Weak GDP raises stakes for Obama, Fed (running out of options)

latimes ^ | Thursday August 26, 2010 | Jim Puzzanghera,

[Bigtigermike]

Growth figures are expected to show the economy is almost at a standstill, but the government is running out of options to rebuild momentum.

The widening consensus that the U.S. economy has slowed to a crawl will be hammered home Friday with the government's expected announcement that the nation's second-quarter growth was far more anemic than previously estimated.

Many economists believe the Commerce Department will revise its estimate of growth in gross domestic product to 1.3% or lower, down from 2.4% — a dismal performance, especially as the country struggles to rebound from recession.

A bad GDP number would cap a week's worth of troubling developments in the housing and financial markets, and ratchet up the pressure on President Obama and congressional Democrats heading into November's midterm elections.

But just as there is widespread agreement that the economy is faltering, there is also a sense that the federal government is running out of options to rebuild momentum.

"Housing is in the tank. Confidence is going down. The stock market is going down. It's hard to imagine how consumers will spend," said Sung Won Sohn, an economics professor at Cal State Channel Islands and former chief economist for Wells Fargo.

[muawiyah]

You could ELIMINATE every single federal agency including DOD and USPS and the savings in salaries and operating costs would be covered up by the rounding factors in the federal budget.

[muawiyah]

Certainly ~ if the aggregate out of pocket costs were less than renting the same quality house at a comparable location.

Otherwise where would I live?

Remember, homes should ideally first serve the purpose of providing shelter.

[Ghost of Philip Marlowe]

Yes, I agree.

But the danger is that if house prices fall another 20% or so (as I believe they will), that this is not an isolated occurrence, but one symptom of a systemic disease. And the problem with that is that you will be stuck (if you want to play by the rules) paying a lot of money each month that you will never get back — money that you may desperately need to spend on other things, like food.

A lot of realtors are saying this is the perfect time to buy, as they always do. I just don’t think a lot of people are going to agree. We now have over 9 months of backlogged inventory. I don’t think people believe they will not be able to buy a home cheaper if they wait till next year, and that mentality will perpetuate until the bottom has been clearly defined.

[muawiyah]

Even during periods of deflation you gotta' have a place to live. It's very easy to compare values going up or down ~ just use your discount rate to find the net present value at the end of the period with which you are concerned.

I said if it's cheaper to buy than to rent, then buy, otherwise rent.

[muawiyah]

SECOND ANSWER ~ if you would like prices to go up, in general, what you do is get together with a whole bunch of people who have faith in the sort of economics Roosevelt and others believed in when they killed millions of baby pigs.

Then you arrange to destroy several million surplus homes.

BTW, I checked on how references to that event in the Roosevelt years were working out and discovered that even Glenn Beck has used this story several times in the last couple of years.

I've been using it on the internet since 1996 ~ and it's a good one. Amazing how many people imagine that you can force up the price of a single commodity by simply reducing the supply on hand.

It doesn't actually work that way ~ and Audie Murphy could have told you that if "they" tried to raise the price of pork his Mom still couldn't pay it so he'd continue to supplement the family diet with "free" wild squirrel meat, and I must say, squirrel is a lot more tasty than pig any time, and beats the heck out of beef, chicken or prime Norwegian rat ~

Back to the point ~ you may think you have control of the commodity that's dropping in price but you don't. There are always displacements available, and they will pop up if the public can't pay the price.

For example, I can't afford another house at the moment ~ so no matter how low the prices go I'm not going to buy one, and if you burn down an empty house in my neighborhood what we end up with is a trash strewn concrete foundation!

That's not progress of any kind.

[P.O.E.]

GMTA

“Maybe a negative 1% prime rate would do the trick. Call it the “Cash for Cashier’s Checks” program.

http://www.freerepublic.com/focus/news/2578098/posts?page=42#42

[P.O.E.]

Indeed, it is time for an audit.

Just for starters, I’d like to see receipts for the Porkulus money. I want to know exactly who or what entity has parked the cash.

[newnhdad]

fire-up the presses..

[mylife]

Mmmmm...
Waffles and shrimp grits...

[calex59]

They haven’t run out of options, they have run out of socialist options but the options that work are not being tried nor will they be until we get conservatives in office.

[OneWingedShark]

The problem with eliminating the USPS is that the Constitution authorizes a postal service; and as I said, being a Constitutionalist, I’d strive for following the Constitution.

The DOD itself isn’t mentioned in the Constitution and could therefore be eliminated; the same with the Air force, NASA, the Coast Guard. If those entities do serve a valid federal function they should be folded into Constitutionally sanctioned organizations (ie Air Force -> Army Air Corp).

[japaneseghost]

So, you think you can now afford your dream home.

You have to look realistically at yearly property taxes. Florida, for example, taxes are at least 3% (way more than that). They give a break to people who live there year round. Can you realistically expect property values to rise 3.25% annually, compounded annually? I think not. Add in the astronomical hazard taxes of living in a hurricane prone area.

If I could afford a home on the ocean, I would make sure there is no HOA requirement for hazard insurance, because I know it’s a waste of time and money. If your house blows away in a hurricane they are NOT going to rebuild it soon or as it looked before. There would be a years-long drama to get the house livable again. I have witnessed 2 families go through this mess.

[Cottonbay]

for later