Are public attitudes toward the U.S. government's economic policy linked to housing prices?
There are other factors involved, but over the past three decades there has been a correlation between the two conditions, The New York Times reported.
When home prices are rising at a pace moderately faster than inflation, consumers tend to think well of the U.S. Government's economic policies, The Times reported, citing Haver Analytics.
For example, during the U.S. housing market's two, prior housing booms, 1984-1987 during the Reagan Administration, and 1996-1998 during the Clinton Administration, consumers, on average, approved of the government's economic policies, The Times reported.
Like, his paymasters, the oil companies -- who contributed $2.7 million to his 2004 campaign -- George W. Bush is feeling sorry for himself. Perhaps his record low poll ratings are hurting his feelings. He went to Saudi Arabia and asked it to increase production. He went to the Middle East and asked them to make peace -- it's a nice sentiment but will results follow? But that's not why Bush is whining.
BusinessWeek reports that Bush's complaint is that he thinks General Electric Company's (NYSE: GE) NBC News was unfair in the way it edited an interview. In the Israeli parliament, Bush gave a speech which none-too subtly implied that Barack Obama was like Nazi appeaser, Neville Chamberlain, because Obama has said he would meet with Iranian leaders. Bush thought he was being clever in his non-denial denial. Now he is complaining that NBC is being "deceitful."
That's rich coming from the person who got the U.S. into a war with Iraq based on false claims of Weapons of Mass Destruction (WMD) and ties to Al Qaeda. Is it the "Mission Accomplished" Bush or the "Heck-of-a-job-Brownie" Bush who's complaining about NBC News's "deceit?" Meanwhile -- as I posted here, here and here -- the oil companies have been whining because their earnings are down -- the price of oil has doubled and they have only been able to increase wholesale prices by 39%. Boo hoo!
So as you stand at the pump filling up your tank with $4 a gallon -- a surprise to Bush -- shed a tear for Bush and those poor, suffering oil companies.
The evils a broad bailout for reckless lenders and speculative buyers are so obvious that even President Bush can understand them.
Referring to the housing bill that has bipartisan support in the Senate, Mr. Bush said that "Laws shouldn't bail out lenders. Laws shouldn't help speculators. The government ought to be helping creditworthy people stay in their homes."
Bush has also threatened to veto the "cash for trash" bill that would use taxpayer money to insure $300 billion in mortgages for distressed home owners. Remember: if the banks won't make the loans without a federal guarantee, it's because they know that the loans are garbage. If we're going to use taxpayer money to insure the loans, we should expect to shell out a good chunk of money when they end in default.
The larger point that people are missing here is that no homes will be lost -- the person who sees their home go into foreclosure will have to move into a rental --, but the sale of that distressed property might be the difference between renting and homeownership for a young family. Or it could be sold to an investor, adding to the supply of rental housing and making that more affordable. It's not like the banks are foreclosing on houses and then burning them to the ground.
It's a sign of an election year when an outgoing President of very limited intellect can understand something that far more intelligent politicians running for office can't.
As Congressional Democrats and Bush Administration officials evaluate additional legislative ideas aimed at further stimulating the anemic U.S. economy, one proposal that could gain more traction in the months ahead concerns domestic infrastructure.
The consensus among economists is that the first economic stimulus package will provide only a modest boost (at best) to the U.S. economy, economist David H. Wang told BloggingStocks Tuesday. Further, if many Americans choose to save or invest their $300-$1200 tax rebate, instead of spending it or using it to pay down debt, the stimulus effect will be even less than projected.
That would leave the U.S. economy with a correcting housing sector, record-high oil prices (oil topped $113 per barrel Wednesday), a contracting job sector, an investment banking sector largely seeking to rebuild balance sheets and not lend money, and rising living costs weighing on consumer spending. In other words, Wang said, all of the classic U.S. growth engines, except exports, are likely to serve as contractionary forces through at least the first half of 2008, and most likely for considerably longer.
First the good news: Congressional Democrats are talking up the idea of a second fiscal stimulus package to help jump start the U.S. economy.
Now the bad news: Congressional Democrats are talking up the idea of a second fiscal stimulus package to help jump start the U.S. economy.
U.S. House Speaker Nancy Pelosi, D-California, said she would raise the prospect of a second stimulus bill when she and other Congressional leaders meet with President Bush this week, CNN reported Monday.
Anemic U.S. economy
Speaker Pelosi did not provide specifics but said March 2008's "disturbing unemployment numbers" which indicated the nation's economy lost 80,000 jobs "compels the President to work with Congress on a second stimulus package to get our economy back on track, create jobs, and speed assistance to families struggling to make ends meet," CNN said.
On Monday, the Bush Administration said it was too soon to talk about the need for a second economic stimulus package because the first one had not been fully implemented yet, Reuters reported.
