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April 22, 2008
8 Reasons to be Optimistic About Economy!
From the Economists View....
Charles Calomiris argues that the decline in credit due to current problems in financial markets is unlikely to cause a recession (This was written in 2007, lets see how he's done):
1. Housing prices may not be falling by as much as some economists say they are. (Actually was worse than expected)
2. Although the inventory of homes for sale has risen, housing construction activity has fallen substantially [which will support future prices]. (Wrong - see house prices below - they are tanking)
3. The shock to the availability of credit has been concentrated primarily in securitisations rather than in credit markets defined more broadly. (True and this has caused consumers to be worse off debt wise )
4. Aggregate financial market indicators improved substantially in September and subsequently. (They didn't continue improving)
5. ...nonfinancial firms are highly liquid and not overleveraged. (Subjective - they are over leveraged)
6. ...households' wealth is at an all-time high and continues to grow. ( So does the debt and less than zero savings)
7. Of central importance is the healthy condition of banks. (Guess he didn't see banking crisis coming.. B of A profits were down 77% 2 days ago)
8. Banks hold much more diversified portfolios today than they used to. ( Deregulation in 1999 caused most of the sub-prime disaster)
Charles Calomiris...go put on a dunce cap and sit in the corner.
Posted by Post Scripts at April 22, 2008 11:01 AM
Comments
6. ...households' wealth is at an all-time high and continues to grow. ( So does the debt and less than zero savings)
My understanding is that "wealth" is measured after debt has been taken into account. I might be wrong but I think that's right.
This is one reason I believe statistics are being used to scare the voting public.
Posted by: Tina at April 22, 2008 02:59 PM