Economic stimulus/tax rebates

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Granny says, "Dem Republican businessmen are gettin' the heebie-jeebies...

Corporate America is getting nervous
June 6, 2008: A big spike in unemployment is the latest sign that businesses are starting to feel the pinch from the weak economy. But some see hope on the horizon.

Businesses, like consumers, are starting to get much more nervous about the economy. The significant spike in the unemployment rate in May, coupled with another month of job losses, is a certain indication that businesses are feeling the need to cut costs. What's more, two separate reports about the health of Corporate America released today provide even more somber news about business confidence.

According to a survey of nearly 2,400 chief executive officers of small and mid-sized businesses by executive coaching firm Vistage International, CEO confidence is at an all-time low. "It is clear the state of the economy is factoring into stress levels for CEOs as more and more companies adjust their business plans in the United States to survive," said Rafael Pastor, Vistage's chairman and CEO in the report. "CEOs are telling us they are more stressed."

But what's worrisome is how CEOs are dealing with this stress. According to the survey, only 43% of the CEOs said they now plan to increase their headcount in the next year. That's down from 57% a year ago. And one in six CEOs said they planned to cut jobs this year. Online recruiting firm Dice Holdings (DHX), which specializes in career Web sites geared toward the technology and financial services industries, issued a report with similarly gloomy forecasts this morning.

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Unemployment rate jumps to 5.5 percent in May
WASHINGTON - Fri Jun 6, `08 : Biggest jobless jump since '86 — Wall Street sinks

Pink slips piled up and jobs disappeared into thin air in May as the nation's unemployment rate zoomed to 5.5 percent in the biggest one-month jump in decades. Wall Street swooned, and the White House said President Bush was considering new proposals to revive the economy. Help-wanted signs are vanishing along with jobs, so the unemployment rate is likely to keep climbing, a government report indicated, underscoring the toll the housing and credit crises are taking on jobseekers, employers and the economy as a whole. Adding to the pain, oil prices soared to a new record high, while the value of the dollar fell. The Dow Jones industrials tumbled almost 400 points.

The White House snapped into crisis-management mode. The president is now considering further plans to help energize the economy, which had already been teetering on the edge of recession, said counselor Ed Gillespie. Bush acknowledged, "This is a time of turbulence in the housing market and slow growth for our overall economy." Pounded by soaring energy prices and plagued by uncertainty, nervous employers clamped down further on hiring in May.

Friday's Labor Department report was filled with sobering numbers:

• Employers eliminated 49,000 jobs in May, the fifth straight month of nationwide losses.

• The number of unemployed people grew by 861,000 — to 8.5 million.

• Job losses for the year reached 324,000.

Longer unemployment lines mean even more angst for those seeking work.

More Biggest jobless jump since '86 — Wall Street sinks - Yahoo! News

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Job losses confirm sense of economy in trouble...

Job losses confirm economy's troubles
Fri., June. 6, 2008 - Recession or no, indicators show no sign of improvement any time soon

Friday's report on the U.S. job market confirmed what many consumers have been sensing for months: that the slide in house prices and the rise in food and energy costs are taking a heavy toll on the economy. With consumers gloomier than they’ve been in decades, the economy had seemed to be defying gravity. Tax rebates helped prop up surprisingly strong retail sales in May, and manufacturers are getting something of a reprieve from a weak dollar.

But the jobs data confirmed that it’s far too early to declare the recession bullet has been dodged. Some forecasters now have pushed back their estimates of how long it will take for the economy to get back on its feet. The number of Americans out of work grew by 861,000 in May — to 8.5 million workers. The sent the jobless rate to 5.5 percent in May from 5 percent in April — the biggest one-month jump in 22 years.

The surprising jump spooked Wall Street, sending the Dow Jones industrial average down nearly 400 points. Stock traders also were reacting to soaring oil prices, which rose more than $10 a barrel in New York trading to a record of nearly $139. The White House said President Bush is considering new measures to stimulate the battered economy, but officials said they recognize the administration has little time left to act.

More Job losses confirm economy's troubles - Eye on the Economy - MSNBC.com

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What goes down, must come up...