My Ph.D. adviser David E. RePass, professor emeritus at the University of Connecticut, used to frequently recite an axiom about the U.S. Congress that rings true, regardless of era, or circumstance.
"Congress does not react, unless not reacting will result in the wrath of the American voter."
Well, concerning housing, it looks like Congress sees the wrath of the American voter ahead because the legislative body is starting to react.
Two measures working their way through Congress may ease the housing crisis. The first, a bipartisan Senate measure, is a modest step to address the rise in home foreclosures, The New York Times reported Friday.
U.S. Rep. Barney Frank, D-Massachusetts and Chairman of the House Financial Services Committee, Thursday introduced legislation to enable the Federal Housing Administration to insure and guarantee mortgages that have been written down banks and other mortgage holders, Rep. Frank announced in a statement.
Rep. Frank's proposal would permit the FHA to provide up to $300 billion in loan guarantees which could potentially result in the refinance of 1-2 million at-risk mortgages, preventing foreclosures, "protecting neighborhoods and help stabilize the housing market."
So much for that oil slump. Oil's price pullback lasted all of one day as buyers piled back into oil futures Wednesday, sending oil surging up $5.00 to a new record close of $104.52, after OPEC said it would maintain current production quotas.
The Organization of Petroleum Exporting Countries agreed to maintain production targets at a meeting Tuesday in Vienna, Bloomberg News reported. That price-bullish reality, combined with a surprise report by the U.S. Department of Energy indicating that U.S. crude inventories fell for the first time in eight weeks, was enough to send the oil pits into frenzied buyer mode, once again. Earlier this week oil broke through the previous nominal high of $103.76 set back in 1980.
Gasoline, heating oil prices surge
The other major energy commodities also rocketed higher. Heating oil surged 14 cents to $2.93 per gallon, unleaded gasoline jumped 10 cents to $2.63 per gallon and natural gas climbed 37 cents to $9.72 per million BTUs.
And once again, OPEC repeated its oft-stated rationale that "the markets are well supplied," Bloomberg News reported, arguing that speculators and investors seeking to buy oil as a long-term asset and as an inflation hedge, are primarily behind oil's climb to the stratosphere. And once again, traders and other oil buyers acted as if there won't be enough oil to meet global demand at some point in the months ahead.
With home foreclosures expected to increase in 2008 as the second wave of variable interest rate mortgages reset, an influential member of Congress is expected to introduce legislation that would enable the Federal Housing Administration to buy at-risk loans, enabling them to be refinanced and preventing homeowners from being foreclosed upon, The Financial Times reported Wednesday.
U.S. Congressman Barney Frank, D-Massachusetts and chairman of the House Financial Services Committee, is floating a $15 billion initiative that would authorize the FHA to buy as many as 1 million at-risk mortgages, The FT reported. Some loans, such as those for investment properties and vacation homes, would not be eligible for the program.
The overlooked FHA
Overlooked during the "Roaring 1990s" economic expansion and this decade's housing boom, the Federal Housing Administration is a Depression-era agency that insures loans made to borrowers with poor credit.
Reuters reports that U.S. home prices fell a record 8.9% in 2007. The last time home prices fell anywhere near as much as in 1991 when they lost 2.8% of their value. That was when the current president's father was in office. And he presided over a $200 billion government bailout of the savings and loan industry.
This is an impressive accomplishment for junior. But it does not appear to be the end -- although it may mark the beginning of the end. That's because, as you may have read by now, two million homeowners are expected to foreclose on their homes by the end of 2009. The reason is that variable rate mortgages are resetting to rates higher than many borrowers can afford.
It's too early to tell how much the current president's housing market problems will cost the economy. Although, so far, he is doing a good job of keeping the government from formally bailing out the housing market. That is unless you take into account the skyrocketing stagflation resulting from the Fed's interest rate cuts and the credit crunch.
Maybe the U.S. needs a break from Bushes in power.
What's the new president - - Republican or Democrat -- likely to face after taking the oath of office in 2009?
Daunting fiscal problems -- and right at a time when Congress may have to consider more fiscal stimulus to jump-start the U.S. economy, one economist observed.
The biggest problem, economist Glen Langan said, will be the federal government's budget deficit. The United States is on-track to record a $200 billion deficit in Fiscal 2009 and a $241 billion in Fiscal 2010 -- and that's if the U.S. economy doesn't fall into a recession, Langan said, citing Congressional Budget Office data.
"The baseline CBO projections present a large budgetary task for the new president, but by itself it's not an impossible one, absent a major recession. The problem is there's no money available to tackle any other problems, including ones a Democratic president would address -- health care, energy policy, education and infrastructure. And don't forget the Iraq War, anti-terrorism efforts, and potential mortgage assistance programs," Langan said. "If there aren't changes to the tax code, given the current revenue structure and tax rates,to say the next president's hands are tied regarding new programs, would be an understatement."
