no job, no home

The New York Times reports that foreclosures are climbing — among the regular, ‘prime’ mortgages.  Those are the ordinary folks with regular, I-can-qualify-and-pay mortgages.

Why the growth?  Unemployment is still increasing. Following right behind are the foreclosures.

A table with charts showing the rapid rise is below. Read the rest of this entry »

Barsky - reputation intact

This crash destroyed the reputations of the big guys on Wall Street as much as it has destroyed our economy.

Joe Nocera, the New York Times‘ finance reporter-columnist, published this interesting profile of one of the hedge fund managers, Neil Barsky, as Barsky closes down his successful fund.  Nocera later blogged about the interview with Barsky, one of his regular go-to gurus on Wall Street.

This is one of the more illuminating pieces — Barsky’s survey of the crash and Nocera’s outline of why Barsky was successful show that not everyone on Wall Street was reckless.

I met a young man yesterday afternoon who started a construction business with 2 friends two years ago. They specialize in home remodeling. He reports that things were a bit slow throught the winter but business is booming again — they’re maxed out for projects.

His is a sector I’d thought especially vulnerable to the recession. He thinks there are two reasons for the upturn: first, it is spring and people feel more hopeful.  Second, he reports many of his customers have decided not to move to a different house.  Better in these economic times to stay where they are and fix up or modify to suit their needs.

I took away more than the data point. This young man reflected an air of quiet, can-do confidence that is decidedly American.  I think there are many more like him who are not shivering with economic fear — they are building businesses and marching on with their lives.

another warning

Update: This week’s New Republic has an excellent article on Roubini.  I hadn’t known of his Iranian-Jewish roots, the family’s transplant to Milan and his eclectic, hyper-caffeinated working style.

Writing in his Forbes Magazine column, Nouriel Roubini, aka “Doctor Doom”, warns again,  “Think you see green shoots ahead? You’re wrong…”  “Don’t believe the optimists,” he says. Roubini’s view of what’s ahead:

• Recession does not hit bottom until late ‘09/early ‘10 (as I have been assuming) — i.e., 2 or 3 quarters more or implosion.
• A possible ‘double dip’ — a period of brief, exciting but false-dawn recovery followed by another downturn and only then the beginning of real, if sluggish, long term growth — the W of the caption.

The whole column is worth reading.

4 month trends

The Christian Science Monitor (always an excellent newspaper — Carla and I publish there) asks if international investors are loosing faith in the dollar.

The chart shows how the dollar has been losing ground against the British pound for a couple of months — the months when our huge, Keynsian debt has been mounting.

The Monitor reports:

• a sense of risk among investors that the US could lose its AAA credit rating in ‘3 to 4 years.’ The UK — formerly the world’s financial superpower and still a main hub of global finance — also has an AAA rating.  But that rating’s trend was just regraded from ’stable’ to ‘negative.’  Could that happen to the US? Yes it could.
• a recognition of the total debt burden in the US — the gargantuan federal debt, the sum of state debts, and the massive personal debt levels.  We’re suddenly starting to save, but we’re a long way from being a creditor nation as we have traditionally been. Read the rest of this entry »

Here is an important blog entry by Nouriel Roubini.  The contrarian economist who was right early on about this recession is now expressing doubt about the current belief that the recession is bottoming out and that better days are almost at hand.

Not so fast, says Roubini.

Morton Loggers' Jubilee

Our Tacoma News Tribune (an excellent paper which seems to be responding to the squeeze on newspapers by getting better and stronger) ran an excellent piece yesterday on the logging town of Morton, on the Southwest fringes of Mount Rainier.

Here is a “Fact Box” with some telling stats about the changes in the lumber industry:

Fact Box BY THE NUMBERS

Timber trade

• 28.9 billion board feet — Estimated U.S. lumber demand in 2009

• 64.3 billion board feet — U.S. lumber demand in 2005

• 432,000 home– s Number of new U.S. homes projected in 2009

• 553,000 homes — Projected number of new U.S. homes in 2010

• 5.3 billion board feet — Lumber projected to be used in U.S. homes this year

• 27.6 billion board feet — Lumber used in homebuilding in 2005

NO JOBS

14 percent
Lewis County unemployment rate

9.2 percent
Washington unemployment rate

8.5 percent
National unemployment rate

This is a striking chart from Menzie Chinn’s Econobrowser site:

You can see another side of the unemployment problem: as employers try to avoid layoffs, hours are being cut back much faster than unemployment is falling.  Fewer hours = fewer bucks to take home.  One more sign of how deeply this recession is biting.

ready to travel

It seems like an easy call. Buy America.  Stop sending jobs overseas. Cut that trade deficit.  In international trade nothing is simple. This Washington Post article reports on how hard it is to help one’s own economy without hitting yourself in the back of the head.

The Obama $787 B stimulus package included a Buy America provision, one that the White House tried carefully to get softened in a Congress wild with protectionist zeal.

Because of the formal free trade rules which govern much of international trade, many of these protectionist and tit-for-tat retaliations are erupting in indirect trade sectors.

Meanwhile, here in WA, agriculture exports are the third largest of American states – $6.5 B last year.

Our WA Dept. of Agriculture is offering $2.5M of the Obama stimulus money in grants to develop innovative specialty crop exports.

I understand that the drought now affecting China’s agriculture — related to the climate change impacts on the Himilayan snow pack — could translate into increased opportunity for ag exports to China from Washington. It’s an ill wind indeed that blows no good somewhere, as my Mom used to say.

MSNBC summarizes the latest stats.

Retail sales are the biggest engine in the many engined US economy.  The chart shows how the sales decline is shifting the shape, at least for now, of our retailing sector.

Notice the size of our retail activity in this report from the Economics and Statistics Administration:

Advance monthly retail sales in April 2009 declined 0.4% from March and decreased 10.1% from April 2008, to $337.7 billion. Excluding autos, April retail sales decreased 0.5% from the prior month and declined 7.7% from the prior year.

Lots more stats here.