Alabama Right News

Wednesday, August 25, 2010

Analysis: New home sales tumble, show downside of government intervention

Ugh. The news just doesn't get any better. If this is a "recovery summer," I shudder to think what fall might bring. Reuters even manages the gall to slip the media's favorite adverb, glumly reporting that new home sales plunged "unexpectedly."

The 276,000 unit annual rate of new home sales is the lowest since Commerce began the series in 1963. Let that sink in a moment. Not since John F. Kennedy was shot has the new home market been this dead.

Analysts polled by Reuters had forecast new home sales unchanged at a 330,000 unit pace last month.

"What we are seeing is the downside of government intervention. It had fanned expectations of a market bottom when in fact, it created a false bottom," said Tom Porcelli, a senior economist at RBC Capital Markets in New York. "We expect home sales to stay at this remarkably low range with remarkably high unemployment. There is also little demand for lending."

…

The housing market has wobbled following the end of a popular home tax credit in April, which had boosted sales and construction. The sector was at the center of the longest and deepest recession since Great Depression and its continued weakness is holding back the broader economic recovery.

Data on Tuesday showed sales of previously owned homes dropped in July to their slowest pace in 15 years. While the end of the tax credit is distorting the housing data, a 9.5 percent unemployment rate is also worsening the situation.

The weak sales pace last month resulted in the supply of new homes available for sale spiking to 9.1 months' worth from 8.0 months' worth in June.

The only thing the tax credit did was front-load transactions in the housing market, causing people who would likely buy anyway to do so ahead of schedule. And, since they were probably already qualified, it means that the program needlessly added to the deficit while deceiving markets into thinking the housing sector had bottomed out. It clearly hasn't. Combining this with yesterday's existing home sales bloodletting paints a very ugly picture for the real estate market.

But the new home sales data are much more important in terms of economic growth, for a very big reason. Residential Investment (RI) is a leading indicator for GDP and only reflects investment in new homes. Sagging numbers in existing home sales don't have much of an impact on GDP, because their contribution to GDP represents transactions costs only (brokerage fees, survey cost, loan origination fees, etc). New home sales have a much larger impact, because the value of the home itself and all associated transactions costs are counted in the measure of output.

With July figures this bad, and with very sluggish job creation over the summer, there is no indication that August and September are going to get much better. As a result, RI could be a major millstone for Q3 GDP. We'll get the first revision in Q2 GDP tomorrow. A key component of that will be the RI figure, which showed some strength in the preliminary release. If the RI component is revised downward, and the current trend in employment and income continue, it doesn't portend well for Q3 GDP, or Q4 GDP going forward.

Update: Calculated Risk has a post about the "distressing gap" between existing an new home sales, and how that gap won't be closed until inventory is worked down (especially "distressed" inventory, which isn't gonna work down until prices work down).

Gimme some feedback in the comments.

http://feedproxy.google.com/~r/ibleedcrimsonred/OvJu/~3/D5_fJ032ic0/analysis-new-home-sales-tumble-show.html

Sent from my iPhone

New Medicare Plan Will Force 3 Million Seniors To Switch Plans

Just got more infoRemember President Obama's promise that if you like your plan you can keep it? Well forget it. An analysis by research company Avalere Health shows that a plan by Medicare to try to make it simpler for consumers to pick drug coverage could force 3 million seniors to switch plans next year whether they like it or not. These seniors see their will see their prescription plan eliminated as part of a new effort by Medicare to eliminate duplicate plans that offer the similar coverage. These seniors would not lose coverage, but they probably will see changes in their premiums and copayments.

Medicare officials dismissed the Avalere estimate without offering their own number. "Anybody who is producing that kind of analysis is simply guessing," said Jonathan Blum, deputy administrator for Medicare.

But Bonnie Washington, a senior analyst with Avalere, said the company's analysis used Medicare's specifications.

For example, Medicare has already notified insurers they will no longer be able to offer more than one "basic" drug plan in any given location. Several major prescription plans, including CVS-Caremark and AARP, offered two basic options throughout the country this year, Washington said. Eliminating that particular form of duplication among the top plans would force 2.75 million beneficiaries to find new coverage, according to Avalere's estimate.

The change in the program will help new people signing up for the plan, but it makes things more difficult for the 17.5 million seniors already in the program. When all the changes are taken into account, as many as 3.7 million Medicare recipients may have to switch plans according to Avalere. That represents about 20% of the program's total enrollment.

Former Medicare administrator Leslie Norwalk said the change might make things easier for people signing up for Medicare but harder for those already in the program.

"If you're in a plan that you like and you have to change it, it will be disruptive," said Norwalk, acting administrator under President George W. Bush. "It depends on how (Medicare) handles it to try to make it as seamless as possible."

The government is not famous for making things seamless. So ultimately things will be more difficult for the enrolled adults.

"Some opponents of the (health care) law may say that this is taking away choices, but we have heard from our members for years that the (drug coverage) options can be confusing," said Nora Super, AARP's top health care lobbyist. The seniors lobby supports the change. AARP's public policy branch is separate from its business side, which sponsors Medicare and other insurance plans.

