Take it Seriously!!!!!!!!!

Taking a Depression Seriously

By DAVID BROOKS
Published: March 9, 2009


The Democratic response to the economic crisis has its problems, but let’s face it, the current Republican response is totally misguided. The House minority leader, John Boehner, has called for a federal spending freeze for the rest of the year. In other words, after a decade of profligacy, the Republicans have decided to demand a rigid fiscal straitjacket at the one moment in the past 70 years when it is completely inappropriate.


David Brooks

The G.O.P. leaders have adopted a posture that allows the Democrats to make all the proposals while all the Republicans can say is “no.” They’ve apparently decided that it’s easier to repeat the familiar talking points than actually think through a response to the extraordinary crisis at hand.
If the Republicans wanted to do the country some good, they’d embrace an entirely different approach.
First, they’d take the current economic crisis more seriously than the Democrats. The Obama budget projects that the recession will be mild this year and the economy will come surging back in 2010. Democrats apparently think that dealing with the crisis is a part-time job, which leaves the afternoons free to work on long-range plans to reform education, health care, energy and a dozen smaller things. Democrats are counting on a quick recovery to help pay for these long-term projects.
Republicans could point out that this crisis is not just an opportunity to do other things. It’s a bloomin’ emergency. Robert Barro of Harvard estimates that there is a 30 percent chance of a depression. Warren Buffett says economic activity “has fallen off a cliff” and is not coming back soon.
Stock market declines are destroying $23 trillion in wealth, according to Lawrence Lindsey. Auto production is down by two-thirds since 2005. In China, 20 million migrant laborers have lost their jobs. Investment in developing countries has dropped from $929 billion in 2007 to $165 billion this year. Pension systems are fragile. Household balance sheets are still a wreck.
Republicans could argue that it’s Nero-esque for Democrats to be plotting extensive renovations when the house is on fire. They could point out that history will judge this president harshly if he’s off chasing distant visions while the markets see a void where his banking policy should be.
Second, Republicans could admit that they don’t know what the future holds, and they’re not going to try to make long-range plans based on assumptions that will be obsolete by summer. Unlike the Democrats, they’re not for making trillions of dollars in long-term spending commitments until they know where things stand.
Instead, they’re going to focus obsessively on restoring equilibrium first, and they’re going to understand that there is a sharp distinction between crisis policy-making and noncrisis policy-making. In times like these, you’d do things you would never do normally. When it’s over, we can go back to our regularly scheduled debates.
Third, Republicans could offer the public a realistic appraisal of the health of capitalism. Global capitalism is an innovative force, they could argue, but we have been reminded of its shortcomings. When exogenous forces like the rise of China and a flood of easy money hit the global marketplace, they can throw the entire system of out of whack, leading to a cascade of imbalances: higher debt, a grossly enlarged financial sector and unsustainable bubbles.
If the free market party doesn’t offer the public an honest appraisal of capitalism’s weaknesses, the public will never trust it to address them. Power will inevitably slide over to those who believe this crisis is a repudiation of global capitalism as a whole.
Fourth, Republicans could get out in front of this crisis for once. That would mean being out front with ideas to support the wealth-creating parts of the economy rather than merely propping up the fading parts. That would mean supporting President Obama’s plan for global stimulus coordination, because right now most of the world is free-riding off our expenditures. That would mean eliminating all this populist talk about letting Citigroup fail, because a cascade of insolvency would inevitably lead to full-scale nationalization. It would mean coming up with a bold banking plan, rather than just whining about whatever the Democrats have on offer.
Finally, Republicans could make it clear that that the emergency has to be followed by an era of balance. This crisis was fueled by financial decadence, and public debt could be 80 percent of G.D.P. by the time it’s over. Republicans should be the party of restoring fiscal balance — whatever it takes — not trillion-dollar deficits as far as the eye can see.
If Republicans were to treat this like a genuine emergency, with initiative-grabbing approaches, they may not get their plans enacted, but voters would at least give them another look. Do I expect them to shift course in this manner? Not really.

Spain's depressed!!!

Clear signs of global depression: Spanish minister
Tue Mar 10, 2009 6:45am EDT

MADRID (Reuters) - There are clear signs of a global economic depression , Spanish Industry Minister Miguel Sebastian said on Tuesday.
The global financial crisis has caused a generalized fall in economic confidence, industrial production, trade and led to job destruction, Sebastian said in a speech to Spain's Congress.
"These factors are unmistakable symptoms of a global depression that demands a combined and coordinated response by all countries," Sebastian said.
(Reporting by Andrew Hay; Editing by Victoria Main)

UK housing trends ~ Down, Down, Down......

House Price Reports

UK house prices continue to crash at an alarming pace

Well that was short lived, no sooner had the "green shoots of recovery" appeared last month (in relation to house price growth) then the true overall trend re-emerges, downwards...
House prices have fallen 17.7% year on year and approx. 20% from their peak - in September 2007. It's also useful analysing the 'swing' from positive to negative; from 15% positive to 17.7% negative has taken twenty months, this is unprecedented during the (circa) twenty five years of house price data collation.

With falls now accelerating it's more important than ever that first time buyers remain increasingly vigilant ensuring they buy at future 2010 prices; perhaps negotiating a discount of 15% off the asking and or valuation price in order to insulate themselves from further falls.


