Friday, February 3, 2012

Bernanke: US Economy Still Vulnerable

And when was the last time Big Ben was right on anything?

Federal Reserve Chairman Ben S. Bernanke said the economy has shown signs of improvement while remaining vulnerable to shocks, and he called on lawmakers to reduce the long-term U.S. budget deficit.

“Fortunately, over the past few months, indicators of spending, production, and job-market activity have shown some signs of improvement,” Bernanke said today in testimony to the House Budget Committee in Washington. “The outlook remains uncertain, however, and close monitoring of economic developments will remain necessary.”

Bernanke repeated the Federal Open Market Committee’s Jan. 25 statement that the outlook for the economy would likely warrant near-zero interest rates through at least late 2014. The FOMC also established an inflation goal of 2 percent, achieving Bernanke’s longstanding aim to reduce “public uncertainty” about monetary policy.

Bernanke Sees Improvement in Economy - Bloomberg

Tuesday, January 31, 2012

Home Prices Bottomming Out? Not So Fast

Think the housing market has finally hit bottom and people will start buying again?
Yeah, right!
A home price bottom could stimulate real estate demand, but contrarians are betting against a recovery in 2012.  In fact, Lance Roberts, CEO of StreetTalk Advisors, is pushing back at reports claiming affordable home prices will lure  consumers. Despite affordable prices, Roberts says consumers are too over-leveraged to buy a home and unable to qualify for a mortgage or save for a 20% down payment.
Roberts says a recent National Association of Realtors housing affordability index is overly optimistic in its suggestion that low prices could stimulate activity. He sees 2012 as another year of lagging sales, considering the average household debt for Americans over the age of 16 comes to $96,229 per person. In addition, the average income before taxes is roughly $54,110 and many Americans have a debt-to-income ratio of 177.8%, making it difficult for them to qualify for a home loan.
Home prices bottoming out? Not so fast « HousingWire

US Dollar Slips Against the Pound

The British Pound is starting to look like a good alternative to both the US Dollar and the Euro.

The pound advanced to the strongest in two months versus the dollar after a report showed U.K. consumer confidence rose to the highest in seven months in January. Sterling weakened against the European common currency after Greek Prime Minister Lucas Papademos said progress had been made in bondholder debt-swap talks at the center of efforts to stem the euro-area financial crisis. Gilts fell as stocks gained, reducing demand for the relative safety of U.K. government bonds.

The pound rose 0.3 percent to $1.5757 at 9:31 a.m. London time, after touching $1.5775, the strongest level since Nov. 30. That extended its advance to 1.4 percent this month. It depreciated 0.1 percent to 83.75 pence per euro, headed for a monthly decline of 0.4 percent

Pound Advances Versus Dollar on Confidence Data, Greek Swap Deal - Businessweek

Breaking US Dollar Collapse News

What's Behind the Decline of the US Dollar?

This is one the of the best and simplest explanations we have seen:
The U.S. dollar's downward slide is accelerating as low interest rates, inflation concerns and the massive federal budget deficit undermine the currency. - Wall Street Journal, April 23, 2011
Interestingly, the Federal Reserve is responsible for, or an active participant in all three of these factors.