Monday, August 31, 2009

Monday roundup (8-31-09)

Mortgages continue to weigh on the economy:

"The default rate on commercial mortgages held by U.S. banks more than doubled in the second quarter from a year earlier amid falling rents and occupancies for malls, office buildings and warehouses. " (Bloomberg)

Meanwhile, back at the ranch, The New York Times noted Aug. 28:

"THE number of homeowners whose mortgages exceed the value of their home — who are 'underwater,' in industry parlance — recently hit a grim milestone.

"As of the end of June, more than one-third of all mortgaged homes in the United States were underwater, according to a report last month by the First American CoreLogic, a mortgage-industry consulting firm in Santa Ana, Calif. First American said the figure is almost certainly the highest it has been in decades. ...

"It is, of course, anyone’s guess how long it might take for underwater homeowners to see their house go from a liability to an asset." (The New York Times)

An Atlanta Journal-Constitution columnist explained Aug. 29 how house prices (at least in Atlanta) could go lower:

"Now, the housing index is followed as closely as the Dow.

"And what we hope the index is saying is that we have hit bottom.

"But more likely, housing prices will experience what they call a dead cat bounce ...

"What will continue pushing prices down?

"Unemployment. ...

"Folks don’t buy houses if they are out of work or worry they might be.

"Unemployment also drives foreclosures, which continue unabated despite expensive attempts at loan modifications." (The Atlanta Journal-Constitution)

And this is a hard and unusual recession, as was noted on Aug. 29:

"'The current financial crisis is unlike any others,' says the Bank for International Settlements. Lasting damage has been done. The 'cumulative output loss' is likely to reach 20pc of GDP in the major economies.

"The message is the same at the International Monetary Fund. 'The world is not in a run of the mill recession. The crisis has left deep scars. In advanced countries, the financial systems are partly dysfunctional,' said Olivier Blanchard, the Fund's chief economist." (The Daily Telegraph)

The same journalist, Ambrose Evans-Pritchard, wrote Aug. 26 in his blog:

"There is something wrong with the entire recovery tale, which ignores the fact that excess plant is still at the highest level since the Great Depression (capacity use is 70pc in Europe, 68pc in the US, 65pc in Japan, and as low as 50pc in some countries, according to the World Bank’s Justin Lin). Companies will have to cut jobs and investment.

"Soaring 'confidence' indicators have decoupled from reality. The world economy is still prostrate. GDP has shrunk 4pc, 6pc, 8pc, even 12pc or more in a large group of countries. There it more or less sits, like a deflated soufflé. ...

"I am absolutely convinced that those who think we can return to the status quo ante of the credit bubble as if nothing has happened are delusional. As almost every central banker in Jackson Hole reminded us over the weekend, it is going to be a very long hard slog."
(The Daily Telegraph blog)

Tent cities spring up nationwide in the US:

"As cities from Sacramento, Calif., to Tampa, Fla., debate the merits of tent cities to house newly homeless people (many of them young families), this recession is starting to yield scenes that evoke the Great Depression...

"'It’s not quite Hoovervilles, but it’s getting there,' says Leonard Heumann, a housing policy professor at the University of Illinois at Urbana-Champaign, referencing the massive tent cities and shantytowns erected during the Great Depression. ...

"With the jobless rate at a 30-year high and a foreclosure wave still sweeping the nation, wait lists for shelters are expanding and laid-off Americans are looking for other options. The rise in long-term tenting and camping is a sign that people’s options are running out, says Nan Roman, president of [The National Alliance to Prevent Homelessness]." (The Christian Science Monitor)

As MSNBC reported Aug. 27:

"Despite repeated extensions of the unemployment compensation program — up to a record 79 weeks in many states, compared to the standard 26 weeks in normal times — some 1.5 million people are expected to exhaust their benefits by year’s end.

"In the first big wave, some 540,000 are expected to fall out of the program by the end of September, according to the nonprofit National Employment Law Project.

"'Every state is going to experience a substantial increase in people exhausting their benefits,' says Chris Owen, executive director of the Washington, D.C.-based worker advocacy group. 'That means more people who will not be able to pay their mortgages, and who will not be able to shop and buy things. It will be a blow for the national economy, and for state and local economies.'" (MSNBC)

Sunday, August 30, 2009

Sunday roundup (8-30-09)

"With market rally on hold, traders seek signs of actual economic growth ...

