“Very serious recession.” Keep those words in mind.

[Entendance]

“Very serious recession.” Keep those words in mind.
http://markettalk.newswires-americas.com/?p=3180
http://content.ksg.harvard.edu/blog/jef ... aster-you/

[Entendance]

These are not comforting data points. If the recovery continues to be jobless, it may cease to be recovery.



http://www.economist.com/blogs/freeexch ... covery.cfm
°°°°°°°°°°°°°°°°°°

last posts? at

search.php?search_id=active_topics

[mxsquid]

The U.S. has lost the equivalent of all jobs created in the last 9 years.

http://www.financialpost.com/story.html?id=1752178

Joblessness with or without economic recovery is a failure of the Federal Reserve to fulfill the Congressional mandate of Humphrey-Hawkins: "Full Employment and Balanced Growth". Acceptable unemployment rate is 3%.

If the Fed is incapable of doing its job, what purpose does it serve?

http://en.wikipedia.org/wiki/Humphrey-H ... oyment_Act

[dlry]

Very serious recession...anyone who believes otherwise is a fool.

Why are America's food banks suffering shortages?
http://tinyurl.com/najzf9



http://tinyurl.com/o5habp
because the bankers had to get their undeserved bonuses to keep their trophy homes in proper form


I'm not a religious person (you either conduct your life to help others, do the right thing, etc for yourself) but maybe more of this needs to be focused on.

July 3, 2009

Bill Moyers speaks with Cornel West, Serene Jones, and Gary Dorrien for a fresh take on what our core ethics and values as a society say about America's politics, policy, and the challenges of balancing capitalism and democracy.

http://www.pbs.org/moyers/journal/07032009/watch.html



added later: maybe everybody needs a lot of religion..lol
http://tinyurl.com/phc9xv

[Entendance]

<...the reality of the economic crisis is slowly becoming clearer to more people -- and over time it will become even more so.
At some point, the economic crisis may feed back into the financial crisis once again and we're liable to find out that the stress tests were way too lenient and that some financial problem children are back on the disabled list.
As an example of the fact that more people are starting to understand the nature of the economic crisis, Friday's FT carried an article by Mohamed El-Erian titled "American Jobs Data Are Worse Than We Think." He notes that "there are rare occasions, such as today, when we should think of the unemployment rate as much more than a lagging indicator; it has the potential to influence future economic behaviors and outlooks."
Of course, the reason why we have such a problem creating jobs is because the country spent 10-12 years engulfed in bubbles. They created the misallocation of capital and the appearance of health -- when all we were doing was creating more risk.
http://www.ft.com/cms/s/0/caffe6d4-6769 ... ck_check=1

Now we've got a broken economy and will experience real trouble creating real jobs. One of the shocking developments, El-Erian points out, is the speed with which they have been lost and how fast unemployment has screamed higher. He notes (as to my ballgame analogy): "The unemployment rate will increasingly disrupt an economy that, hitherto, has been influenced mainly by large-scale dislocations in the financial system." That's his way of saying: The big issue now is not the financial but the economic crisis.
As green shoots come and go and don't really yield a lot, more and more folks will start to understand the nature of the problem...>
Bill Fleckenstein
(courtesy of our member Dlry)

[Entendance]

Coincident with the pullback in most markets over the past few weeks on doubts with the robustness of the 2nd half global economic recovery, the fed funds futures have been pricing in lowered odds of a fed rate hike by year end. Odds of a 25 bps hike to .50% by December is near 20% today, down from 44% one week ago and 100% one month ago.

[Entendance]

Why There Is More Pain To Come

http://zerohedge.blogspot.com/2009/07/w ... -pain.html

[sowhat]

There Will Be No Recovery...


"The banks must be restrained, and the financial system reformed, and balance
restored to the economy, before there can be any sustained recovery."
Often a closing comment from our blog, essentially this is what Robert Reich is saying in his recent essay on the economy.

The median wage must increase for consumption to resume, and for this to happen the heavy taxes of the financial sector and the oligarchs on the real economy must be lowered significantly.

There is reason for pessimism that this can happen voluntarily. I have come to the conclusion that there is a pathological drive in some small portion of the population to acquire and control and devour rather than consume, even to their own destruction.

The law sets limits on the speed on highways to protect the many from the reckless and willful behaviour of the few. That we ought not to set limits on the banking system is a remarkable bit of speciousness.

There are obvious questions of how best and how far to limit, and how to detect and prevent and prosecute violations, but the comparison is more valid than obtuse. But it is a poor argument to say that we ought not to do it at all because it is difficult, and perpetrators are always trying to find ways to circumvent the system, especially when it is the aspiring criminal element and their demimonde that is making the argument.

The comparison of this latest epidemic of bad economic behaviour is strikingly reminiscent of the Gilded Age at the end of the 19th century and the Roaring 20's. As you may recall both periods were followed by economic dislocation and a world in flames.

Why we allow this sort of bestial behaviour to ravage the many, in the mistaken support of 'free markets,' where nothing these people touch can remain free and effective and efficient for long, is truly an accomplishment of propaganda and those blinded by ideology.

http://jessescrossroadscafe.blogspot.co ... overy.html

[Greater_Depression]

CIT Falls on Concern FDIC May Not Guarantee Debt (Update2)

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By Caroline Salas and Pierre Paulden

July 10 (Bloomberg) -- CIT Group Inc. bonds and stock tumbled on concern that the Federal Deposit Insurance Corp. won’t give the commercial lender access to its Temporary Liquidity Guarantee Program.

The FDIC, which has backed $274 billion in bond sales under the TLGP since Nov. 25, has been unwilling to let CIT participate on concern that standing behind the lender’s debt would put taxpayer money at risk, according to people familiar with the regulator’s thinking who declined to be identified because the application process is private.

