Tuesday, March 31, 2009

Still Falling

I really don't think the people in charge (Obama, Larry, Timmeh) understand the reality of the economic situation. It isn't about turning the machines back on.

March 31 (Bloomberg) -- Home prices in 20 U.S. cities fell 19 percent in January from a year earlier, the fastest drop on record, as demand plummeted and foreclosures rose.

The S&P/Case-Shiller index’s decrease was more than forecast and compares with an 18.6 percent decrease in December. The gauge has fallen every month since January 2007, and year- over-year records began in 2001.


I have no idea why pumping massive amounts of money into a banking sector which proved that it was horribly bad at its supposed role - allocating capital efficiently - is a good idea. Who are they supposed to lend to?

There's still a big wave of ARM resets* coming, and the CRE implosion has just begun.


*Regarding ARM resets, some suggest this won't be a problem because interests rates are so low. But the issue is option ARMS ("pick a payment!") loans, where people have been making interest-only or even neg-am payments on the loans.