"... consumers who have lost their jobs or who fear being fired have curtailed their spending dramatically. ...

"'Without people working, you don't have people buying,' [Ben Halliburton, chief investment officer of Tradition Capital Management in Summit, N.J.] said. 'We are definitely in a weak situation.'" (The Associated Press)

Saturday, August 29, 2009

Saturday roundup (8-29-09)

Retired California state savings and loan examiner is certain that the bank situation is drastically understated:

"Richard Newsom, a former FDIC bank examiner, said that [FDIC chairwoman Sheila] Bair is 'delusional if she actually thinks additional bank fees and assessments will cover the black hole in the FDIC insurance fund.'

"Newsom blamed the FDIC and other regulators for contributing to the industry's downfall by easing up on oversight earlier this decade.

"'I am certain the published numbers of problem banks and related dollars dramatically understate the actual number and dollar amount of problem institutions in the banking system, as it has for at least two years,' he said.

"''Too big to fail' historically means too big to put on the problem list and admit to past regulatory failure,' he said." (The Los Angeles Times)

In this video, CNBC anchor Maria Bartiromo interviews Charles Ortel, managing director of Newport Value Partners and Steve Hagenbuckle, managing principal at TerraCap Parners. Ortel says: "The underlying system is not yet back in recovery phase. ... I think we're in for a good seven years, maybe 10 years, of flat to down restructuring here to deal with the past sins."

Meanwhile the New York Times says: "Reluctance to Spend May Be Legacy of Recession":

"'We’re at an inflection point with respect to the American consumer,' said Mark Zandi, chief economist at Moody’s Economy . com, who correctly forecast a dip in spending heading into the recession, and who provided data supporting sustained weakness.

"'Lower-income households can’t borrow, and higher-income households no longer feel wealthy,' Mr. Zandi added. 'There’s still a lot of debt out there. It throws a pall over the potential for a strong recovery. The economy is going to struggle.'" (The New York Times)

Friday, August 28, 2009

Friday roundup (8-28-09)

More smaller banks closed ...

"Regional banks in Maryland and Minnesota were closed by regulators Friday, bringing the total number of failed banks this year to 83, the Federal Deposit Insurance Corporation said. ...

"With Friday's closures, the number of banks shut this year is more than three times the number of banks that failed in 2008, and it's the highest tally since 1992, when 181 banks failed." (CNN)

See this map for "where the banks are failing"; to view foreclosures state-by-state, toggle the bar above the map. (CNN).

... but meanwhile, the too-big-to-fail banks have only gotten bigger, which "alarms top regulators":

"J.P. Morgan Chase, an amalgam of some of Wall Street's most storied institutions, now holds more than $1 of every $10 on deposit in this country. So does Bank of America, scarred by its acquisition of Merrill Lynch and partly government-owned as a result of the crisis, as does Wells Fargo, the biggest West Coast bank. Those three banks, plus government-rescued and -owned Citigroup, now issue one of every two mortgages and about two of every three credit cards, federal data show. ... But no consequence of the crisis alarms top regulators more than having banks that were already too big to fail grow even larger and more interconnected.

"'It is at the top of the list of things that need to be fixed,' said Sheila C. Bair, chairman of the Federal Deposit Insurance Corp. 'It fed the crisis, and it has gotten worse because of the crisis.'" (The Washington Post)

Why that worries regulators may be suggested in this columnist's blog:

"There’s good news and bad news in the FDIC’s quarterly profile of the banking sector. The good news is that FDIC has more resources than you think to handle the problem banks on its radar. The bad news is that the too-big-to-fail banks aren’t on it." (Reuters)

"Speculation is at its peak":

"'When you see the single-digit stocks hit the most-active list, it's a sign that speculation is at its peak,' said Jeffrey Saut, chief investment strategist for Raymond James & Associates in St. Petersburg, Fla. ...

"'It's clear that the market, in order to grind higher, needs more empirical evidence from companies about a recovery,' said Quincy Krosby, market strategist with Prudential Financial. 'The market has been propelled higher by lower-grade companies. What needs to happen is a move into the best of breed companies, the ones with better balance sheets.'" (CNN)

"So far this month through Thursday's close, AIG shares were up 264%, according to FactSet Research, while Freddie Mac rallied 261% and Fannie Mae jumped 231%." (Marketwatch)

With income stagnant in a consumer-driven society, how can the economy recover?

