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Wednesday, January 9, 2008

Housing Led Recession Looming

Items of interest:

Goldman Sachs sees U.S. recession in 2008 -- Goldman Sachs on Wednesday said it expects the U.S. economy to drop into recession this year, prompting the Federal Reserve to slash benchmark lending rates to 2.5 percent by the third quarter.

In a note to clients, Goldman said real gross domestic product would contract by 1 percent on an annualized basis in both the second and third quarters. For all of 2008, the investment bank said GDP would rise by 0.8 percent. [...]

Paul Kedrosky / Infectious Greed:
California: Schwarzenegger's $14-billion Deficit -- When California sneezes, does the rest of the Union get a cold? That is the question tonight, with the largest state in the U.S. now firmly projecting a $14-billion budget deficit for the coming year (more than double what was proffered a few months ago), and with the state saying it will cut that deficit dramatically via big spending cuts during this weakening economy. The upshot: A recipe for a nasty economic cocktail in 2008/9. [...]

Schwarzenegger didn't blame housing and/or the economy for his problems. Good of him to pretend they aren't playing a role, but they are playing a big one -- which is why the rest of the country should be worried about what he'll do.
Median property values sink another $10,000 [in Bakersfield, CA] -- A new real estate report paints another bleak picture of property values for home sellers in Bakersfield.

The latest report from appraiser Gary Crabtree shows single family home prices continue to slide.

“The median price of a home has dropped 20 percent since it's peak in 2006,” said Crabtree.

That’s a $10,000 drop in the Bakersfield area in last month alone. [...]
Wall St. Journal:
SEC Provides Incentive For Mortgage Companies To Renegotiate Loans -- The SEC on Tuesday said mortgage companies could renegotiate certain adjustable-rate mortgages without triggering accounting rules that would require businesses to put those loans onto their balance sheets. The accounting guidance is an interim step that could provide incentives to mortgage servicers that are weighing whether to renegotiate certain loans to provide relief to qualified homeowners. The move comes one day after Treasury Secretary Henry Paulson suggested the mortgage industry should consider expanding a White House-backed program for borrowers facing rising mortgage expenses. [...]
Aiken Standard:
Bankruptcy Filings Rise In S.C. In 2007 -- The number of bankruptcy filings rose about 18% in South Carolina last year, in part because of troubled real estate and mortgage markets. There were nearly 7,200 corporate and personal bankruptcy filings — up almost 2,000 from 2006. Still, the number was only about half of those in 2005 when changes in the law made it harder for people to file for bankruptcy. [...]
Funny, and you thought the U.S. press was gullible and lazy.

French Press Falls For Major Facebook Prank -- ... A simple user managed to generate the biggest prank in the history of Facebook and the press bought it. Hilarious, ridiculous but also worrying and sad for the French press (a big chunk of it) whose credibility has been hit.

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