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Tuesday, May 26, 2009

Great Recession Roundup — May 26, 2009

Items of Interest:

NY Times:
Home Prices Continued Their Decline in March -- Home sales may be up in many parts of the country but prices continue to scrape along the floor, raising fresh doubts about the recovery of a critical sector.

Prices in 20 major metropolitan areas dropped by 18.7 percent in March when compared with the same month a year ago, according to the Standard & Poor’s Case-Shiller Home Price Index that was released Tuesday. That was about the same as February and just shy of January’s record plunge of 19 percent.

“Foreclosures have picked up, and that seems to be pushing prices down,” said David M. Blitzer, chairman of S.& P.’s index committee. “The recession is really biting.” ...

related:
Standard & Poors:
Nationally, Home Prices Began 2009 with Record Declines

CNNMoney:
Homes: Almost 20% cheaper -- The home price slide accelerated during the first three months of 2009, according to a report issued Tuesday...

The Big Picture:
Why a Housing Recovery Requires Lower Prices
More Job Losses = Greater Foreclosures

S&P/Case-Shiller Home Price Index - through March 2009----
Bloomberg:
Housing Hitting Bottom Means Fewest Starts Since 1945 -- The slump in the U.S. housing market that caused the median value of homes to decline 24 percent since 2006 may bottom next month without any prospect of a rebound for another year, according to estimates from chief economists at Fannie Mae and Freddie Mac, the Mortgage Bankers Association and national realtors and homebuilder groups.

Existing home sales probably won’t reach pre-boom levels until the third quarter of 2010 and housing starts won’t surpass 1 million until 2011, a barrier last broken six decades ago, the economists said...
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NY Times:
Job Losses Push Safer Mortgages to Foreclosure -- As job losses rise, growing numbers of American homeowners with once solid credit are falling behind on their mortgages, amplifying a wave of foreclosures.

In the latest phase of the nation’s real estate disaster, the locus of trouble has shifted from subprime loans — those extended to home buyers with troubled credit — to the far more numerous prime loans issued to those with decent financial histories...
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Bloomberg:
Unemployment at 8 Percent Is the New Normal as Growth Slows -- Americans may have to get used to unemployment greater than 8 percent for the first time since 1983 and an economy that won’t grow much beyond 2 percent as a consequence of the lost confidence in consumer credit that shattered financial markets.

By this time next year, “the market will realize that potential growth for the U.S. is no longer 3 percent, but is 2 percent or under,” Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., said in an interview with Bloomberg Radio.

“We are transitioning to what we call at Pimco a new normal,” El-Erian said...
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Bloomberg:
Greenspan Says Banks Still Have a ‘Large’ Capital Requirement -- Former Federal Reserve Chairman Alan Greenspan signaled that the financial crisis has yet to end even as borrowing costs tumble, warning that U.S. banks must raise “large” amounts of money.

“There is still a very large unfunded capital requirement in the commercial banking system in the United States and that’s got to be funded,” Greenspan said...

Greenspan’s comments suggest he sees a bigger capital shortfall in the banking system than reflected in regulators’ stress tests on the 19 biggest U.S. lenders...
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Wall Street Journal:
Millionaires Go Missing — Maryland's fleeced taxpayers fight back. Here's a two-minute drill in soak-the-rich economics: — Maryland couldn't balance its budget last year, so the state tried to close the shortfall by fleecing the wealthy...
discussion:
Conor Clarke / The Atlantic Business Channel: Why The Wall Street Journal Should Like Progressive Taxes
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Bloomberg:
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Brink Lindsey / Reason.com:
Nostalgianomics -- Liberal economists pine for days no liberal should want to revisit.

“The America I grew up in was a relatively equal middle-class society. Over the past generation, however, the country has returned to Gilded Age levels of inequality.” So sighs Paul Krugman, the Nobel Prize–winning Princeton economist and New York Times columnist, in his recent book The Conscience of a Liberal.

The sentiment is nothing new. Political progressives such as Krugman have been decrying increases in income inequality for many years now. But Krugman has added a novel twist...
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Calculated Risk

MishTalk - Mike Shedlock

Paul Krugman - NY Times

The Big Picture - Barry Ritholtz

naked capitalism - Yves Smith

Pragmatic Capitalism

Washington's Blog

Safe Haven

Paper Economy

The Daily Reckoning - Australia