"Household income in the United States is essentially stagnant, raising doubts about whether consumers already hurt by job losses can sustain an economic recovery.

"The now-ended Cash for Clunkers program helped lift consumer spending last month and is expected to deliver a bigger boost in August. But any economic rebound likely would falter if shoppers lack the income to spend more in the long run.

"Especially in the U.S., consumer spending is essential: It drives about 70 percent of economic activity — more than for most European nations and well above the rates in developing countries such as China." (The Associated Press)

Newspapers in Philadelphia and other key US cities are bankrupt:

"Philadelphia Newspapers is seeking to shed most of its $400 million in debt by repurchasing the company through a bankruptcy auction for about 22 cents on the dollar." (The Associated Press)

"... a long list of newspaper-related companies ... have filed for bankruptcy - like Tribune Co., publisher of the Chicago Tribune and the Los Angeles Times, and Philadelphia Newspapers LLC, which puts out the Philadelphia Inquirer and Daily News." (Wall Street Journal blogs)

Thursday, August 27, 2009

Thursday roundup (8-27-09)

Just how bad is unemployment?

According to today's reports it dipped a bit, but the real numbers may be less clear, notes an American news weekly.

"Is Unemployment the Worst Since the Great Depression?
"Hidden behind the unemployment rate are some startling numbers" (U. S. News & World Report)

FDIC quarterly report finds banks under mounting stress

"The number of 'problem banks' in the United States reached a 15 year high, while 28.3% were unprofitable, according to the Federal Deposit Insurance Corporation, which delievered a litany of painful quarterly data from the lending industry. 'Banking, and by extention the FDIC, is going to be under considerable stress for the foreseeable future,' said Brian Olasov, managing director at the law firm McKenna, Long & Aldridge." (Forbes)

"The quarterly report 'makes clear that banks are neither at the beginning or the end of the problems presented by a difficult economy,' said James Chessen, chief economist at the American Bankers Association. 'They are in the middle and significant challenges still remain.'" (Marketwatch)

This conforms an Aug. 25 report by Risk News, in which they quoted the Fitch credit-rating agency, which said it was "'highly concerned with the prospect of significant deterioration in CRE [commercial real estate], which will likely be an escalating contributor to credit problems over the next several quarters'." The piece also noted that some analysts expect "higher levies from the FDIC to replenish its deposit insurance fund and meet the cost of the [bank] failures". (Risk News)

Marketwatch confirms: "The manner in which five banks collapsed on Friday, costing the resource-stretched Federal Deposit Insurance Corp. roughly $3.7 billion, is raising concerns about the agency's depleted insurance fund used to protect depositors.

"That's driving expectations the agency will look in the short-term to cover losses by slapping large additional special fees on banks, with larger financial institutions taking on the brunt of the costs." (Marketwatch)

"... analysts are worried that the FDIC, which is funded by a regular surcharge on the banking industry, could run short of its own resources, which would force it to tap a $500bn line of credit available from the US treasury. The FDIC has not required help from taxpayers for two decades and such a move could damage the fragile recovery in confidence surrounding the financial industry.

"'[Borrowing from the treasury] would send a signal about the health of the banking industry,' Nancy Bush, an analyst at NAB Research, said. 'They, the Federal Reserve and the treasury are all concerned about systemic fragility.'" (The Guardian)

So under this systemic fragility, how many more banks might fail? Apparently a lot.
Ian Mathias of Agora Financial (producers of the film I.O.U.S.A.), quoting fellow Agora analyst Dan Amoss the other day, says "at least a few hundred." (The Daily Reckoning)

But today an analyst is willing to raise him.

"The US banking system will lose some 1,000 institutions over the next two years, said John Kanas, whose private equity firm bought BankUnited of Florida in May." (CNBC)

Just as I thought I'd hit a peak number, another analyst is bidding still higher: double or nothing.

"'We could end up with a couple thousand fewer banks within a few years,' said Terry Moore, managing director of consulting firm Accenture's North American banking practice. 'You could say we're overbanked right now.'" (CNN)

On Aug. 25, John Lounsbury, a writer with The, posted "Comparing today's bank crisis to the past," in which he argues that it is useful, in considering failures to date, to consider the number of branches the bank had rather than just the number of individual banks that failed. By doing this, he says, "the number of actual bank locations affected in the current crisis, which is not over, is similar to the entire period of the Great Depression from 1929 to 1941." (Seeking Alpha)

Tomorrow night is Friday, so we will get to see if any more banks failed this week.

