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Four reasons we're stuck with high unemployment for a while

Tom Johansmeyer — Tue, 20 Oct 2009 15:00:00 EST

Filed under: Employees, Economic Data, Personal Finance, Recession

Some of the jobs that have disappeared through this recession are gone forever, it seems. Even when the market turns, and even gains momentum, we could be stuck with a fairly weak employment market for a while. The recovery will take longer than we'd like, putting more distance between now and the top of the next market run. We've lost 7.2 million jobs since December 2007, and the predictions of some economists that we'll get them back by 2014 may actually seem optimistic.

Unemployment is at 9.8%, and it's expected to clear 10% early next year. Then, we have the specter of a jobless recovery with which to contend. "Full employment" is often considered to be an unemployment rate of 4% to 5%, but it could be a while before we get there. The last downturn, following the dotcom bust, resulted in a peak unemployment rate of 6.3% in 2003 ... and we're already well past that.

Why is the recovery going to be such a grind? Check out the four major reasons after the jump.

Continue reading Four reasons we're stuck with high unemployment for a while

Four reasons we're stuck with high unemployment for a while originally appeared on BloggingStocks on Tue, 20 Oct 2009 15:00:00 EST. Please see our terms for use of feeds.

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Citigroup announces mortgage help, will it help the stock at all?

Mark Fightmaster — Tue, 03 Mar 2009 09:20:00 EST

Filed under: Citigroup Inc. (C)

This morning, Citgroup (NYSE: C) announced a new initiative that it expects will help the recently unemployed mortgage customers that have fallen behind in their payments. The goal is to keep these customers in their homes by reducing their monthly mortgage payment for three months.

Who is eligible for this program? Borrowers with first mortgages whose loans are owned and serviced by CitiMortage. The borrowers also have to meet other guidelines to be eligible for program participation.

According to Citigroup, the required monthly payment for most qualifying customers will be roughly $500 per month.

Continue reading Citigroup announces mortgage help, will it help the stock at all?

Citigroup announces mortgage help, will it help the stock at all? originally appeared on BloggingStocks on Tue, 03 Mar 2009 09:20:00 EST. Please see our terms for use of feeds.

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Seven reasons the market is not going up any time soon: #2 The next mortgage tsunami

Michael Shulman — Mon, 26 Jan 2009 11:33:00 EST

Filed under: Bad News, Housing, Recession, Financial Crisis

Subprime mortgage defaults peaked and will slowly begin to slide during the next two years.

But don't get excited -- option ARMs and ALT-A mortgages are now beginning to rise at a very rapid rate. According to analysts I follow, notably Ivy Zelman, the next tsunami will be larger than the one we just went through.

And the banks are not currently valuing these mortgages as if they will default at this rate.

Be sure to read all 7 reasons the stock market isn't going up any time soon.

Michael Shulman is a contributor to OptionsZone.com.

Seven reasons the market is not going up any time soon: #2 The next mortgage tsunami originally appeared on BloggingStocks on Mon, 26 Jan 2009 11:33:00 EST. Please see our terms for use of feeds.

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Next target for fear mongers: Credit cards

Jamie Dlugosch — Mon, 01 Dec 2008 17:00:00 EST

Filed under: Newsletters, Stocks to Buy, Financial Crisis

Banking analyst Meredith Whitney is credited with questioning assets on bank balance sheets given the collapse in the real estate market.

Taking advantage of a complete lack of information, Ms. Whitney triggered a massive collapse of trust in an industry by claiming that mortgage-backed securities were worth far less than what the market had perceived.

While she may have had a basis for her claims, her assessment was more sensational than factual. Mortgage-backed securities are quite complex instruments whereby loans are sliced, diced and packaged for sale to a global market.

With maturities extending 30 years into the future, it is unreasonable and unfair to assume that paybacks, even with high default rates will amount to what is currently priced into the market.

The lack of understanding of the underlying security or loans at the individual level has created uncertainty that has yet to be resolved.

For fans of the original "Star Wars" movie, think of the weakness in terms of attacking the Death Star. That one hole was exploited (we can debate the merits of doing so later) by Ms. Whitney and those like her.

Continue reading Next target for fear mongers: Credit cards

Next target for fear mongers: Credit cards originally appeared on BloggingStocks on Mon, 01 Dec 2008 17:00:00 EST. Please see our terms for use of feeds.

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Merrill Lynch's John Thain: Credit crisis getting better

Brian White — Wed, 07 May 2008 11:42:00 EST

Filed under: Management, Merrill Lynch (MER), Housing

Merrill Lynch and Co., Inc. (NYSE: MER) CEO John Thain said today that the risk in the housing market is "much lower" than it has been recently as the credit crisis in the U.S. is "getting better." Leave it to the leader of a company which has written off over $30 billion in mortgage lending investment to make this claim. But the thing is, could he be right?

Although Thain said "economic pressure" will remain high over the next year, he expressed confidence that the end of the housing bubble, which is still popping in many parts of the country, is now in sight. Thain also indicated that food prices and shortages as well as higher unemployment will continue to have an impact on the U.S. economy. Of course Merrill has had three quarters of disastrous results like other large investment banks, and the company is still toiling with the idiocy of incredibly risky investments that have left it weakened financially.

Even if Thain had been hired by Citigroup, Inc. (NYSE: C) last year, he'd be in the same mess in the same industry. I'm not sure what "much lower" risk in the housing market means, although he's probably talking about his company's reduced exposure to those SIVs and other vehicles from the Flintstone era that start off fast before the wheels fall off.

I hope Thain is correct in his assessments, and Merrill Shareholders are probably wanting the same thing, just much more badly than myself.

Merrill Lynch's John Thain: Credit crisis getting better originally appeared on BloggingStocks on Wed, 07 May 2008 11:42:00 EST. Please see our terms for use of feeds.

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Did the subprime tsunami spare Goldman Sachs?

Jonathan Berr — Tue, 13 Mar 2007 09:10:00 EST

Filed under: Before the Bell, Major Movement, Other Issues, Competitive Strategy, Goldman Sachs Group (GS), Morgan Stanley (MS), Economic Data, New Century Fin'l (NEW)

Goldman Sachs Group Inc. (NYSE:GS) reported a 29% gain in first-quarter profit, handily beating analysts' forecasts and investors probably could care less. Wall Street is waiting on pins and needles to find out whether the largest securities firm escaped the black hole engulfing suprime lenders.

As Bloomberg News notes, Goldman Sachs is a lender to New Century Financial Corp. (NYSE:NEW), the suprime lender that can't pay its creditors. Shares of the Goldman have slumped 8.3% since February 20 amid concerns that the real estate market will fall because of higher interest rates resulting in a slowdown of the economy, Bloomberg said.

Not suprisingly, New Century shares were halted yesterday after plunging nearly 90% last week. Another subprime lender Accredited Home Lenders Co. (NASDAQ:LEND) plumetted 27% yesterday and plunged another 43% in pre-market trading.

Suprime lending is bound to come up over the next two weeks when Bear Stearns Cos. (NYSE:BSC), Lehman Brothers Holdings Inc. (NYSE:LEH) and Morgan Stanley (NYSE:MS) report earnings.

Did the subprime tsunami spare Goldman Sachs? originally appeared on BloggingStocks on Tue, 13 Mar 2007 09:10:00 EST. Please see our terms for use of feeds.

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