| Topic: |
Politics > Politics-USA |
| User: |
"Harry Hope" |
| Date: |
15 Dec 2005 10:43:12 PM |
| Object: |
Storm clouds over the Bush economy |
From The Seattle Times, 12/15/05:
http://seattletimes.nwsource.com/html/opinion/2002684248_harrop15.html
Economy not all that sunny
Froma Harrop / Syndicated columnist
At least there's the economy.
That's what Republicans are saying as their poll numbers tank over
deficits, corruption and the hard slogging in Iraq.
America saw strong economic growth in the third quarter, they sing,
and a good jobs number for November.
All true, but all temporary.
And, by the way, the tax cuts had little to do with it.
President Bush was recently in North Carolina, urging factory workers
to give thanks for the tax cuts.
In folksy mode, Bush criticized "some of those people up in
Washington" who doubted that the tax cuts would make the economy
golden.
It happens that some of those folks up on Wall Street are also
doubters.
They think the economy is about to turn really crummy.
And though they are genuinely grateful for the tax cuts on a personal
level -- after all, they're rich -- on an economic level, they see
them as a problem.
Lower tax revenues and a spending spree have set off an explosion of
federal borrowing, which pushes up interest rates.
And this brings us to the housing bubble.
Rising house prices, fed by low interest rates, have helped keep this
economy going.
That party's closing down.
Merrill Lynch economist David Rosenberg regards the splattering bubble
with some alarm.
He notes that activity related to housing (construction, furniture and
appliances) now accounts for 22 percent of the gross domestic product.
A significant drop in that demand is going to hurt.
Low interest rates were the gin in the punch bowl.
They empowered people to take out enormous mortgages -- giving them
the wherewithal to bid up house prices.
Household real-estate assets have now risen to a record-smashing 150
percent of GDP.
As Rosenberg put it, "Caveat emptor (buyer beware) whenever anything
approaches 150 percent of GDP."
You don't have to be Sherlock Holmes to see the steam already fizzing
out of the housing market.
The shares of home-building companies have taken a dive in recent
weeks.
House prices in previously hot markets are flat or falling.
In the Boston area, for example, asking prices are coming down in
$100,000 chunks.
One statistic Bush forgot to share with the workers was the personal
savings rate.
In September, it fell to an extraordinary minus-1.5 percent.
That means Americans were spending more money than they had coming in.
Where did they get the bucks?
By borrowing off the equity in their houses.
Homeowners have thus obtained $160 billion in cash this year.
In a recent paper titled "Spendthrift Nation," Kevin Lansing, a senior
economist at the Federal Reserve Bank of San Francisco, largely blamed
the housing bubble for this orgy of borrowing.
Rising house and stock prices, he wryly noted, are something that
"households apparently view as a substitute for the quaint practice of
putting aside money each month from their paychecks."
As a result, household debt relative to income has smashed records,
which is not healthy.
Lower house values will make people less willing or able to take more
money out of their homes.
That means they'll have less cash to leave with the merchants.
And that's not good for a country in which consumer spending accounts
for 70 percent of the economy.
Another thing that scares economists is the proliferation of risky
mortgages.
These are the loans that require little or no down payment -- and ask
few pointed questions about the borrower's finances.
Many new mortgages are the adjustable-rate type, in which the interest
charges rise when certain other rates do.
As a come-on, lenders offer super-low payments for the first few
months.
When these fantasy rates expire, borrowers will face real-world
interest charges that could hike their monthly payments by a third or
more.
Add on higher energy costs, and a lot of these Americans will have no
choice but to unload the house in a falling market.
Oh yes, there's another economic indicator the president failed to
mention: the price of gold.
It recently hit its highest levels in a quarter-century.
Gold goes up when investors feel queasy about economic stability.
Some Republicans are nonetheless advising Bush to talk more about the
recent sunny numbers for growth and jobs.
He had better work fast.
Winter is coming on.
______________________________________________________
"There's no question that the minute I got elected, the storm clouds
on the horizon were getting nearly directly overhead."
George W. Bush
Harry
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| User: "Bret Cahill" |
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| Title: Re: Storm clouds over the Bush economy |
15 Dec 2005 11:01:18 PM |
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Even if the economy was booming it wouldn't be good news for
Republicans.
The RRR is 100% dependent of a bad economy for recruits. A good
economy would destroy the GOP as we know it.
Bret Cahill
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| User: "CB" |
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| Title: Re: Re: Storm clouds over the Bush economy |
15 Dec 2005 06:32:16 PM |
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On 15 Dec 2005 21:01:18 -0800, "Bret Cahill" <BretCahill@aol.com> wrote:
<Even if the economy was booming it wouldn't be good news for
<Republicans.
<
<The RRR is 100% dependent of a bad economy for recruits. A good
<economy would destroy the GOP as we know it.
<
<
<Bret Cahill
LOL, what a loon, I've heard it all now.
Is this the apex of relativism or what?
CB
"Our mission in Iraq is clear. We're hunting down the terrorists. We're helping
Iraqis build a free nation that is an ally in the war on terror. We're advancing
freedom in the broader Middle East. We are removing a source of violence and
instability, and laying the foundation of peace for our children and
grandchildren."
-- President George W. Bush
June 28, 2003
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| User: "c-bee1" |
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| Title: Re: Re: Storm clouds over the Bush economy |
15 Dec 2005 11:48:40 PM |
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"CB" <CB@prayforme.com> wrote in message
news:ol24q11h8dl2ur54j1c5n8r7pat8jkp1rr@4ax.com...
On 15 Dec 2005 21:01:18 -0800, "Bret Cahill" <BretCahill@aol.com> wrote:
<Even if the economy was booming it wouldn't be good news for
<Republicans.
<
<The RRR is 100% dependent of a bad economy for recruits. A good
<economy would destroy the GOP as we know it.
<
<
<Bret Cahill
LOL, what a loon, I've heard it all now.
Is this the apex of relativism or what?
No, that's you shilling for boy buttrapers in our prisons.
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| User: "Rich Travsky " |
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| Title: Re: Storm clouds over the Bush economy |
18 Dec 2005 10:17:45 PM |
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CB wrote:
On 15 Dec 2005 21:01:18 -0800, "Bret Cahill" <BretCahill@aol.com> wrote:
<Even if the economy was booming it wouldn't be good news for
<Republicans.
<
<The RRR is 100% dependent of a bad economy for recruits. A good
<economy would destroy the GOP as we know it.
<
<
<Bret Cahill
LOL, what a loon, I've heard it all now.
Is this the apex of relativism or what?
No, this would be:
http://photos1.blogger.com/blogger/2610/663/1600/Rumsfeld-Hussein.jpg
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