Social scientists, unlike some journalists, are reluctant to label anything a trend until they've amassed and evaluated a great deal of data often over years. A journalist can always cite a lack of information, or the crush of daily (and shorter) deadlines as a reason his/her news story did not describe reality, but if a social scientist errs in a refereed-article, well let's just say the action is not conducive to career advancement.
And that's why many social scientists are reluctant to comment on the impact of Sen. Barack Obama's (D-IL) run for the U.S. presidency: it's way too early to articulate informed conclusions that are likely to endure.
Still, that's not to say that one can't comment on developments that may -- and underscoring "may" -- be indicative of a trend. And along that line, here's what we know about the Obama candidacy regarding voting behavior:
Here's an item that's so laced with irony it defies comment -- I can't come up with a metaphor that does it justice. It's sort of like rearranging deck chairs on the Titanic, but it's much, much, much more pathetic.
President Bush's 2009 budget is expected to lead to a deficit of more than $400 billion. But not to worry, our fearless leader has a plan to cut back on spending.
According (subscription required) to the Wall Street Journal, "In years past, the White House's Office of Management and Budget distributed about 3,000 copies of the budget free to media outlets, congressional offices and elsewhere in the capital. This year, those folks must buy a printed copy or access one free online."
Members of Congress can get a copy for $67.50. Ordinary taxpayers hoping to get the details on how their elected officials plan to waste their money and then some will have to pay $213 -- or read it online.
The plan will save taxpayers an estimated $1 million over 5 years.
So $400 billion divided by $200,000... The President has found a way to shave off 1/2,000,000th of the projected deficit for 2009 that will be passed on to future generations.
OPEC appeared likely Thursday to ignore President Bush and the west's plea for increased production and to keep production at current levels, The Wall Street Journal reported (subscription required).
Further, OPEC ministers gathering in Vienna Thursday for Friday's meeting mulled whether to take action to address what some members believe will be an oil price slide if the slow-growth U.S. economy slows global growth, and consequently moderates demand increases in both crude oil and gasoline, the Agence France-Presse reported.
Kuwait's acting oil minister Mohammed Al-Aleem told the AFP that OPEC was "a little worried about the impact of a slowdown or a recession in the United States" on oil prices. "The price, for the time being, has been going a little bit down," he said. "We'll hear and see what analyses have been done" and he said they make a decision based on those analyses.
The $150 billion fiscal stimulus package that's winding its way through the U.S. Congress will not represent a panacea for the U.S.'s economic ills, an economist argued, but it will represent modest good news for one segment -- the beleaguered housing sector.
The fiscal stimulus bill currently under discussion in the U.S. Senate calls for raising Fannie Mae and Freddie Mac's conforming loan limit to $729,750 through 2008 from the current $417,000.
Conforming loans are conventional, fixed-rate mortgages for good credit borrowers that banks make that are eligible for purchase by Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE). When Freddie and Fannie purchase these loans from banks, it "frees-up" money that the banks can use to grant mortgages to future borrowers, thus expanding the pool of funds available for mortgages.
Economist Steve Affinito told BloggingStocks Thursday that while it's important to underscore that the higher conforming loan ceiling will not eliminate the U.S. housing sector's recession, it is "a critical, essential step in the right direction," in his interpretation.
Like, his paymasters, the oil companies -- who contributed 
First the good news: Congressional Democrats are talking up the idea of a second fiscal stimulus package to help jump start the U.S. economy. 
U.S. Rep. Barney Frank, D-Massachusetts and Chairman of the House Financial Services Committee, Thursday introduced legislation to enable the Federal Housing Administration to insure and guarantee mortgages that have been written down banks and other mortgage holders, Rep. Frank announced 
What's the new president - - Republican or Democrat -- likely to face after taking the oath of office in 2009?
Social scientists, unlike some journalists, are reluctant to label anything a trend until they've amassed and evaluated a great deal of data often over years. A journalist can always cite a lack of information, or the crush of daily (and shorter) deadlines as a reason his/her news story did not describe reality, but if a social scientist errs in a refereed-article, well let's just say the action is not conducive to career advancement. 
OPEC appeared likely Thursday to ignore President Bush and the west's plea for increased production and to keep production at current levels, The Wall Street Journal reported (
The $150 billion fiscal stimulus package that's winding its way through the U.S. Congress will not represent a panacea for the U.S.'s economic ills, an economist argued, but it will represent modest good news for one segment -- the beleaguered housing sector. 
The week in preview: New quarter earnings kick-off
Comfort Zone Investing: Keep your recovery expectations real
Will Americans have to slim down to fit into their cars?
