Key West Real Estate underwater again?
Just teasing Martha
Economy shrinks at fastest pace in 26 years
The economy contracted at a staggering 6.2 percent pace at the end of 2008, the worst showing in a quarter-century, as consumers and businesses ratcheted back spending, plunging the country deeper into recession.
A much sharper cutback in consumer spending -- which accounts for about two-thirds of economic activity -- along with a bigger drop in U.S. exports sales, and reductions in business spending and inventories all contributed to the largest revision on records dating to 1976.
Looking ahead, economists predict consumers and businesses will keep cutting back spending, making the first six months of this year especially rocky.
The faster downhill slide in the final quarter of last year came as the financial crisis -- the worst since the 1930s -- intensified.
The nation's unemployment rate is now at 7.6 percent, the highest in more than 16 years. The Federal Reserve expects the jobless rate to rise to close to 9 percent this year, and probably remain above normal levels of around 5 percent into 2011.
Builders cut spending on commercial construction projects by 21.1 percent, the most since the first quarter of 1975.
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Can you say Cramdown?
The deal reached by Citigroup with top Senate Democrats to allow for cramdowns is a potential breakthrough for the financial-services industry and potentially for the housing market. Not that it will stop housing values from declining — it may not, because it allows bankruptcy judges to change loan terms, lower principal or the interest rates, and that, in effect, is a reset of the value of the home. But it may accelerate the process of the decline in housing values. It’s possible that Citigroup saw the writing on the wall, and realized that a renegotiated mortgage at a lower rate with a higher chance of repayment was better than nothing at all, and that’s something that the lion’s share of those who have a piece of these mortgages — through the various slicing-and-dicing that occurred with securitization — will have to accept as well. “It would alter their value — it would alter the amount that the person that’s getting paid on principle would ultimately get paid,” says Robert Brusca, chief economist at Fact-and-Opinion Economics. “Maybe the difference is, now that person now will be paid.” About 1 in 10 homeowners, or 4.6 million people, are either delinquent in their mortgage payments or in the process of foreclosure, and the rising delinquencies and fear of increased need for bad loans has been at the heart of the credit crisis that began with subprime securities in mid-to-late 2007 and slowly engulfed the entire financial sector.
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House Faces Tuesday Vote on Bankruptcy Cramdowns
The House of Representatives will on Tuesday consider a sweeping homeowner assistance legislative package that would allow bankruptcy judges to modify mortgage debt on a borrower’s principal residence. The bill, HR 1106, or the Helping Families Save Their Homes Act, contains the controversial “cramdown” measure originally passed by the House Judiciary Committee in early January.
HR 1106 also includes so-called safe-harbor legislation for servicers, designed to protect servicers from legal liability in the event of massive-scale mortgage modifications.
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Headlines
• Combat Troops to Leave Iraq by Fall 2010
• Citigroup reaches deal to give government up to a 36% stake
• U.S. to yield marijuana jurisdiction to states
• http://news.aol.com/article/biden-web-site-number/362018
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Rocky Mountain News Stops the Presses
The newspaper crisis roiling the United States has claimed its biggest victim so far: The Rocky Mountain News, Colorado's oldest newspaper and a Denver fixture since 1859, published its last edition Friday.
Four owners of 33 U.S. daily newspapers have sought Chapter 11 bankruptcy protection in the past 2 1/2 months. A number of other newspapers are up for sale.
Scripps has owned the News since 1926. The newspaper will close just two months short of its 150th anniversary.
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