Howard Davidowitz, chairman and sole stockholder of Davidowitz & Associates, consultants to the retail industry, comments flamboyantly and bleakly on the economic outlook at Yahoo's Tech Ticker; he projects that "we're closing hundreds of banks this year":




Wednesday, August 26, 2009

Wednesday roundup (8/26/09)

Mortgage woes remain a threat:

"Rising unemployment continues to make more Americans miss their mortgage payments, a negative sign for the U.S. housing market that has lately enjoyed strong data on sales, prices and mortgage applications.

"Among U.S. homeowners with mortgages, a record 7.32 percent were at least 30 days late on payments in July, up from about 4.5 percent a year earlier and 7.23 percent in June, according to monthly data from the Equifax credit bureau." (Reuters)

"Adjustable Mortgages Loom as Threat to Housing Recovery ...

"As the housing market seeks a bottom, option ARMs [adjustable rate mortgages], which accounted for $750 billion in mortgages made from 2004 to 2007, according to the industry newsletter Inside Mortgage Finance, remain a risk, especially because many are not eligible for refinancing. About a third are already in default, according to analysts." (The New York Times)

Meanwhile, some ask: Will homes sales continue upward when the government stops helping?:

"New home sales have clearly moved off of their cyclical lows, but there remains ample reason to doubt whether this increase in sales can be sustained over coming months, particularly given that the first-time buyer tax credit is set to expire Nov. 30," wrote Richard Moody, chief economist for Forward Capital. (Marketwatch)

Four (Wounded) Horsemen lead the market charge:

"For the past few days, Citigroup (C, Fortune 500) (which taxpayers now own a third of), mortgage giants Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500) (which were placed under government conservatorship last September) and Bank of America (BAC, Fortune 500) (which has needed $45 billion in bailout funds) have been far and away the most actively traded stocks on the New York Stock Exchange.

"In fact, these four wounded horsemen of the financial sector comprised 40% of the overall trading volume on the NYSE on Tuesday. These stocks haven't just been active, they've been surging.

"This is kind of scary. It suggests that the late-summer portion of the almost six-month long market rally is being fueled more by speculation and momentum, not real optimism about a potential recovery in the financial sector and the overall economy." (CNN)

Cash for clunkers -- what a success!:

Nearly 700,000 old cars (clunkers) were traded in for new cars under the impetus of a government refund program.

"This is one of the best economic news stories we've seen and I'm proud we were able to give consumers a helping hand," Transportation Secretary Ray LaHood said. (CNN)

What better way to help GM and Chrysler, just rescued from the jaws of bankruptcy? So let's see where these companies placed in the top 10 vehicles purchased: Toyota, Honda, Ford, Hyundai, and Nissan. (The New York Times). Hmmm.

Indeed, National Public Radio reports that "According to the Department of Transportation, as of Friday, 59 percent of vehicles bought with Clunkers cash were foreign. ... Foreign firms control the majority of the U.S. market, but they did even better than usual during the Clunkers program." (NPR)

Clips of quips by Peter Schiff, president of Euro Pacific Capital, on the current crisis:

Tuesday, August 25, 2009

Tuesday roundup (8/25/09)

The news was not good on the economy today:

"The US economy will shrink far more than expected this year and will rebound much more slowly than forecast after that, according to a bleak new assessment by the White House Budget Office.

"The federal government also faces exploding deficits and mounting debt over the next decade, far worse than what the Obama administration had estimated just a few months ago." (CNBC)

"Congressional Budget Office director Douglas Elmendorf said if Congress does not reduce deficits, interest rates will likely rise, hurting the economy. But if Congress acts too soon, the economic recovery -- once it arrives -- could be thwarted, he said.

"'We face perils in acting and perils in not acting,' Elmendorf told reporters." (The Associated Press)

Ben Bernanke is re-nominated as Fed chairman, but now comes "the real challenge":

"Bernanke's theoretical model is clearly wrong – since he was blind-sided two years ago – and must lead him into fresh error. The risk is that he will mismanage the Fed's 'exit strategy' by tightening policy too soon on the false assumption that recovery is secure. He knows this was the Fed blunder of 1936-1937, but also seems to think he has basically licked our Great Recession of 2008-2009. Has he really?" (Daily Telegraph of London)

"Bernanke has done the easy part,' said Ram Bhagavatula, managing director at the hedge fund Combinatorics Capital. 'It's not very difficult to throw money at the problem. Of course, we will never know what would have happened if the Fed was not quite so reckless. But the real challenge comes over the next 12 months when they have to withdraw the excess monetary stimulus.'" (CNBC)

Amongst the Fed's next projects (already announced last week): dealing with the woes in commercial real estate.

