Fed Governor Randall Kroszner said in a statement yesterday.
To contact the reporter on this story: Scott Lanman in Washington at slanman@bloomberg.net; Steve Matthews in Atlanta at smatthews@bloomberg.net.
Last Updated: March 4, 2008 18:15 EST
C.H.U.D.
HOFer
I want my principle reduced too...I had the option of taking an ARM and flat refused for this exact reason. So I paid more in interest in the first 5 years of the loan.
"Greatness is not an act... but a habit.Greatness is not an act... but a habit." -Greg Jennings
80% of homeowners received a letter from Hope Now and HAVE NOT responded! Hope Now is a non-profit that's there to help people keep their homes. If people do nothing to try to save their home then it's their stupid fault for losing it.
The entire concept of a RECESSION, as the term would imply, is that you are going backwards.
In terms of the numbers, our economy has slowed to a mere crawl, but it is not going backwards.
As such, I find it difficult to claim we are in a recession. I think the chances that we actually will reach the point of a recession are very high...as the forces impacting the economy negatively in the last 2 years are still at work, and by most accounts still are having a strong impact.
Buffet is merely spouting off because he now has a political stake on the Democratic side of the ledger...so of course he will claim the economy is worse currently than the numbers truly suggest. In an election year, you can't take anyone's opinion as unbiased.
Neither Buffet or Bush is right IMO. There is no need to claim our economy is horrible. The problem is due to reasons we all recognize and understand. However, there is also no need to claim there is no cause for concern.
We aren't in recession, but we are heading there. Why the hell can't people recognize the truth rather than twist words to meet their own agendas?
My signature has NUDITY in it...whatcha gonna do?
Leaper is right. We are not in a recession, according to the latest numbers. "Recession" is a term defined by a numerical measure, it is not defined by opinion---whether the opinion comes from red or Partial's dad or Warren Buffett. If the Gross Domestic Product (basically, the value of all goods and services produced by domestic businesses) recedes rather than grows for two consecutive quarters, we are in a recession. This hasn't happened. Look up the GDP numbers. The 4th quarter of 2007 still showed GDP growth, so we're not even halfway there.
But recession is not the sole measure of economic well-being. It measures economic output by our economy, but it really doesn't measure costs. And since it's the cost side of the ledger that has spiraled upwards (gas and energy costs, housing costs, healhcare costs, etc.) we've had hard economic times for a while now while not actually being in a recession. But those higher costs (along with other factors) have been a drag on output, and GDP growth has been slowing even though it hasn't gone negative. That's why many believe we will see a recession yet.
Also, some individual industries have been in a recession even if the overall economy has not been. Housing and lending sectors, for example, have been in recession for a while. But nobody seems to mention that these recessionary times were preceded by rapid and unsustsainable growth in those same industries. It's just a reversion to the mean, like we saw in the technology sector after the tech boom. Nobody complains when growth exceeds expectations, but everybody acts surprised when the industry gets ahead of itself and stumbles a bit. Nobody complains when their house doubles in value in a 5 year period, but then they complain when they find out afterward that it was overvalued after all? Common sense, folks.
A recession might happen, but then again it might not. Unemployment numbers are still historically below average. Businesses adapt and are still making money and producing goods/services. Most of you still go to work every day and create value for the economy. We will get past this housing & financing bubble and things will go back to normal.
Overinflated home values will stagnate or even fall, but the flip side is that inflated housing costs should stagnate or fall too. Creditors may tighten lending standards and offer less easy credit than before, but the flipside is that less risky lending should eventually mean lower lending costs from defaults. It evens out---it just takes time. How much time is the question. In the meantime, put one foot in front of the other and don't panic.
I think the question is whether the perception that we are in a recession will become a self-fulfilling prophecy. If people pull back on spending because they are afraid of the future effects of the imagined recession, could that not help push us into an actual recession?
Ring the bells that still can ring
Forget your perfect offering
There is a crack, a crack in everything
That's how the light gets in - Leonard Cohen
There will be blood.....we haven't seen anything yet as far as I'm concerned. Just look at some of the data out there. The credit market is the worst it's been in 30 years.....longer probably. Businesses that need to refinance are screwed and will be forced to file bankruptcy. It could very well turn into a brutal time for many.
C.H.U.D.
Fucking Bernanke.
C.H.U.D.
Costco and BJ's are raking in the cash due to the slowing economy. Opportunity is everywhere for those willing to look hard enough.
People with deep pockets can often ride-out specific losses and get much richer in recessions and depressions. Something about buying low and selling high. Its not JUST intelligence/willingness/superiority on their part. Smaller fish have assets tied-up in investments they can't afford to drop at bottom of market, or they sell and take terrible losses. Not everybody is so liquid.
A lot of fortunes were made in the Great Depression.
It is not about deeper pockets...it is about being relatively free of debt.
In a credit crunch, those who do not rely on the accumulation of debt to finance their lives are at an advantage. Those who rely on an accumulation of debt live outside of their means...and it is difficult for those people to survive when the belt needs to tighten, even if they have the ability to produce a large cash flow for themselves.
My signature has NUDITY in it...whatcha gonna do?
I don't know shit about this stuff, I'm just faking it.
Umm, who the eff doesn't use credit. That is what made this country great.It is not about deeper pockets...it is about being relatively free of debt.
In a credit crunch, those who do not rely on the accumulation of debt to finance their lives are at an advantage. Those who rely on an accumulation of debt live outside of their means...and it is difficult for those people to survive when the belt needs to tighten, even if they have the ability to produce a large cash flow for themselves.
I don't know the figures, but i'd love to know what percent don't have debt..or extreme debt.
I'm sure you could almost count the number without any debt on one hand.
What I'm getting at are people who use debt to live beyond their means...paying more than 40% of your monthly income toward your home and/or using debt to finance common big ticket purchases. If you have the coin to afford the debt you are taking on and do so because you can get a good rate on it, I don't think that is necessarily living beyond your means.
People who train themselves to use cash rather than plastic are typically the ones who are better off in a credit crunch.
My signature has NUDITY in it...whatcha gonna do?
And, who doesn't live beyond their means in this country? Take out the depression era folks who have an apocalypse could happen any minute mindset and there are very few.I'm sure you could almost count the number without any debt on one hand.
What I'm getting at are people who use debt to live beyond their means...paying more than 40% of your monthly income toward your home and/or using debt to finance common big ticket purchases. If you have the coin to afford the debt you are taking on and do so because you can get a good rate on it, I don't think that is necessarily living beyond your means.
People who train themselves to use cash rather than plastic are typically the ones who are better off in a credit crunch.
This country has a poor savings rate..and that is being kind. Perhaps you might wanna talk to our prez who told us the best thing we could do was to spend.
Posting Permissions
Reply With Quote