Bernanke May Boost Interest Rates Soon
WASHINGTON, June 10, 2008 - The Financial Sector Has Taken The Fed Chairman's Tough Anti-Inflation Talk As A Signal That He Will Raise Interest Rates

Ramping up his tough anti-inflation talk, Federal Reserve Chairman Ben Bernanke is raising expectations on Wall Street and elsewhere that the central bank could boost interest rates sooner than anticipated if high oil and food costs threaten to spur a broader bout of spiraling prices. Over the past week, Bernanke has been sounding the alarm ever louder about the threat of inflation.

In his latest remarks on Monday evening, Bernanke played down the May spike in the nation's unemployment rate, saying the danger that the economy has fallen into a "substantial downturn" has faded. At the same time, Bernanke sent a fresh warning that the Fed will be on heightened alert against inflation dangers, especially any signs that investors, consumers and businesses think prices will keep going up and change their behavior in ways that will aggravate inflation.

The Fed "will strongly resist an erosion of longer-term inflation expectations, as an unanchoring of those expectations would be destabilizing for growth as well as for inflation," Bernanke said. The Fed chief and his colleagues have been signaling that the Fed's rate-cutting campaign, started in September, is probably over given mounting concerns about inflation. And, little by little, Bernanke is preparing people for the prospects of higher rates down the road.

For now, many analysts still expect the Fed to hold rates steady at 2 percent, a four-year low, when policymakers meet next on June 24-25. However, Bernanke's remarks raise the odds that rates could go up later this year, instead of next year as many have been predicting, should inflation show signs of worsening, they said. "I think the Fed wants to wait until the economic coast is clear to raise rates," said Mark Zandi, chief economist at Moody's Economy.com. "But Bernanke is saying the Fed will sacrifice near-term economic growth to the altar of stable inflation" should prices start to take off, he added.

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More financial land mines ahead
June 10, 2008: The worst of subprime mortgage crisis may now be out in the open. But more problems are lurking in prime mortgages, credit cards and auto loans.

When Lehman Brothers reported a stunning $2.8 billion loss Monday, it was just the latest sign that bad mortgage loans continue to be a problem for the financial markets and the economy. But subprime mortgages could only be the beginning. Many economists and market experts are worried that other problems are lurking that could cause a new credit crisis for consumers and businesses.

Meredith Whitney, the banking analyst for Oppenheimer & Co., estimates that the credit problems will continue to dog financial markets into 2009. She thinks future losses will dwarf the roughly $25 billion set aside by Wall Street firms so far to cover them -- perhaps reaching $170 billion by next year. Other experts agree that the worst is not yet over.

There are several types of loans raising concerns, ranging from prime mortgage loans to credit cards. Much like subprime mortgages, many of these loans were packaged into securities traded on Wall Street. And many of these loans are beginning to see rising defaults and delinquencies, just as subprime mortgages were a year ago. These defaults are nowhere near subprime loan levels and few think they will ever get that bad. But if defaults keep rising, this can cause the same kind of problems in the markets for those securities, leading to widespread losses for investors.

"There are plenty of additional problems on bank balance sheets," said Kevin Giddis, head of fixed income sales, trading and research for investment bank Morgan Keegan. "The bigger problem is we don't know how far it goes. Those problems remain well hidden for a reason." But if they do eventually surface, it would mean higher costs and tighter credit for consumers. And that in turn could lead to an even longer slump for the economy than currently forecast.

Prime loans "the next shoe" to drop

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Economy to drag for at least another four seasons...

Economic rebound at least a year away
June 18, 2008: U.S. economy likely won't improve until summer 2009, with more layoffs and higher inflation looming, according to a survey of CFOs.

Economic woes are expected to continue until at least mid-2009, and things may get worse before they get better, according to a quarterly survey of chief financial officers. The quarterly Duke University/CFO Magazine Global Business Outlook study found 71% of more than 1,000 CFOs surveyed said the U.S. economy will not begin to rebound until 2009. And 54% think the turnaround will happen by next summer at the earliest.

"This could be the longest slowdown since the double dip recession of 1979-81," said John Graham, director of the survey. There was some positive news from the survey: Overall, optimism rose slightly from the previous quarter.

Still, financial chiefs from a broad range of public and private companies hold a grim view of the economy and attribute their pessimism to a tough jobs market and rising inflation. Weak consumer demand and high fuel costs also topped their concerns.

Jobs

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Did Bernanke go too far?...

Did the Fed go too far?
June 22, 2008: The Fed is likely to keep rates steady at this week's meeting. But some argue the economy is worse off because cuts already have gone too far.

