Wednesday, June 09, 2010


You remember that whole residential real estate depression/collapse thing that drove us into this nasty recession?  Yeah, it's still there, folks.  And the numbers are indicating that it's going to get far worse and do so quickly.
U.S. home buying applications sank for a fifth straight week to a fresh 13-year low, the Mortgage Bankers Association said on Wednesday, suggesting that tax credits had robbed more from future sales than expected.

Demand for loans to purchase houses fell 5.7 percent in the week ended June 4 to the lowest level since February 1997, even after adjusting to account for the Memorial Day holiday.

"Purchase applications are now 35 percent below their level of four weeks ago, as homebuyers have not yet returned to the market following the expiration of the homebuyer tax credit at the end of April," Michael Fratantoni, MBA's vice president of research and economics, said in a statement.
And why would they?  There's a major recession out there, if you haven't noticed.  With the deficit hawks stripping as much spending as they can from any attempts to help the market, we're about to go down the path of Herbert Hoover once again.

Citing deficit concerns, Democrats in both chambers of Congress have said it's time to start thinking about how to wrap up the extended unemployment benefits put in place to fight the recession. But 74 percent of people surveyed said they agreed with the statement that "it is too early to start cutting back benefits and health coverage for workers who lost their jobs."
And yet that's exactly what Congress the Democrats plan to do. The GOP is more than eager to hand the Dems the knife to slit their own throats with.  Somehow, they believe the Republicans are serious about deficit reduction and won't turn around in the fall and attack them for cutting off job benefits in a recession, running on a platform to "help the American middle-class."
Sixty-seven percent said they either "strongly favored" or "somewhat favored" continuing federal unemployment benefits. The poll did not mention the fact that federally-funded extensions, in combination with the initial 26 weeks of state benefits, give the unemployed up to 99 weeks in some states. (There is no proposal on the Hill to help the "99ers" -- the hundreds of thousands of people who've been through all available benefits and still haven't found work.)
And people wonder why home sales are at 13-year lows. The deficit hawks are about to pull the life-support plug on the economy and all but assure a double-dip recession if not a full-blown depression, and Dems seem to believe the Republicans will take credit for yanking the cord out, and not bash them over the head in November with it.

Playing to lose is a funny strategy when you're trying to win, Donks.

[UPDATE] A good article on this in this morning's NY Times.
At a moment when many economists warn that the American economic recovery is likely to be imperiled by prolonged high unemployment and slow growth, President Obama is discovering that the tools available to him last year — a big economic stimulus and action by the Federal Reserve — are both now politically untenable. 
And the Dems are falling for it.  After all, the last time the Republicans were in charge, they showed such impressive fiscal restraint...

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