The recession rolls on.
There’s no sign of bottom to the mess we’re in right now. Oil prices continue to test the $120 a barrel mark, gas prices are hitting record highs almost daily, and average Americans are being crushed in a vice grip between debt and the ruthless GOP economy.
As the Fed contemplates cutting interest rates again tomorrow, the President is taking bold action…action to blame Congressional Democrats for all our problems.
Americans are “understandably anxious” about issues affecting their pocketbook, President Bush said Tuesday.
Bush said people are looking to leaders in Congress to take action, but “all they are getting is delay.”
Speaking from the Rose Garden, Bush blasted Congress for not doing enough to address Americans’ financial fears.
“I repeatedly submitted proposal to help address the problems. Time after time, Congress chose to block them,” he said.
Bush called on Congress to send him sensible and effective bills to keep the country moving forward before taking questions from reporters.
Asked if he was premature in saying the economy is not in a recession, Bush said “the average person doesn’t really care what we call it.”
As usual, Bush’s excuse is that Congress isn’t sending him bills he can sign, and therefore the President who has elevated Executive Privilege to a grotesque form of art is in fact completely unable to do anything to help America because the Democrats have tied his hands.
Meanwhile, the housing depression continues unabated and there’s no solution in sight. Housing prices set another 12 month record decline figure again for March.
Home prices have posted another record decline, as most of the nation’s largest markets suffered double-digit drops over last year, a survey released Tuesday shows.
The S&P Case/Shiller Home Price Index, which tracks 20 of the largest housing markets, showed prices plummeting by 12.7% in the 12 months ending February. That’s the biggest fall since the index began tracking prices in 2000.
Of those 20 metro areas, 17 posted their largest year-over-year declines ever. Ten of the 20 cities posted double-digit dips.
The 10-city Case/Shiller index is down 13.6% year-over-year, the biggest drop since its launch in 1987.
In Kansas City, the foreclosure industry is giving rise to a new phenomenon: the locksmith with too much work on his hands.
Locksmith Brent Fasse squints at the map, double-checking the address of a house off the Paseo.
“This is it,” he says, as he parks his Chevy Astro van, filled with thousands of keys packed into plastic storage boxes.
For all the misery of the mortgage crisis, with its foreclosures and evictions and interrupted lives, it’s a good time to be a locksmith. Almost all the locks Fasse changes these days are on foreclosed homes.
This one is a two-story bungalow. Weeds in the yard, trash strewn about. A faded-blue plastic Winnie the Pooh sits at a cockeyed angle in muck. On one crumbling step is a toddler’s shoe.
Fasse knocks hard, a safety precaution to alert anyone inside. Although the occupants were evicted days or weeks earlier, sometimes they return. Sometimes vagrants have taken up residence. Fasse doesn’t want to surprise anyone or anything.
“Hello? … Hello? Anybody here?”
He listens. No barking dog. No mewing kittens. No hushed whispers or scrambling footsteps. No running water …
Nothing.
Fasse relaxes a little. He knows at a glance which key to jiggle in the home’s front door lock. It clicks open to the darkness of turned-off electricity and overwhelming odors: spoiled food, mold, urine and feces. A teddy bear lies face down by the doorway, as if it died there when dropped from a child’s hand.
Fasse has traveled as far as St. Joseph on foreclosure jobs and to every part of the metro area. He’s changed locks on million-dollar homes and $30,000 homes.
“It’s ridiculous,” said Greg Fasse, Brent’s father and owner of Greg’s Lock & Key Service in Independence. “We’ve never been this busy before.”
Once Brent Fasse opened a door to the sound of rushing water — never a good sign, he says. From the front door he could see a waterfall pouring through a bathtub-sized hole in the ceiling. Through a hole in the living room floor he could see the bathtub, now in the basement.
“I just turned around on that one,” he says.
More and more people are walking away from their homes. Millions more will do so over the next year or two. Housing prices could fall another 15-30% across the country. They could fall as much as 50% total in the worst housing bust areas.
Who would hold on to a mortgage like that even if you could afford the payments? You’d owe so much on the house you’d STILL be underwater when it was paid off. Why bother with that? As more and more homeowners go underwater, and more foreclosed homes lower housing values, the crash will wipe out trillions of dollars from the economy.
The only thing Americans had going for them since 2001 was the housing bubble. Now that’s turned into a nightmare.
It’s affecting everything else. Up in Anchorage Alaska, food prices, already high, are going through the roof.
You can see it in the bread aisle at Carrs, where shoppers nowadays stare long and hard at a small $4.50 loaf of all-grain Oroweat Best Winterwheat bread before placing it in the cart.
