Stocks struggled from the open and enter the final hour with modest losses. Treasury Secretary Timothy Geithner’s feet are being held to the fire today regarding the NY Fed’s role in the AIG bailout during his governorship. Things aren’t going well for the Treasury Secretary as it appears his handling of the matter left a lot to be desired and apparently Congress doesn’t like to be conned, unless of course it’s by a lobbyist with a lot of campaign contributions and other goodies.
Despite near record low mortgage rates, an extension of the $8,000 homebuyer tax credit and easy finance terms from the FHA like existing home sales, new home sales fell sharply, dropping 7.6% to 342,000 units annualized. Inventory increased to 8.1 months while the median price gained 6.4% to $225,700 the highest since December 2008. That said the recent plunge in sales activity despite all the stimulus and dramatically improved affordability poses some serious questions not only for real estate but for the economic recovery as well.
The MBA activity index fell 10.9% to 513 during the week ending on the 22nd as refi’s slipped 15.1% and purchase apps fell 3.3%, the 30-year contract rate was essentially unchanged at 5.02%. Mass layoffs fell to their lowest level since July 2008 dropping to 1,726 in December involving 153,127 employees. As expected the Fed left rates unchanged at the conclusion of the latest FOMC meeting.
Increasingly our problems are shifting away from those of a purely economic nature, not to minimize them, to one of credibility and by implication trust. As today’s hearing demonstrates, as does the lack of real regulation in response to this fiasco, a glaring lack of prosecution though some investigations are underway with others planned. An almost complete lack of gratitude on the banksters part for their taxpayer funded bailouts and by implication employment along with a continued avoidance of any responsibility on their part. The public’s frustration level is high and rising along with the level of strategic defaults currently estimated at 25% of the total. If that reaches critical mass, and your guess is as good as mine the potential for a game-changing outcome cannot be discounted.
Hi and welcome to The Profit Motive, I’m your host Caleb Lawrence. Once upon a time in America the media acted as the watchdog of the corporations and the state. In the modern era it’s all about ratings and profits, opinion has been substituted for news and frequently is presented as fact. Much like my daily radio show on KPIG 107.5 FM in Santa Cruz California and KPYG FM 94.9 Cayucos/San Luis Obispo California. A thousand Blogs were able to spot the current problems and many began discussing it years before it reached crises proportions. While there were exceptions, and these exceptions are becoming more common, the mainstream media failed to get it and largely continue to do so.
