EconomicCrisis.US

Sales of new homes in the U.S. unexpectedly fell in January to the lowest level on record, a sign that an extension of a government tax credit may not be enough to rekindle demand.

The report underscores Federal Reserve Chairman Ben S. Bernanke’s comments today that the economy is in a “nascent” recovery still in need of low interest rates. Homebuilders face competition from foreclosed properties that have driven down prices at the same time companies are reluctant to create jobs.

“The foreclosure flow is robbing demand from the new-homes market, and that process seems to be strengthening,” said Julia Coronado, a senior economist at BNP Paribas in New York. “The new-homes market just can’t get off the floor. If new homes suffer, construction suffers and jobs suffer.”
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Investors have been nervous recently about whether the U.S. Federal Reserve may be sending out clues that interest rate increases are coming.

If they’re hoping to get more clarity from Fed Chairman Ben Bernanke this week, they are likely to be disappointed.

The Fed last week increased the rate charged to banks on emergency loans, which markets took as a sign that tighter credit across the economy may be the next step. Since then, Fed officials have been saying they’re not sure when borrowing costs for consumers and companies could also rise.
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In response to Pat Mikenatic’s letter: Yes, the recession is over. The general definition of a recession is “two or more consecutive quarters of negative economic growth.” The economy has grown in the past two quarters. By definition, the recession has been over for eight months and we are in a recovery.

He says that Austrian school economists know that this recovery is a bubble because of fiat money. No, they might think that. They don’t know it. He also claims that Von Mises disproved Keynes. No, Von Mises disagreed with Keynes.
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The era of billion-dollar bailouts and an economy stuffed to the gills with money virtually created out of thin air is drawing to a close.

The unprecedented actions by the federal government to stave off economic collapse had to end sometime. And a variety of local bank analysts, financial advisers, chief financial officers and others regard Friday’s announced hike in the Federal Reserve’s discount rate as a step – albeit an early one – in that direction.

The discount rate is the interest rate at which banks borrow on loans directly from the Fed.
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