In normal times, market analysts, pundits and economists would not be mulling over names and scuttlebutt regarding the new U.S. President's likely nominee for U.S. Treasury Secretary, months before the inauguration.

But as investors and traders know, these are not normal times, and with United States officials making their best effort to avoid a reappearance of the barter system, names are surfacing regarding who the likely Treasury nominee, should poll leader U.S. Sen. Barack Obama be elected.

The top two contenders, according to TheDeal: Gov. Jon Corzine of New Jersey, and Lawrence Summers, Secretary of the Treasury during the Clinton Administration (1999-2001).

A second tier candidate, in economist David H. Wang's opinion, is Citigroup (NYSE: C) executive Robert Rubin, who served as Treasury Secretary during the Clinton Administration, 1995-1999.

"All three are qualified, in my view. And there are no perfect or unblemished candidates, given what the nation has gone through in the financial crisis," Wang said. "Each has an appropriate temperament and is in tune with Obama's economic philosophy, which is a mix of center-left here, center-right there, and be willing to try creative and innovative solutions when needed."

U.S. Treasury Secretary Henry Paulson's prediction that the 2008 tax rebate will create 500,000 jobs may come up a tad short, if a Bloomberg News survey is telling.

The median estimate of economists surveyed by Bloomberg News forecasts a stimulus package-induced job increase on 158,500 -- far short of Paulson's forecast, Bloomberg News reported Friday.

Paulson and other Bush Administration officials are hopeful the stimulus package will create jobs both directly and via spin-off effect -- for example, jobs created in manufacturing when goods are purchased; and jobs created in feeder industries to the manufacturing sector, etc.

The administration views the tax cut as intrinsic to jump-starting a U.S. economy slowed to a crawl (or perhaps already in negative growth) by its worst housing recession in more than 15 years, and by record-high oil and gasoline prices. (Oil traded Friday up $2.21 to $133.02 per barrel. Oil is up about 100% in 12 months.)

Economic Analysis: Analysts and economists vary regarding the tax rebate's job creation potential, and the 158.5K Bloomberg survey estimate is most likely on the mark. It's possible the tax rebate could create 500,000 new jobs, but the U.S. economy would have to experience an extraordinary boost in GDP growth in 2H 2008. The more likely scenario: only modest GDP growth in 2H 2008, which will make the Bush Administration the first administration to preside over a net drop in payrolls since the Eisenhower Administration in 1960, according to the Economic Policy Institute.

The ever-incisive FT columnist Martin Wolf offers a stark and sober analysis of the United States' current financial and economic predicament, but it's an analysis well-worth reviewing, if one has the time.

A synopsis is provided here, but first, full warning: read the analysis when you're feeling well and in a good mood, not during other times.

Bank of America, Citigroup and other major U.S. banks and lenders announced Tuesday a revised plan to help some borrowers in danger of default remain in their homes.

Encouraged by U.S. Treasury Secretary Henry Paulson, the banks will offer a 30-day freeze on foreclosures while loan modifications are considered for borrowers who are at least three months late on payments. The program will include borrowers with prime mortgages, as well as those with poorer credit histories.

Second wave of defaults

The program is being initiated as the United States prepares for the second wave of mortgage defaults as variable mortgages rates reset in 2008. The U.S. Federal Reserve estimates that about two million mortgages will reset to higher rates, with foreclosures expected to soar to one million, absent an intervention. In a typical year, the U.S. has about 500,000-550,000 foreclosures.

U.S. Treasury Secretary Henry Paulson in a speech delivered Monday said the Bush Administration was weighing how to provide stimulus to the U.S. economy - - including a possible fiscal stimulus package - - but added that the administration does not want to rush a package.

Paulson, speaking at an event sponsored by the New York Society of Securities Analysts, said the administration's immediate goal is to minimize the impact of the housing correction on the U.S. economy.

Paulson said the nation was facing an "unprecedented wave" of 1.8 million subprime mortgages scheduled to reset to sharply higher rates, and underscored that the administration's negotiated deal with the mortgage industry to freeze selected mortgage rate five years will help the housing market recover, and avert a possible market failure.

Home prices fell 6.1% in the past 12 months -- the largest 12-month decline in at least six years, and a sign that the housing market remains in a pronounced slump, research from the S&P/Case-Shiller home price index indicated Wednesday. In the survey, all 20 metropolitan markets surveyed showed year-over-year price declines.

Analyst C. Leonard Bauer, formerly of Prudential, told BloggingStocks on Wednesday that the October 2007 Case-Shiller data confirms some of the worst fears analysts have about the U.S. housing market heading into 2008.

"This is a sobering statistic," Bauer said. "It confirms a housing market in a deep slump. This is the worst year-over-year decline in prices that I've seen nationally, and I've been following housing for 20 years. The northeast [U.S.] condo slump in the early 1990s saw bigger percentage drops but that was only one section of the market. This is across the board."

In an essay/column in this week's issue of The New Yorker magazine ("Paulson's Plan," December 17, 2007) writer James Surowiecki offers a more-somber analysis of the subprime mortgage default issue than, say, Financial Times' columnist Martin Wolf.

In Surowiecki's analysis, (which, readers should note, was researched and published before the European Central Banks' infusion of $500 billion Tuesday to ensure year-end liquidity for banks), the current problem is one unlike any other that Wall Street has faced. The problem is not liquidity, as Martin Wolf argued, but 1) high-risk home owners who spent way too much n overpriced houses, and 2) a deep mistrust of the financial system because of the way the system rates and values assets like mortgages.

At issue: Wall Street?

Hence, the Bush Administrations' proposed assistance plan to the mortgage sector and some homeowners, even if it becomes more-encompassing, would not solve the problem: the financial system - - and presumably Wall Street - - simply does not rate and value assets correctly, and the government package doesn't speak to that dimension.

U.S. Treasury Secretary Henry Paulson is negotiating an agreement with banks and other lenders to limit the surge in foreclosures by fixing interest rates on loans to subprime borrowers, people familiar with the Thursday meeting said, Bloomberg News reported.

"We've all agreed that there should be some sort of standardized approach to reaching more homeowners faster," U.S. Treasury Department spokeswoman Jennifer Zuccarelli told The Associated Press.

Subprime mortgages worth about $362 billion are expected to reset to higher interest rates in 2008, according to BusinessWeek magazine.

Market chatter Friday speculated on the plan's form, with no consensus readily emerging so far. Some Wall Street analysts expect Paulson's plan to focus on middle-income loans, excluding higher-income borrowers on the belief that they will able to obtain better terms themselves, and excluding lower-income borrowers who would not be able to afford their mortgage, even after a refinancing. Other analysts suggested that the plan may be more encompassing -- "capping" or limiting interest resets to predetermined rates.

U.S. Treasury Secretary Henry Paulson is on the wires again, this time predicting that the number of potential home-loan defaults "will be significantly bigger" in 2008 than in 2007.

In an interview with The Wall Street Journal (subscription required), Paulson said, "The nature of the problem will be significantly bigger next year because 2006 (mortgages) had lower underwriting standards, no amortization, and no down payments. He added that "We'll watch carefully mortgages that will be reset."

Home prices fall

Paulson's comments came before the National Association of Realtors announced that home prices had fallen in 51 of 150 U.S. metropolitan areas in Q3, with the median sales price falling to $220,800 in Q3 2007, compared to $225,300 in Q3 2006. The NAR also announced that home sales fell to an annualized rate of 5.42 million units, including single-family homes and condominiums, compared to a 6.29-million-unit annualized rate a year ago.