"The Conference Board, a New York-based business research group, said its Consumer Confidence Index fell to 53.1 in September from an upwardly revised 54.5 in August.
"Economists were expecting a reading of 57, according to a Briefing.com consensus survey.
"'Consumers remain quite apprehensive about the short-term outlook and their incomes,' said Lynn Franco, director of the Conference Board Consumer Research Center. 'With the holiday season quickly approaching, this is not very encouraging news.' ...
"The lower reading doesn't bode well for the nation's retailers, who make more than half of their annual profit during the holiday season.
"'This year consumers have less income available to spend and credit is tighter,' [Mark] Vitner [at economist at Wells Fargo] said." (CNN)
Both federal and state tax revenues have been severely curtailed:
"In 2009, roughly 47% of households, or 71 million, will not owe any federal income tax, according to estimates by the nonpartisan Tax Policy Center.
"Some in that group will even get additional money from the government because they qualify for refundable tax breaks.
"The ranks of those whose major federal tax burdens net out at zero -- or less -- is on the rise. The center's original 2009 estimate was 38%." (CNN)
"State tax revenues in the second quarter plunged 17% from a year earlier as rising unemployment and reduced spending hurt sales- and income-tax collections, according to Census Bureau figures released Tuesday.
"The decline was the sharpest since at least the 1960s. ...
"'This brings really bad news for almost every single state and leaves them with unprecedented budget crises,' said Lucy Dadayan, a senior policy analyst with the Nelson A. Rockefeller Institute of Government at the State University of New York." (The Wall Street Journal)
Most homeowners with modified loans still can't avoid foreclosure:
"Lenders are ramping up efforts to avoid home foreclosures, but a report by bank regulators says more than half of borrowers who get help fall behind again.
"More than 50 percent of homeowners with loans modified in the first half of last year had missed at least two months of payments a year later, the federal Office of the Comptroller of the Currency and the Office of Thrift Supervision said Wednesday." (The Associated Press)
"The number of homes lost to foreclosures rose about 17 percent in the second quarter of this year despite the launch of an extensive government program aimed at helping borrowers save their home, according to government data released Wednesday." (The Washington Post)
In desperation, banks are sometimes even reducing the principal when they modify loans:
"Banks and loan investors are starting to bite the bullet and lower the principal due on home mortgages for some struggling borrowers, a new report from bank regulators shows. ...
"The portion of loan modifications in the second quarter that involved reducing the principal jumped to 10% from 3.1% in the first quarter, according to the report released Wednesday by the Office of the Comptroller of the Currency, or OCC, which regulates national banks." (The Wall Street Journal)
And corporate debt defaults may reach record levels this year:
"U.S. corporate debt default rates are expected to hit 'unprecedented' levels in 2009 ...
"A spike of maturities beginning next year will cause the next wave of financial distress, according to the Bain study." (Reuters)
CIT Group: Not too big to fail, but still big:
"The fate of CIT Group Inc. was hanging in the balance Tuesday as the large commercial lender readied a plan that would likely hand control of the company to its bondholders.
" ... [but] many of those involved said they didn't expect that the company could avoid seeking Chapter 11 bankruptcy protection, given competing bondholder interests.
"If CIT does file, it would be the fifth-largest bankruptcy filing, by assets, in U.S. history, trailing only Lehman Brothers Holdings Inc., Washington Mutual Inc., WorldCom Inc. and General Motors Corp." (The Wall Street Journal)
Families are not getting out of debt as fast as professionals are, analyst says:
"American families, who account for about 40% of all borrowing in the U.S., aren't nearly as far along the deleveraging road as big finance. ...
"'Deleveraging in the household sector has barely begun because it's hard for households to lower debt burdens, other than declaring bankruptcy,' says Martin Barnes, who has been monitoring the credit cycle for years for the Bank Credit Analyst, a forecasting journal." (The Wall Street Journal)
Recovering from job losses may take years, academics predict:
"The recession’s staggering job losses, coupled with an ever-growing labor force, means it could be late 2017 before employment returns to the pre-recession levels of 2007, according to the study, conducted by Rutgers economists Jim Hughes and Joseph Seneca.