Or at the Costco on DeBarr Road, where fears over rice availability and price increases to come created a small stampede near the entrance Monday morning as customers raced for the food aisles — clearing out four whole pallets of rice in less than 15 minutes.
Or in the wall-to-wall faces of morning diners at Bean’s Cafe, which increasingly caters to Anchorage’s “working poor” — low-income residents who tell the staff they can’t afford to buy their own food the last half of the month.
Food prices in Anchorage are rising.
After remaining stable for several years, the cost of a typical weekly shopping cart of food for an Anchorage family of four shot up 10 percent during the first three months of this year — from $121.31 to $132.88, according to preliminary statistics reported Monday by the University of Alaska Fairbanks Cooperative Extension Service.
Some individual items have climbed even higher. From March 2007 to March 2008, ground beef rose 18 percent. Eggs, 22 percent. White bread, 33 percent. Cheddar cheese, 61 percent. Rice, 85 percent.
Experts blame a variety of factors, from global-warming-related droughts to higher shipping costs (driven by steadily rising fuel prices) to allocation decisions traceable to farmers who choose to grow government-subsidized biofuel crops rather than food crops.
But it all comes down to a bigger hit on the pocketbook, according to Anchorage resident Janet Galbraith, who says she’s changed the way she eats because of the increase in prices.
“Everything has gone up,” Galbraith said Monday afternoon, standing with her cart at the Midtown Fred Meyer. She’s buying more generic groceries now and tailors her cooking to what’s on sale.
“I’m just more careful than I was before,” she said.
This is being repeated all over the country. Something’s going to have to give, and that something is going to be spending, the engine of the modern US economy. It’s going to break the back of the country soon.
And what do we see out of the financial sector? Why, more happy talk of course.
Federal Reserve Chairman Ben S. Bernanke is persuading investors that the financial markets are working again.
The Standard & Poor’s 500 Index gained 7.88 percent since the central bank backed the purchase of Bear Stearns Cos. on March 16. Companies sold $45.3 billion of debt last week, the most ever. High-yield bonds are poised for their best month in five years and mortgage securities are outperforming Treasuries for the first time in 2008.
“In the near term, if he’s a triage nurse, you have to say he’s definitely stabilized the patient,” said James Swanson, who helps oversee $204 billion as chief investment strategist at MFS Investment Management in Boston. “That’s what I’d call it, a triage nurse using radical procedures. But they worked. Whether they’ll be proven right in the long run, I don’t know.”
By cutting interest rates six times since September, backing the Bear Stearns takeover and pumping $915.5 billion through the financial system, Bernanke provided relief to investors stunned after banks reported $318 billion of losses and writedowns from mortgage-related securities and leveraged loans.
Policy makers meet today and tomorrow to set interest rates. Futures contracts on the Chicago Board of Trade show there’s an 80 percent chance the Fed will cut its target for overnight lending between banks by a quarter percentage point to 2 percent. Traders have pared their bets from a month ago, when 48 percent expected a half-point cut.
We’re almost out of the woods, they’ll tell you. After all, the Dow is up almost 10% from its recent lows at the beginning of March, that’s a Bull Market again. The economy’s fine, the credit crunch is over, and the recession will be short and shallow, right?
Confidence among Americans fell to a five-year low this month after home prices dropped by the most since at least 2001, signaling a deepening threat to consumer spending.
The Conference Board’s confidence index fell to 62.3 in April, posting its biggest three-month slide since the last recession in 2001, the New York-based research group said today. House prices in 20 U.S. metropolitan areas dropped 12.7 percent in February from a year earlier, more than forecast and the most since S&P/Case-Shiller’s records began seven years ago.
Treasuries rallied and stocks fell after the figures indicated no end in sight to the housing slump. Economists anticipate a report tomorrow will show gross domestic product growth slowed to 0.5 percent in the first quarter as home construction fell, employers cut payrolls and consumers struggled with a surge in gasoline prices.
“People sense that hard times are upon them,” said Kevin Logan, senior market economist at Dresdner Kleinwort in New York, who had forecast the confidence gauge would drop to 63. “They feel the pinch from high gasoline prices, their main asset, their home, is declining in value, and jobs are becoming harder to get.”
The Conference Board’s index dropped from a revised 65.9 reading in March that was higher than previously estimated. Economists had forecast the Conference Board’s measure would fall to 61, according to the median of 67 forecasts in a Bloomberg News survey, from a previously reported 64.5.
It’s going to be a long, hard slide folks. And the election this year will determine if it’s a slide that a humbled but wiser America recovers from down the road, or if we all plunge into the fires together.
It’s always darkest just before it turns pitch black.
Be prepared.