Wall Street thinks the Federal Reserve is almost certainly done cutting interest rates for the time being. But as inflation fears rattle Wall Street, some economists are beginning to wonder if the Fed went too far by cutting rates as much as it did in such a short period of time.

The central bank is widely expected to leave its key federal funds rate at 2% after a two-day policy meeting on Tuesday and Wednesday. That would be the first time the Fed left rates steady following seven rate cuts since last September.

The fed funds rate is the central bank's key lever to spur economic growth or slow it in an effort to keep prices in check. It is used as a benchmark to set rates paid by consumers on many types of loans, such as adjustable rate mortgages, home equity lines and credit cards, as well as for many types of business loans.

Typically, the Fed lowers rates when it is concerned about the economy slowing and raises rates when it is more worried about inflation. With that in mind, some economists believe the Fed will begin raising rates as soon as this summer in order to combat rising commodities prices. Others believe that rate hikes are more likely in early 2009.

Rates are too low...

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Communities suffer as foreclosure rate rises...

Foreclosures hurt more than homeowners
Tues., June. 24, 2008 • Readers report lonely streets, rundown homes, service cutbacks

As mortgage defaults and foreclosures continue to rise, the impact is spreading well beyond those who are losing their homes. In communities across the country, msnbc.com readers report that local governments are coping with shrinking tax rolls, lenders are saddled with more foreclosed homes than they can sell and empty homes in many neighborhoods are being vandalized.

Like everything associated with the nation's housing crisis, the fallout from foreclosures is very local, a fact confirmed by hundreds of e-mails from readers in msnbc.com's Gut Check America. Some regions appear to have escaped relatively unscathed. But in hard-hit states like California, Arizona and Florida, readers report that some neighborhoods are becoming virtual ghost towns.

In Indian Harbour Beach, Fla., “lots of homes have been abandoned by their owners, and many people are going into bankruptcy,” wrote a reader named Robert. “Whole condo projects sit half-finished and rotting in the Florida sun. On some streets almost half the homes are empty. Many people have lost 40-50 percent of the value of their homes. “ Others report a different kind of isolation; many of those losing their home to foreclosure are reluctant to confide in family or friends until the process is complete. Some neighbors are unsure how to respond.

More Gut Check America: Foreclosure's fallout - Foreclosure's fallout - MSNBC.com

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Treasury Security gonna fix the banks...

Paulson: Bank Regs Need Overhaul
Wednesday, Jul. 02, 2008 - Britain and the United States must overhaul their outdated banking regulatory systems to give better advance warning of future economic turbulence, U.S. Treasury Secretary Henry Paulson said on Wednesday.

Paulson said the U.S. Federal Reserve needs sweeping new powers to give it easier access to information on financial institutions, and to intervene to avert future crises. He planned talk later with British Prime Minister Gordon Brown at his official Downing Street residence. Paulson, on a foreign tour, is also holding a meeting Thursday with British Treasury chief Alistair Darling to discuss measures to promote stability in global financial markets. "As U.S. and global regulators respond to recent events, we must recognize that the stability and vitality of our markets require both robust oversight and market discipline," according to excerpts of a Paulson speech released in advance.

He said the Federal Reserve should be granted wider access to data on the activities of commercial and investment banks and hedge funds. "We should create a system that gives us the best chance of foreseeing a crisis, including a market stability regulator with the authorities to avert systemic issues it foresees," the excerpts said. Banks in both Britain and the United States have suffered the impact of the global credit crunch and needed government intervention. U.S investment bank Bear Stearns was spared from near collapse in March after the Federal Reserve orchestrated its sale to JPMorgan Chase & Co. In Britain, mortgage lender Northern Rock was nationalized in February after worries over its future triggered the first run on a British bank since 1866.

Both episodes undermined public confidence in the financial markets, together with impact of falling house prices and the rising cost of food and fuel. Paulson warned that major global markets must root out the perception that some financial institutions are too big, or too complex, to fail. Markets need to be robust enough to withstand the collapse of a major firm, with government intervention an unusual act, the text excerpts said. "Government support should be an extraordinary event that requires the engagement of the executive branch. It should be focused on areas with the greatest potential for market instability and should contain sufficient criteria to ensure that the cost to the taxpayers is minimized," Paulson is expected to say.

Source

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If ya got a job, hang onto it...