Martin Ellis;
"The average UK house price declined by 2.3% in February. This monthly decrease more than offset January's 2.0% increase. Prices in the three months to February compared to the previous quarter, which provides a better indicator of the underlying trend, were 3.6% lower...
Whilst market activity remains at very low levels, there are some tentative signs that activity may be beginning to stabilise. The house price to earnings ratio - a key measure of housing affordability - has fallen to its lowest level for six years.

Continuing pressures on incomes, rising unemployment and the negative impact of the dislocation of the financial markets on the availability of mortgage finance are, however, likely to mean that 2009 will be another difficult year for the housing market."

LLOYDS BANKING GROUP HOUSE PRICE INDEX
Ket Statistics
February 2009 (seasonally adjusted)
Annual change
-17.7%
Monthly change
-2.3%
Average Price
£160,237
.
Key facts
House prices declined by 2.3% in February. This fall more than offset January's 2.0% increase (revised from 1.9%). Historically, house prices have not moved in the same direction month after month even during a pronounced downturn. For example, prices fell for seven successive months in 1989 but subsequently increased in three of the first ten months in 1990 even though the overall trend in prices was downwards.

Prices in the three months to February compared to the previous three months - an indicator of the underlying trend - were 3.6% lower. This is slightly below the quarterly rate of decline of 5-6% recorded consistently between June 2008 and January 2009.

House prices in February were 17.7% lower on an annual basis. The annual rate of change (measured by the average for the latest three months against the same period a year earlier) fell from 17.2% in January to 17.7%. The UK average price has returned close to the level in August 2004 (£159,799).

-The house price to earnings ratio - a key affordability measure - is at its lowest for six years. The house price to average earnings ratio has declined from a peak of 5.84 in July 2007 to an estimated 4.42 in February 2009; a fall of 24%. The ratio is at its lowest level for six years (February 2003: 4.41). The long-term average is 4.0.

-Tentative signs of a stabilisation in activity albeit at a very low level. Bank of England industry-wide figures show that the number of mortgages approved to finance house purchase was unchanged between December 2008 and January 2009. Approvals in January, at a seasonally adjusted 31,000, were also identical to the monthly average recorded in the second half of 2008.More details about UK house prices continue to crash at an alarming pace (opens a new window)

No recovery in GLOBAL housing markets

Speedy recovery in global housing markets unlikely

The collapse of the world’s housing markets is still accelerating according to the Global Property Guide’s latest survey with only Germany and Switzerland achieving a positive momentum in 2008.


Many house-price falls during 2008 were extremely severe. Countries with house price falls of over 10 percent were Latvia (Riga), 37 percent), Lithuania (Vilnius), 27 percent, the US, 20 percent, the UK, 18 percent, Iceland,16 percent, Ireland, 12 percent, and the Ukraine (Kiev),12 percent. (All figures inflation-adjusted).


During the final quarter (Q4) of 2008, the downward price momentum significantly accelerated, as compared to Q3, suggesting that the situation is deteriorating.


The Baltic countries of Latvia and Lithuania suffered the hardest price falls both in nominal and real terms. In Riga, Latvia, the average price of standard-type apartments plunged 37 percent during 2008. Prices have been going down in Latvia since late 2007, after a remarkable increase of about 70 percent in 2006.

The most alarming decline took place in the 4th quarter, when prices declined by 15 percent, the steepest quarterly drop in real terms in any country.

These price falls were triggered by increased interest rates, and by the tightened credit rules which Latvia imposed in 2007.


In the US, the centre of the global financial crisis, 2008 house prices fell 20 percent according to the Case-Shiller house price index, which emphasises urban areas. OFHEO and FHFB figures, which are associated with Fannie Mae and Freddie Mac loans and have somewhat lost credibility, suggest a smaller decline of 6 percent and 3 percent respectively, during 2008.


The US government recently approved a $ 787 billion economic stimulus package, of which $275 billion will be allocated to rescue the ailing housing market.

Canada has been much less affected than the US.
Both Australia and New Zealand saw house price declines during 2008, of 7 percent and 8 percent respectively.


Housing markets in Asia have not been insulated. Singapore’s private residential prices dropped 9 percent during 2008, in sharp contrast to the 26 percent price increase of experienced during 2007.

Hong Kong has been badly hit by the crisis. During the last quarter, Hong Kong experienced a severe decline in prices of 14 percent.
In Makati, Philippines, prime 3-bedroom condominium prices fell by 2 percent during 2008, after an 11 percent price rise during 2007.
Japan recorded modest Tokyo condominium price rises of 1.2 percent during 2008.
In Shanghai, China, house price rises slowed to 5 percent y-o-y by the end of 2008, after peaking at 30 percent y-o-y to May 2008. However Shanghai is likely to be somewhat exceptional and Xinhua News Agency reported house prices declines in 70 major cities during 2008.


In Dubai, UAE, despite the bleak global picture, saw surprisingly large dwelling price rises of 41 percent during 2008. However during the year’s final quarter, prices fell by 8 percent in nominal terms. This downturn is attributable to strongly tightening lending criteria, an increase in interest rates, multiple layoffs, and alarm among buyers.

History suggests that in a crash, housing markets take many years from peak year to full recovery. In view of this and of the pessimistic IMF forecast for the global economy, no real recovery is likely in the global housing markets this year.

The Global Property Guide - www.globalpropertyguide.com -is an on-line property research house, specialising in analyzing residential property valuations around the world.

House prices fall record 17.7 percent on year in February | UK | Reuters

House prices fall record 17.7 percent on year in February UK Reuters

House prices fall to April 2004 levels - Telegraph

House prices fall to April 2004 levels - Telegraph