Quit Doling Out That Bad-Economy Line" (Washington Post)

[FUZO]

TweetQuit Doling Out That Bad-Economy Line" (Washington Post)

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A long article, but it had some ineresting points, which I pulled out. Bottom line, can you say fear mongering and rhetoric?


Quote:
"It was the worst of times, and it was the worst of times."

I imagine that's what Charles Dickens would conclude about the current condition of the U.S. economy, based on the relentless drumbeat of pessimism in the media and on the campaign trail. In the past two months, this newspaper alone has written no fewer than nine times, in news stories, columns and op-eds, that key elements of the economy are the worst they've been "since the Great Depression."

Quote:
Patient zero in this epidemic is the Democratic candidate for president. As it would be for any challenger, it's in his interest to portray the incumbent party's economic performance in the grimmest possible terms. Barack Obama has frequently used the Depression exaggeration, including during a campaign speech in June, when he said that the "percentage of homes in foreclosure and late mortgage payments is the highest since the Great Depression." At best, this statement is a good guess. To be really true, it would have to be heavily qualified with words such as "maybe" or "probably." According to economist David C. Wheelock of the Federal Reserve Bank of St. Louis, who has studied the history of mortgage markets for the Fed, "there are no consistent data on foreclosure or delinquency going all the way back to the Depression."

The Mortgage Bankers Association (MBA) database, which allows rigorous apples-to-apples comparisons, only goes back to 1979. It shows that today's delinquency rate is only a little higher than the level seen in 1985. As to the foreclosure rate, it was setting records for the day -- the highest since the Great Depression, one supposes -- in 1999, at the peak of the Clinton-era prosperity that Obama celebrated in his acceptance speech at the Democratic National Convention late last month. I don't recall hearing any Democratic politicians complaining back then.

Even if Obama is right that the foreclosure rate is the worst since the Great Depression, it's spurious to evoke memories of that great national calamity when talking about today -- it's akin to equating a sore throat with stomach cancer. According to the MBA, 6.4 percent of mortgages are delinquent to some extent, and 2.75 percent are in foreclosure. During the Great Depression, according to Wheelock's research, more than 50 percent of home loans were in default.

Moreover, MBA data show that today's foreclosures are concentrated in that small fraction of U.S. homes financed by subprime mortgages. Such homes make up only 12 percent of all mortgages, yet account for 52 percent of foreclosures. This suggests that today's mortgage difficulties are probably a side effect of the otherwise happy fact that, over the past several years, millions of Americans of modest means have come to own their own homes for the first time.

Here's another one not to be too alarmed about: Obama is flat-out wrong when he frets on his campaign Web site that "the personal savings rate is now the lowest it's been since the Great Depression." The latest rate, for the second quarter of 2008, is 2.6 percent -- higher than the 1.9 percent rate that prevailed in the last quarter of Bill Clinton's presidency.

Quote:
And Obama's infection by the Depression-exaggeration bug goes way back. His first outbreak came on Oct. 2, 2002, in his famous speech opposing the invasion of Iraq, delivered when he was an Illinois state senator. He said that the invasion was "the attempt by political hacks like Karl Rove to distract us from" a litany of economic troubles including "a stock market that has just gone through the worst month since the Great Depression."

Quite an exaggeration. When state senator Obama made that remark, the Standard & Poor's 500 had just dropped 11 percent for the month of September 2002. But stocks dropped twice that much in October 1987. Since the Great Depression, the stock market has had bigger one-month drops on four occasions. Obama's pessimism on stocks then happened to be as ineptly timed as it was factually incorrect. Exactly one week later, stocks hit bottom, and over the next five years the S&P 500 more than doubled, surging to new all-time highs.

So much for Obama's hyperbole about our terrible economy.

[straydoglogic]

Tweetwait a minute fuzo....i thought you hated the washington post?

[BABY1]

Tweet

wait a minute fuzo....i thought you hated the washington post?

Just because you hate something, (newspaper, tv show etc.) doesn't mean that you may not read or watch that very something occasionally. Sometimes it may just be out of curiosity or to see what others are saying. I dislike Obama very much but i sat and wacthed the DNC. Why? Because I just wanted to hear him talk and see what all the hype was about. Just like you say that you are done with posting in this political forum, and you stiil do it.

[FUZO]

Tweet

wait a minute fuzo....i thought you hated the washington post?

SURE DO BUT IF I SEE LIBERAL PAPER POST SOMETHING TRUE I'LL POST IT

[straydoglogic]

Tweetwell its funny..alan greenspan was just on and said that we have a more than 50% chance of going into recession...and now with the loss of Lehman Brothers , Merril Lynch AND AIG and the stock market crumbling as we speak....i think there is much to be concerned about...

i cant even fathom why anybody would think that the economy is doing ok...
fannie may, freddie mac bailouts...bear stearns bailout...now gm is asking for help..which they probably wont get...and now the 3 giants...and also washington mutual is in trouble.....the economy is NOT doing ok...

[FUZO]

TweetSTATS INDICATE THAT RIGHT NOW THE USA IS NOT IN A RECESSION STRAY.WHO KNOWS WHAT NEXT QTR MAY BRING BUT RIGHT NOW ITS NOT

[straydoglogic]

Tweeti didnt say right this minute....i said we are certainly heading in that direction...and alan greenspan is no slouch...he knows his shyte...
as i sit and watch giant companies go belly up ( which will effect the world economy, not just ours ) and watch the stock market spiral...things arent looking good....

[daved150]

Tweet

well its funny..alan greenspan was just on and said that we have a more than 50% chance of going into recession...and now with the loss of Lehman Brothers , Merril Lynch AND AIG and the stock market crumbling as we speak....i think there is much to be concerned about...

i cant even fathom why anybody would think that the economy is doing ok...
fannie may, freddie mac bailouts...bear stearns bailout...now gm is asking for help..which they probably wont get...and now the 3 giants...and also washington mutual is in trouble.....the economy is NOT doing ok...

refering to the big 3?...the money thats being asked for right now is the money for devolpment of high econo and hybrid vehicles...i dont think gm/ford/chrysler is asking for bail out $.

[straydoglogic]

Tweetno dave...when i said big 3 i was reffering to lehman, merril and aig..
but yes..youre right...they are asking for billions in loans.....

[daved150]

Tweet

no dave...when i said big 3 i was reffering to lehman, merril and aig..
but yes..youre right...they are asking for billions in loans.....

oh...sorry. i think in automotive when i here big3, lol..product of my enviroment!!! my banks have put us on notice friday that they will be sending us new guidlines today for lending...i'm pretty sure they are not going to say "ok, we'll take anyone now"....just another nail in the coffin.