EconomicCrisis.US

Federal Reserve Bank of Boston President Eric Rosengren said the U.S. economy is at risk of relapsing into recession after expanding in the second half of 2009.

“It’s certainly a risk,” Rosengren said today in an interview with CNBC, when asked about the danger of a relapse. “That’s why we don’t want to take the stimulus away too quickly.”

A report from the Fed’s 12 district banks yesterday portrayed an economy on the mend with little danger of inflation. District banks saw “stabilization or modest improvements” in many areas of the economy, with “little or no” price pressures, according to the Beige Book report.
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The Wall Street Journal is reporting today that the Obama administration is on the verge of committing as much as $35 billion in financing and subsidies to provide mortgages to low- to moderate-income families. Hmm… this sounds vaguely familiar. The government subsidizing the mortgage market making credit artificially easy — oh yeah! That was one of the reasons why the mortgage market overheated, and we fell into a deep financial crisis. Have we learned nothing?
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This was an old quote I used to hear the great PBS announcer make regarding the equity markets on TV in the late 1970s and early 1980s when I first started watching the Nightly Business Report.

Yesterday’s market action reminded me of that adage from Mr. Kangas. The stock market turned violently lower late in the day yesterday following the Fed’s statement release. The sharp turn lower stands out because earlier in the day the markets had surged.

The large question looms… As the bulls and bears went at it again, is this the start of a normal correction or the start of a new bear market?
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A measure of the U.S. economy’s prospects scaled a 1-1/2-year high in August but a record rise in home loan defaults cast doubts over the durability of the apparent recovery from recession.

The Conference Board said Monday its index of leading economic indicators rose 0.6% to 102.5, the highest level since January 2008. It had advanced 0.9% in July.

It was the fifth straight month that the gauge, which is supposed to forecast economic trends six to nine months ahead, had increased. The gain was a touch below the 0.7% rise economists had forecast.

“These data add further evidence to the growing view and our long-held belief that the official end date of the recession is likely to be sometime in third quarter,” said Michelle Girard, an economist at RBS in Greenwich, Connecticut.
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