That's the same AARP that helped the Progressives push through Obamacare over the objections of their own membership in order to enrich the organization through selling insurance.

"We are not reducing the number of (insurers). We are not reducing the number of quality plans," said Blum, adding that having fewer, more distinct choices will benefit seniors. "That puts beneficiaries in a stronger, rather than weaker position."

Lets see...more demand, less supply that puts beneficiaries in a weaker position. Instead of 40 or more choices in each state, seniors may have around 30 plans to pick from. Sadly America's seniors will once again be hurt at the hands of the Obama Administration and the AARP.

Please email me at yidwithlid@aol.com to be put onto my mailing list. Feel free to reproduce any article but please link back to http://yidwithlid.blogspot.com

http://feedproxy.google.com/~r/blogspot/NWlS/~3/XADTwC9xlI8/new-medicare-plan-will-force-3-million.html

Tuesday, August 24, 2010

So, who’s responsible for the current debt level?

And more importantly, who's responsible for the current trajectory of the federal debt?

Yesterday, Joe Biden blamed GOP for "quadrupling" National Debt.

Quadrupling? SRSLY, Joe?

Mark Knoller, White House correspondent for CBS Radio, did a quick check of the numbers to show that the increase was actually 86% on the GOP's watch from 2001 through the 2009 inauguration of Barack Obama. That's nowhere near "quadrupling," which would represent a 400% increase, but this calculation doesn't tell the whole truth, either.

When George W. Bush took office in January 2001, the total US National Debt was $5.727 trillion. Between that date and January 2007 when Democrats took control of the Congress, the total US National Debt was $8.675 trillion. This represents a 51% increase, or about an 8.6% increase on an average annual basis. That's a big jump, but wait…

From January 2007 until January 2009, Under the Democrat-controlled Congress, the National Debt increased to $10.627 trillion. This represents a 22.5% increase, or about 11.25% on an average annual basis. That's an even bigger jump. It took Congressional Democrats two years to do half more again the damage what the GOP did in six years.

From January 2009 through August 2010, under a Democrat-controlled Congress and a Democrat White House, the National Debt increased to $13.320 trillion, or about a 16.0% average annual basis. Whoa… The rate of growth in the National Debt has increased nearly two-fold since the Democrats obtained full legislative and executive power. In about 20 months, too.

In truth, since the Democrats took control of Congress in January 2007, they have steadily increased the rate of growth in the National Debt. For the two year period between 2007 and Obama's inauguration in January 2009, the annual rate of increase in the debt level grew by a whopping 265 basis points. Between January 2009 and the current date, the annual rate of increase in the debt level has grown by an even more eye-popping 475 basis points.

There is no sugar-coating the Republicans' responsibility for the increase between 2001 and 2007. They spent in ways that would make Tip O'Neill blush. But to suggest that the Republicans are responsible for the 54% increase since 2007 and the 16% average annual rate of growth since 2009 is just wrong.

Here's a chart, showing the plot using these rates of growth and projecting them into 2012. The parabolic launch didn't start until Democrats had all the levers of power.

Anyone who claims that the Republicans are responsible for the recent run-up in the National Debt, from $8.675 trillion in 2007 to the current level of $13.2o trillion is either very bad at math, or very good at partisan political spinning.

NB: This is not a knock on Mark Knoller, who has done a very professional job of covering the White House for CBS Radio. This is a knock on partisan Democrats (and their sycophants in the old school media) who want to spin numbers such that they don't have to bear responsibility for nearly doubling the National Debt since seizing power in the 2006 mid-term election.

http://feedproxy.google.com/~r/ibleedcrimsonred/OvJu/~3/MjSVEUc4m7M/so-whos-responsible-for-current-debt.html

Sent from my iPhone

So, who’s responsible for the current debt level?

And more importantly, who's responsible for the current trajectory of the federal debt?

Yesterday, Joe Biden blamed GOP for "quadrupling" National Debt.

Quadrupling? SRSLY, Joe?

Here's a chart, showing the plot using these rates of growth and projecting them into 2012. The parabolic launch didn't start until Democrats had all the levers of power.

http://feedproxy.google.com/~r/ibleedcrimsonred/OvJu/~3/MjSVEUc4m7M/so-whos-responsible-for-current-debt.html

Sent from my iPhone

On the cusp of a major stock market decline?
Tuesday, August 24, 2010
As noted previously, stock charts are nothing more than a depiction of hope and fear. Markets rise on hope, and decline on fear. Hope is not a clear emotion in many cases. It tends to be diffuse and nebulous. As a result, stock market rises tend to... Read more »

Birmingham Personal Finance Examiner, Greg Howard

Greg Howard is a personal financial advisor and licensed agent in Alabama, Georgia and Florida. His specialty is those who are in the pre-retirement window and already in retirement. He was educated at The Citadel, and has been in insurance and finance since 1985. He appears regularly on internet TV and radio talk shows, explaining the current economic situation and how it affects individuals. You may contact Greg at greg@gregwhoward.com.

Advertisement

You are receiving this email at Jayman2124@gmail.com because you subscribed to Birmingham Personal Finance Examiner on examiner.com
If you wish to change or remove your email address, simply ask us to unsubscribe you Unsubscribe | Terms of Use