Employers cut jobs for sixth straight month
3 July `08 WASHINGTON - 62,000 jobs lost, off nearly half-million for year

The nation lost jobs for a sixth month in a row in June, a storm of pink slips drenching this year's July Fourth holiday for more than 60,000 Americans and leaving thousands more worried about the future. Weighed down by energy prices and the housing crisis, employers laid off workers in stores, factories and forsaken building sites. With more job cuts expected in coming months, there's growing concern that many people will pull back on their spending later this year when the bracing effect of the tax rebates fades, dealing a dangerous setback to the shaky economy. These worries are rekindling recession fears.

"The deteriorating jobs climate will dampen many a barbecue this weekend. It's hard to celebrate when you are out of a job," said Richard Yamarone, economist at Argus Research. In June alone, employers got rid of 62,000 jobs, bringing total losses so far this year close to a staggering half-million — 438,000, according to the Labor Department's report released Thursday. The economy needs to generate more than 100,000 new jobs a month for employment to remain stable.

The jobless rate held steady at 5.5 percent after jumping in May by the most in two decades. Still, June's jobless rate was considerably higher than the 4.6 percent of a year ago. The unemployment rate is expected to climb through the rest of this year and top 6 percent early next year. Just in the past few days, Chrysler LLC said it would close a plant and Starbucks Corp. said it would shut some 600 stores in the next year, meaning more lost jobs ahead. American Airlines recently said it may cut flight attendant jobs.

More 62,000 jobs lost, off nearly half-million for year - Yahoo! News

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Mortgage aid plan lookin' good...

Mortgage rescue plan draws Senate support
Jul 8, `08 WASHINGTON (AP) - A mortgage rescue plan to save hundreds of thousands of homeowners from foreclosure drew overwhelming Senate support, inching toward passage despite Republican objections.

The Senate voted 76-10 Monday to advance the bill, a broad array of housing measures including overhauls of the Federal Housing Administration, the Depression-era mortgage insurer, and government-sponsored home loan giants Fannie Mae and Freddie Mac. Its centerpiece is a new $300 billion FHA program to allow debt-ridden homeowners who are currently too financially risky to qualify for government-backed loans to refinance into safer, more affordable mortgages.

The measure is on track for passage by an overwhelming margin, possibly by week's end. It has survived several test votes in the Senate, repeatedly demonstrating that there's enough support for it to override President Bush's promised veto. But Sen. John Ensign, R-Nev., is blocking its progress because Democratic leaders have refused to allow a vote on attaching an $8 billion package of renewable energy tax breaks. Ensign has said he wants the tax incentives to hitch a ride on the housing measure because it has a good chance of being signed into law by Bush.

"This will be the major achievement and accomplishment of this Congress when it comes to dealing with the underlying economic crisis, which is at its heart the foreclosure crisis," said Sen. Christopher J. Dodd, D-Conn., the Banking Committee Chairman who wrote the legislation. Beyond the Senate, the election-year package still faces a tricky path.

More My Way News - Mortgage rescue plan draws Senate support

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Senate Passes Housing Rescue Bill...

Fighting Foreclosure: Senate Passes $300 Billion Housing Rescue Bill
July 11, 2008 - The Housing Rescue Package Still Faces Significant Hurdles

A $300 billion mortgage rescue package aimed at struggling homeowners today received resounding approval in the Senate. In a show of bipartisan support, 63 senators voted for the bill while five voted it against it. But the economic lifeline may not reach desperate borrowers anytime soon because the House wants to change the legislation and President Bush has threatened to veto it.

The Senate bill, which is the result of months of debate, would allow subrprime borrowers at risk of foreclosure to refinance with mortgages backed by the Federal Housing Administration. The bill also includes $14.5 billion in housing tax breaks, such as a credit of up to $8,000 for first-time home buyers. The bill would create a new regulator for government-sponsored mortgage giants Fannie Mae and Freddie Mac, which this week saw their shares plummet amid concerns that they will have to raise more funds to cover growing losses stemming from the slumping housing market.

On the Senate floor Thursday, Sen. Chris Dodd, D-Conn., urged quick passage of the bill. "When you wake up in the morning and have a foreclosure, you have to face your children, have to face your spouse. Two-hundred fifty-thousand [people] will do that in the month of June, and we're still here debating this bill." "We can't wait any longer," Dodd added later. "We've gone weeks now going through the parliamentary rigamarole here in the Senate."

More ABC News: Fighting Foreclosure: Senate Passes $300 Billion Housing Rescue Bill