Euro Millions History Numbers
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Is the USA economy in danger of plunging into recession…………..?
Some numbers…
$1.43 value of dollar against the euro on 26 October – an all-time low
4.7% unemployment rate, the highest in over a year
1.5 million number of families who may lose their homes as a result of the crisis
23.3% drop in house sales compared to last year – sales hit a record low
6% average drop in house prices over the past six months, the worst housing slump in 16 years
$2.3bn quarterly loss at Merrill Lynch, the biggest loss in its 93-year history
93% drop in quarterly profits at Bank of America’s corporate and investment banking division
I think you should discount Merill Lynch and BoA and even CitiGroups profits/performance. These over-eager organisations got burnt in the euphorisa of the housing market after contributing to it. That’s business, sometimes you win when you gamble, sometimes you lose.
I for one, have been expecting rate cuts in the US for a long while, and i think they come too late and for the wrong reason. The last 2 rate cuts were made in order to alleviate pressure on the housing market. That, I feel, is the wrong thing to do. People are holding mortgages they can’t afford to pay because they took mortagage wheer your first few payments were small and affordable, but these payments rise as time passes. The main way out was thought to be to sell theproperty in the booming market. Well, the music stopped and there aren’t enough chairs for everyone. Consumers and financial institutions are as guilty on this one.
The real question is why did the music stop. We cannot keep thinking of the old correlations: housing market is a leading indicator. That might have happened in the past, but the housing market has been distorted by ne financial tools, by institutions gambling heavily in the sub-prime market. People were happy to believe in the boom. As the prices went up, all else -whether it be crime, creeping unemployment – disappeared from view.
But the fact remained that oil prices have been rising – why is a different question – and that increases costs of production, The US dollar was still high. The boom in property allowed increases in wages. And this was the issue. The Fed kept watching inflation. Sure there was wage inflation, but also cost inflation. INcreasing rates was exactly the wrong thing to do. It just propped up the dollar and made the US less competitive even on the international stage. Foreign [rpdicts started looking more and more attractive in the US itself.
The engines of the economy started sputtering, but the noise was covered by the symphony of the booming housing market. As people lost jobs and couldn’t afford their mortgages, there were new optimistic people who snapped the houses up. Those who got out of the market early were actually lucky. However, as more people lost their jobs, the noise increased, and the orchestra decided to slowly leave the stage to take care of themselves.
Now we can hear the sputtering economy.
A declining dollar will help to regain some competitiveness. Besmirching CHina will help control the balance of trade to a certain degree. However I’m afraid we let the machinery overheat.
There will be a correction to allow the machinery to cool down. The people and corporations overinvested in the housing market have to bite the bullet; it’s their own fault. Then there will be just a slowdown. The more attention is focussed on the housing market, the more likely a recession to hit. The dollar needs to weaken more, and may be a couple of banks allowed to fail to avoid a repeat performance – tax payers funds should be used to help the economy, not pop up businessmen who made seriously bad decisions. We need a 10-20% correction in the dow jones too.
Then the economy can restart its engines.
