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By William F. Gavin

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Ear to the Ground

No Kidding: U.S. Economy in Recession

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Posted on Dec 1, 2008
Recession St.
whatpricejusticeblog.com

While it’s great that it has finally been acknowledged, the National Bureau of Economic Research’s announcement on Monday that the U.S. is officially in a recession is old news—even by the bureau’s own estimation.

Update: President Bush says he’s sorry about the state of America’s economy.


AP via Yahoo News:

The U.S. economy has been in a recession since December 2007, the National Bureau of Economic Research said Monday.

The NBER — a private, nonprofit research organization — said its group of academic economists who determine business cycles met and decided that the U.S. recession began last December.

By one benchmark, a recession occurs whenever the gross domestic product, the total output of goods and services, declines for two consecutive quarters. The GDP turned negative in the July-September quarter of this year, and many economists believe it is falling in the current quarter at an even sharper rate.

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By KDelphi, December 3, 2008 at 11:22 am Link to this comment

If the SB 256 had not passed, it would have prevented alot of foreclosures.(Bankruptcy Bill—Obama voted Nay, Clinton didnt vote) Also, the credit card bill that Biden sponsored.

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By Blackspeare, December 2, 2008 at 2:17 pm Link to this comment

There is a rather easy way to resolve the mortgage crisis.  Under existing law, bankruptcy courts cannot modify the terms of home mortgages.  Homeowners are the only ones who cannot modify the terms of their secured debts under bankruptcy laws where as Corporate America flock to bankruptcy courts to do precisely this — to restructure and re-amortize loans whose conditions they find onerous or can no longer meet.

But when the bankruptcy code was adopted in 1979, the mortgage industry persuaded Congress that its market was so tightly regulated and conservatively run that it should be exempted from the general bankruptcy rules permitting modification.  How far we have come!

It is time to remove this ban on home mortgage modification to help stem the increasing number of foreclosures.

Allowing modifications is a solid solution. The homeowner, using bankruptcy proceedings can restructure their loans to terms resembling those of a conventional mortgage. If the court finds that the market value of the home has fallen below what is owed, the secured portion that must be repaid in full would be reduced to the house’s actual value; otherwise, the amount to be repaid would stay the same.

Such a solution is better for everyone. Obviously, it is good for the homeowner and the community. Instead of another abandoned house tied up in foreclosure, the house would be owned by a taxpaying citizen.

More important, it is better for the lender. Whatever mortgage company hold this loan, they are never going to get their inflated return. Instead, the total recovery will be limited to the proceeds from a foreclosure sale in a depressed market.  Allowing the homeowner to declare bankruptcy is a better option.

No one has been able to explain to me why it is not better for mortgage holders to get a fair return of principal back, albeit at a lower interest rate, than to take a lump sum through foreclosure that is probably much less than the value of the note.

There is a simple answer to the frequent, hyperbolic assertion that such a process would be abused: Chapter 13 is no walk in the park. It requires public disclosure of every aspect of your life, examinations under oath by a trustee and creditors, allowing creditors to haul you into court on any objection, and relinquishment of control of your financial life for up to five years.

If you falter, your case will be dismissed and you will lose the entire benefit of the bankruptcy law, including having your original contract terms reinstated.

That is precisely why allowing mortgage modifications is such a good approach. It would elegantly separate those homeowners who desperately need to stay in their homes and have sufficient incomes to make reasonable payments from those investors who bet on lax regulation, easy credit and an appreciating market in buying residential properties.

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By Louise, December 2, 2008 at 5:55 am Link to this comment

It’s the paper work. Yep, that’s it!

Compound that with the problem that Bush doesn’t read and the White House Press secretary cant think and the answer becomes obvious.

Government by the bureaus, of the brainless, for the blind.

See the problem is, unless the numbers get crunched, then filtered, then defined and finally passed on up the line, nothing is official. And even then official numbers get caught up in re-shuffle and by the time they get to the top ... to whoever is in charge ... they get filled under - “Find someone who is in charge.”

But there is an up-side to the method. Usually by the time the National Bureau of Economic Research lets us know we’re in a recession, it’s over!

[Unfortunately this time, the announcement beat the end.]

How about that? That’s gotta be some sorta first!

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By Clash, December 1, 2008 at 10:54 pm Link to this comment

Well today we find that the college boy brainiacs finally decided we are and have been subject to an economic recession since December of 2007. It’s just wonderful how smart all these people are. They say we are probably in for a hard time for at least 16 months, and that there is not any one thing that will fix it, nice to know before they rob us again.

As for being prepared I have been prepared for this for over 20 years and I would suggest   those who are waiting for change should examine the word legal in a country were justice is handed out as to were you fit in the class structure. That is you pay for what you get.

So wash your streetcars argue who said what and its merits but realize the only thing that is going to happen is that this situation is going to get much worse before it gets better and 16 months seems quite optimistic.

The Viet Nam War was brought to a halt by solidarity on both sides, haven’t see much of that around lately.

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By Allan Krueger, December 1, 2008 at 7:51 pm Link to this comment

RECESSION! OMG, who would have thunk it?

Stating the obvious has now thrown the thieving wall street paper shufflers into a tail spin! What is the world coming to? More bailouts, no doubt!

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By RRRock1, December 1, 2008 at 4:41 pm Link to this comment
(Unregistered commenter)

How pitiful is our trusted federal government,which owes its existence to two distict resposibilities1)to provide for a fair and healthy financial system(OOPS!) and 2)to provide for a sound national defense..(Double oops..).. I say lets put the power of the people to the states, confederate our 50 states, keep tax dollars closer to the source and have govt closer to the need.. Im not convinced that a federal system is the best solution to the country’s needs… what do you think?

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By KDelphi, December 1, 2008 at 4:19 pm Link to this comment

This pisses me off so much I cant type. Or, maybe its cause my fingers are so cold…

why didnt they ASK SOMEBODY SLEEPING IN THE STREET ABOUT 4 YRS AGO?!!!

WTF has any use for this ass clown anymore…

“He” should walk around the DC Mall, saying to all the homeless, the vets, the minorities—“sorry, sorry, sorry…”” and go to prison anyway…I really just cant talk about this “guy”.

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By coloradokarl, December 1, 2008 at 2:11 pm Link to this comment

Economics 101: when the politicians say the word RECESSION we are half way through it. 2010,a good year?

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By Eric L. Prentis, December 1, 2008 at 1:53 pm Link to this comment
(Unregistered commenter)

The financial ruling class is forcefully, financially raping America under the guise of saving us. We have the worst of two worlds, a private Federal Reserve unilaterally spends three trillion dollars of public money to ensure that the banking crooks who got us into this mess don’t go bankrupt. This is allowed to happen in broad daylight because the financial sector pays huge campaign contributions to the slimy politicians. The ineffectual Federal Reserve should be disbanded and the banks nationalized.

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By skulz fontaine, December 1, 2008 at 1:14 pm Link to this comment

The “economy” is in RECESSION? Wow, go figure! Maybe the NBER could find those amazingly missing Iraq wmd’s while they’re at it. Can’t get anything passed the NBER. Nope, ain’t gonna happen.

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