"'We’re not trying to be overly dramatic here -- we might even be considered optimistic,' said Hughes, who is dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers. 'It’s not going to be an easy slog from here.'" (The Star-Ledger of Newark, NJ)
And with people out of work, there will be no rise in consumption and consequently no increase in production:
Robert Macintosh, chief economist at Eaton Vance Corp. in Boston, says, "(ADP [National Employment report]) is a little worse than expected, that maybe offsets the minor, minor positive from the GDP report. So that nets things out a little bit.
"Really what it comes down to is how much of this recovery is going to be sustainable. At this point I'm questioning whether businesses really want to commit to ramping up production. If they're not willing to ramp up production, you're not going to get jobs out of it and that's going to curb consumption. That's the real Holy Grail here, getting consumption up.
"I'm not a believer yet that this is a robust economy. I'm still thinking more in the Nike swoosh type of economy. What I'm seeing here, these numbers this morning, doesn't change my opinion that this is going to be a very frustratingly weak growth period and you're not going to see the job creation that you'd love to see." (Reuters)
IMF says global reserves of dollar fell:
"The dollar’s share of global currency reserves fell in the second quarter to the lowest level in a decade as the holdings of euros rose to a record, according to the International Monetary Fund." (Bloomberg)
Lawrence Brahm, the founding director of the Shambhala Foundation, writes:
"The tectonic plates of the global financial system have shifted. The post-colonial order created at Bretton Woods irreparably cracked, together with Wall Street, in September 2008. Time has come to replace it. ...
"It looks like China is positioning to become the bank of reserve to the IMF." (Asian Times)
Watch PBS Frontline's program "Young & Restless in China" online (PBS).
Japan needs reform and low interest rates, OECD says:
"Japan needs major reforms in taxation, healthcare and employment to sustain recovery from recession and foster long-term growth, a new international report said Wednesday.
"Although the world's second largest economy is shaking off its worst slump since World War II, it faces serious problems that could undermine longer-term prospects, according to the Organization for Economic Cooperation and Development, a rich nations club." (The Associated Press)
"'We think the Bank of Japan should keep the policy rate very close to zero as long as inflation remains in minus,' OECD senior economist Randall Jones said. The central bank 'should focus on trying to stop deflation,' he said.
"'Any interest hikes would exacerbate deflation,' the Organisation for Economic Cooperation and Development said in its Economic Surveys report." (Reuters)
Deficits in France and Spain highlight painful economic situations:
"France said its budget deficit will grow to a record this year and next as the global recession causes tax receipts to shrivel and a government stimulus package ramps up spending.
"The budget gap is expected to widen to 8.2% of gross domestic product in 2009, from 3.4% last year, French Budget Minister Eric Woerth said Wednesday as he presented next year's budget to journalists.
"In 2010, the budget shortfall will grow even further to a never before recorded 8.5% of GDP.
"Accounts will remain in the red for the foreseeable future ..." (The Associated Press)
"'France is in a dreadful debt dynamic,' said Guillaume Sciard, who oversees 3 billion euros ($4.4 billion) of bonds at Barclays Wealth Managers France in Paris. 'France will lose its AAA rating by 2012. In Europe, Germany may be the last to potentially keep its AAA.'" (Bloomberg)
"Spain's budget deficit for the first eight months of the year has swollen to 5.73 percent of gross domestic product - four times what it was last year - due to lower tax revenues and a mounting bill for spending aimed at alleviating the economic crisis, the government reported Wednesday. ...
"The once-buoyant economy contracted in the second quarter by 1.1 percent over 3 months and by a record 4.2 percent over the year. It was the fourth consecutive quarterly contraction." (The Associated Press)
Rep. Ron Paul is interviewed by Jon Stewart on the Daily Show:
|The Daily Show With Jon Stewart||Mon - Thurs 11p / 10c|
A drive through commercial real estate in Carlsbad CA:
What you see is a ghost town. (JimtheRealtor on Youtube)