The Lehmann Letter ©
President Obama’s mortgage-default prevention program went into effect today. It helps underwater homeowners refinance into lower rates. They had been prevented from doing so because their home’s value had fallen below their mortgage obligation. President Obama’s program also assists homeowners - in default or at risk of default - restructure their loans so that the monthly payments do not exceed 31% of their income. This is a huge step forward in approaching ground zero of the economic crisis: The housing meltdown. It’s good news.
But the Fed had some bad news. Its Beige Book report (http://www.federalreserve.gov/fomc/beigebook/2009/20090304/default.htm ) began as follows:
“Reports from the twelve Federal Reserve Districts suggest that national economic conditions deteriorated further during the reporting period of January through late February. Ten of the twelve reports indicated weaker conditions or declines in economic activity; the exceptions were Philadelphia and Chicago, which reported that their regional economies "remained weak." The deterioration was broad based, with only a few sectors such as basic food production and pharmaceuticals appearing to be exceptions. Looking ahead, contacts from various Districts rate the prospects for near-term improvement in economic conditions as poor, with a significant pickup not expected before late 2009 or early 2010.”
You don’t need a degree in economics to see the bad news here.
© 2009 Michael B. Lehmann
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