"The commercial real estate downturn is deepening, threatening to slow the economic recovery.

"To try to contain the damage, the Federal Reserve said Monday [Aug. 17] that it will extend into 2010 a program to help investors buy commercial property loans." (USA Today)

Real estate attorney Stephen Meister (also on Aug. 17), said $1.3 trillion is at risk; "it is going to be a torpedo amidships" to the economy:

Nor are home mortgage woes over, one analyst said today:

"A tsunami of home foreclosures is set to hit the US as banks are unable to keep bailing out tenants that can’t afford their rent and struggling home owners show their anger at the financial crisis by giving up on their mortgage, David Karsbøl, chief economist at Saxo Bank, told CNBC." (CNBC)

This blogger last week said basically the same thing, citing an array of reports from which he argues that there is a hidden backlog of foreclosures.

Obviously the present crisis is all about debt. Steve Keen, an associate professor at the School of Economics and Finance, University of Western Sydney, Australia, was found by a Dutch professor to have been one of the few professionals (along with Peter Schiff and Nouriel Roubini) who saw it coming (see this piece by Keen at Debt Deflation). Last month he laid out the problem we're facing at a seminar organized by The Whitlam Institute within the University of Western Sydney, Australia: "What we are going through is a deleveraging crisis and we haven't experienced one of those since 1930. The last time, it took 10 years and a world war to get rid of it. And this time we're starting out with 1.7 times the level of debt in America [compared to 1930], not even mentioning the derivative catastrophe that's also there."

Monday, August 24, 2009

Monday roundup (8/24/09)

Banking industry is still troubled

" ... Christopher Whalen, managing director at Institutional Risk Analytics, a research firm, has analyzed financial data from the second quarter of this year that almost 7,000 banks submitted to the Federal Deposit Insurance Corporation. ...

"Unfortunately, that assessment shows that the number of financially sound banks is declining and that the ranks of troubled institutions are growing. Indeed, Mr. Whalen said his figures show more stress in the banking industry in the second quarter of 2009 than in the immediately previous periods." (The New York Times)

"'The difficulty at the moment is finding enough healthy banks to buy the failing banks,'" [Richard] Bove [a prominent banking analyst with Rochdale Securities] wrote [on Sunday]." (CNBC)

These reports may lend (if we can use that verb) more credence to the recent piece by John Lounsbury, a commentator for The and for Seeking Alpha, entitled "Coming Soon: Banking Crisis of Historic Proportions" (Seeking Alpha)

But are the banks' bad mortgages just a walk in the park?

"Stanford University economics professor John Taylor, an influential economist, told Reuters Television Friday the U.S. budget deficit poses a greater risk to the financial system than the collapse in commercial real estate prices." (CNBC)

Meanwhile, back at the ranch, Fannie and Freddie are among the market leaders, but where are they leading?

"We continue to believe that the common stock is worth zero. They both owe the government about $50 billion each and have no capital of their own," [Keefe, Bruyette & Woods analyst Bose] George said." (The Associated Press)

Joe Saluzzi of Themis Trading, commenting last week (Aug. 20) on the same phenomenon, and on the idea that the stock market is rising on fundamentals, had one comment: "Let's be real here!"

Sunday, August 23, 2009

Sunday roundup (8/23/09)

The most Trichet will say is that the economy is not in free fall:

"'We see some signs confirming that the real economy is starting to get out of the period of free fall,' [European Central Bank President Jean-Claude] Trichet said today at the Kansas City Federal Reserve Bank’s annual symposium in Jackson Hole, Wyoming. This 'does not mean at all that we do not have a very bumpy road ahead of us.'" (Bloomberg)

No green shoots for the Post Office:

"Blame the recession or the rise of the Internet, but the volume of mail is plummeting and taking revenue with it. The Postal Service is on track to close fiscal 2009 in a few weeks with a staggering loss of $7 billion or more. It is expected to run out of cash by the end of next month." (Miami Herald)

And Social Security increases are in jeopardy:

"The trustees who oversee Social Security are projecting there won't be a cost of living adjustment (COLA) for the next two years. That hasn't happened since automatic increases were adopted in 1975." (Associated Press)

Saturday, August 22, 2009

Saturday roundup (8-22-09)

What happens without stimulus?:

"The brightening outlook in Europe and Asia and the improvement in U.S. credit markets and indicators reflect heavy government stimulus spending. ...

