Tag Archives: Recession

News

Deutsche Bank says 48% of mortgage balances will exceed home values in 2011

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Story from Yahoo News. (H/T ECM)

Excerpt:

NEW YORK (Reuters) – The percentage of U.S. homeowners who owe more than their house is worth will nearly double to 48 percent in 2011 from 26 percent at the end of March, portending another blow to the housing market, Deutsche Bank said on Wednesday.

[…]Covering 100 U.S. metropolitan areas, Deutsche Bank in June forecast home prices would fall 14 percent through the first quarter of 2011, for a total drop of 41.7 percent.

[…]Homeowners with the riskiest mortgages taken out during the housing boom have seen the greatest erosion in equity, in part because they were “affordability products” originated at the housing peak, Deutsche said. They include subprime loans, of which 69 percent will be underwater in 2011, up from 50 percent in March, Deutsche said,

Of option adjustable-rate mortgages — which cut payments by allowing principal balances to rise — 89 percent will be underwater in 2011, up from 77 percent, the report said.

Regions suffering the worst negative equity are areas in California, Florida, Arizona, Nevada, Ohio, Michigan, Illinois, Wisconsin, Massachusetts and West Virginia. Las Vegas and parts of Florida and California will see 90 percent or more of their loans underwater by 2011, it added.

Socialism destroys economic growth. There is no way around it.

Podcasts

Dr. Jean Twenge takes on narcissism in today’s children

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Jean M. Twenge, Ph.D
Jean M. Twenge, Ph.D

A female Christian social studies professor railing against narcissism? Sign me up!

The podcast is here.

Here’s her bio:

Jean M. Twenge, Ph.D. is Associate Professor of Psychology at San Diego State University and the author of more than 40 scientific journal articles and book chapters. She received a BA in sociology and psychology, and an MA in social sciences from the University of Chicago in 1993 and a Ph.D. in personality psychology from the University of Michigan, Ann Arbor, in 1998. She then completed a postdoc in social psychology at Case Western Reserve University.

We need more like her. A lot more!

Commentary

What did Reagan do when he inherited a recession?

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Ronald Reagan
Ronald Reagan

Here is a piece from Bloomberg from Amity Shlaes. (H/T The Western Experience)

Excerpt:

Double-digit unemployment looms. The country is in a funk. The federal budget deficit is widening to an extent not seen in decades.

This scenario isn’t new. It also describes the U.S. in 1982. Somehow, the 1980s and the 1990s turned out to be pretty good years. So it’s worthwhile to compare current policy to the one followed then.

…Today, taxes are on their way up. Whether it will be abolishing some of the tax deductibility of health care or increasing taxes on soda, President Barack Obama and Congress are clearly signaling the direction in which they want to move. Most tax increases under discussion would make the rich, or companies, the first to pay. The justification offered for this is that the federal government needs the money and may know how to spend it better than the private sector, anyhow.

…In the early 1980s, the view on taxes was the opposite: get them down. The Economic Recovery Tax Act of 1981, enacted by Ronald Reagan, pushed tax rates down for wealthy and non-wealthy alike. The capital gains tax rate dropped to 20 percent. When Reagan signed the Tax Reform Act of 1986, the top marginal rate on income taxes fell to 28 percent.

Is Obama right? Or was Reagan right?

The coming tax increases

The Wall Street Journal reports on some of the new taxes Obama wants to impose.

The [health care] bill’s main financing comes from another tax increase on top of the increase already scheduled for 2011 under Mr. Obama’s budget. The surtax starts at one percentage point for adjusted gross income above $350,000 in 2011, rising to two points in 2013; a 1.5 point surtax at incomes above $500,000, rising to three in 2013; and a whopping 5.4 percentage points in 2011 and beyond on incomes above $1 million.

And what happens when you tax the rich?

House Democrats… claim that this surtax would raise $544 billion in new revenue over 10 years. America’s millionaires aren’t that stupid; far fewer of them will pay these rates for very long, if at all. They will find ways to shelter income, either by investing differently or simply working less. Small businesses that pay at the individual rate will shift to pay the 35% corporate rate. When the revenue doesn’t materialize, Democrats will move to soak the middle class with a European-style value-added tax.

It should be noted that a value-added sales tax disproportionately hurts the poor.