The federal agency, run by Chairman Sheila Bair, is in discussions with CIT about how the lender can strengthen its financial position to get approval, including raising capital, said one of the people. New York-based CIT’s measures to improve its credit quality, such as by transferring assets to its bank, have been insufficient, the person said.

“Sheila Bair is watching the purse,” said Mark Calabria, a director of financial regulation at the Cato Institute in Washington. “If an institution isn’t systemically important, the FDIC’s first and last viewpoint is protecting the deposit insurance fund.”

CIT’s $500 million of floating-rate notes due in November 2010 fell 3.5 cents on the dollar to 70 cents, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.

Credit-Default Swaps

Credit-default swaps on CIT rose 2.5 percentage points to 37 percent upfront, and earlier reached 38 percent, according to broker Phoenix Partners Group. That’s in addition to 5 percent a year, meaning it would cost $3.7 million initially and $500,000 annually to protect $10 million of CIT debt for five years. The upfront cost reached the highest since Oct. 17, when it climbed to a record 41.5 percent, according to CMA DataVision prices.

The stock fell 33 cents, or 17.7 percent, to $1.53 in New York Stock Exchange composite trading, after earlier falling as low as $1.13, the lowest in seven years.

CIT, the century-old lender to 950,000 businesses, became a bank in December to qualify for a government bailout and received $2.33 billion in funds from the U.S. Treasury. The lender, which has reported more than $3 billion of losses in the last eight quarters, faces $10 billion of maturing debt through 2010 and hasn’t had access to the corporate bond market in more than a year, according to data compiled by Bloomberg.

‘Active Dialogue’

Without the TLGP, CIT may default as soon as April, when a $2.1 billion credit line matures, according to Fitch Ratings.

“CIT continues to be in active dialogue with the government,” the company said today in a statement distributed by Business Wire. “There can be no assurance that CIT’s application will be approved by the FDIC, nor as to the timing or terms of any such determination.”

Curt Ritter, a CIT spokesman, declined to comment on the FDIC’s reasons for the delay.

Andrew Gray, spokesman for the FDIC in Washington, declined to comment on CIT’s pending application.

“If Barack Obama is truly worried about small businesses, then you can’t turn your back on someone that finances 950,000 customers,” said Bond Isaacson, chief executive officer of BlueTarp Financial, a CIT borrower that provides trade credit to building contractors.

“If they go away, it will inevitably cause the failure of some of those businesses. Take it away and you’re going to have a huge unemployment issue,” said Isaacson, whose business is based in Charlotte, North Carolina.

Funding Channel

The TLGP program opened a channel of funding for financial institutions unable to borrow in U.S. markets after the September collapse of Lehman Brothers Holdings Inc. By paying the FDIC a fee to back their bonds, banks are able to sell debt with top credit ratings. The TLGP expires Oct. 31. Issuers must have applied by June 30.

The FDIC has given competitors from Fairfield, Connecticut- based General Electric Co. to GMAC Inc. of Detroit access to the TLGP during the worst credit crisis since the Great Depression.

The program was designed to give creditworthy borrowers access to funds when the debt markets seized up, said one of the people. GE is rated Aa2 by Moody’s Investors Service and AA+ by Standard & Poor’s, the third- and second-highest credit grades.

GMAC, the auto and home lender that received $13.5 billion from U.S. taxpayers, got approval to use the TLGP in May despite its speculative-grade credit ratings because the company is supported by President Barack Obama and its largest stakeholder is the U.S. government, the person said.

GMAC’s Guaranteed Debt

GMAC, which also became a bank in December, was the first junk-rated company to use the program. It issued $4.5 billion of FDIC-backed notes last month, including $3.5 billion of notes maturing in 2012 at a yield of 0.8 percentage points more than similar-maturity Treasuries.

When the sale was announced, GMAC’s non-guaranteed debt was rated C by Moody’s and CCC by S&P. Its existing 6.875 percent notes due in 2011 were trading at a spread of more than 11 percentage points. The lender received government funds to provide financing for customers and dealers of General Motors Corp. and Chrysler LLC.

A failure of CIT would be the biggest bank collapse since regulators seized Washington Mutual Inc. in September. CIT reported $75.7 billion in assets and $68.2 billion in liabilities, including $3 billion in deposits, at the end of the first quarter.

“The FDIC has resolved failed institutions before and not seen the world end,” said Calabria, who before joining Cato in 2009 spent six years as a member of the senior staff of the U.S. Senate Committee on Banking, Housing and Urban Affairs.

Fitch Slashes CIT

Fitch slashed CIT to junk in April, then lowered the lender’s rating again on June 1 to BB and cut it to B+ this week. Moody’s cut CIT three levels to Ba2 from Baa2 on April 24. S&P downgraded CIT three grades to BB- on June 12.

The lender, which says it was the first to offer credit to help consumers nationwide buy Studebaker cars, funds businesses from Dunkin’ Brands Inc. in Canton, Massachusetts, to Eddie Bauer Holdings Inc., the bankrupt clothing chain in Bellevue, Washington. CIT says it’s the third-largest U.S. railcar-leasing firm and the world’s third-biggest aircraft financier.

CIT’s stock plunged 59 percent this year through yesterday, underperforming the Russell 1000 Financial Services Index by 50 percentage points.

To contact the reporters on this story: Caroline Salas in New York at csalas1@bloomberg.net; Pierre Paulden in New York at ppaulden@bloomberg.net

Last Updated: July 10, 2009 16:39 EDT

[defio70]

this is a depression, not a recession

It’s June 1930: The ‘Greatest Depression’ Is Just Getting Started

http://www.contrarianprofits.com/articl ... rted/19014