"'It's not clear that these economies can continue to move forward without stimulus,' said Mark Zandi, chief economist for Moody's "And that's in part why stock markets across the globe are nervous.'" (Associated Press)

"... this recovery may be on very shaky ground.

"Consumer spending, which roughly accounts for 70 percent of economic activity, and housing, about 20 percent of GDP, have been hit with the equivalent of 100-year storms." (CNBC)

Foreclosures hitting prime loans now:

"'We’ve seen a significant drop in the problem with subprime loans and we’ve moved now to a problem with prime fixed-rate loans,' Jay Brinkmann, the Washington-based trade group’s chief economist, said in an interview. 'Job losses are driving it, and we expect that to continue into next year.'" (Bloomberg)

"The broadening of the foreclosure crisis to include prime loans due to high and rising unemployment will delay a bottom in the housing market and threatens the economic recovery," said Mark Zandi, co-founder and chief economist of Moody's (Los Angeles Times)

If you want a shocking graphic depiction of the foreclosure crisis in a neighborhood of your choice, check out Google maps. Click "show search options" to the right of the search box, select real estate from the drop down menu, type in the desired location. When the map page comes up, to the left of the map, select "foreclosure" under "listing type". The map page will automatically refresh and will show with pink dots the properties under foreclosure.

Time to spend and go back to school:

We'll be watching for the results in this sector as one measure of the state of economic "recovery" in the United States.

"Back-to-school shopping has become the second-busiest retail season of the year, making it a major part of the economy and making August a big month for stores that cater to parents with young children or to college students." (The Tampa Tribune)

"The American economy is 70 percent driven by consumer spending, and the problem is that consumers aren’t spending," observes Dale McFeatters of the Scripps Howard News Service. (Ventura County Star)

Friday, August 21, 2009

Friday roundup (8-21-09)

Banks: Four more banks failed this week and one of them was the third largest failure this year and tied for 11th place in the history of US bank failures (see the list at the second link).

Once a bankrupt bank is seized, all it needs is a buyer,
the Washington Post notes:

"The seizure of a bank is in many ways the end of a problem, as the federal government absorbs the losses before selling the healthy parts to a new owner, setting the stage for renewed lending.

"The greatest threat to that process is the dwindling supply of buyers."

As a result, the paper says, foreign buyers are being courted.

You can check on The's rating of your bank by going to this link. Above the search box, choose "Banks & thrifts." This writer suggests that a B+ or better is desirable.

Unemployment: Bank failures are coming in part from the issuing of shaky home mortgages. The housing market can only make genuine improvement, the experts note, when companies begin hiring again. Although statistics suggest that joblessness is easing, analysis of the statistics, the same report notes, showed that "unemployment rates didn't change much from June to July."

Nor is the situation anything to write home about in many states, says the Wall Street Journal: "There were 14 states that had unemployment rates in double digits last month, with three including California setting all-time highs, the Labor Department reported Friday."

Federal deficit: Meanwhile, right on the heels of Warren Buffett's warning that the US government must concentrate on reining in the deficit, the Associated Press reports that it's been discovered that the deficit is massively larger than was thought.

"The Obama administration expects the federal deficit over the next decade to be $2 trillion bigger than previously estimated, White House officials said Friday, a setback for a president already facing a Congress and public wary over spending.

"The new projection, to be announced on Tuesday, is for a cumulative 2010-2019 deficit of $9 trillion instead of the $7 trillion previously estimated."

"Uneasy" about recovery talk: While some see a recovery taking place, Ben Bernanke, the chairman of the Federal Reserve, is more modest, speaking only of a stabilization of the economy.

''After contracting sharply over the past year, economic activity appears to be leveling out, both in the United States and abroad, and the prospects for a return to growth in the near term appear good,' Bernanke said.

"But both Bernanke and European Central Bank President Jean-Claude Trichet said there was still much work to be done to restore the global economy to self-sustaining growth.

"Trichet said he was 'a bit uneasy' about talk of a return to normal and that policy-makers 'should be as active as possible.[']"