EconomicCrisis.US

Treasury Secretary Timothy Geithner said on Wednesday that the U.S. economy will face crises after it recovers from the deep recession that officially ended in 2009, but they will be less severe.

“I think it’s very unlikely you’ll see that again. And you’re going to see people spending years and years reducing the risk that it will happen. But there will be a crisis in the future, hopefully far in the future,” Geithner said in a live interview with Politico.

The banking crisis of 2008 helped push the U.S. economy into the longest and deepest economic recession since the Great Depression. Geithner said reforms made in response to the meltdown of major financial institutions would help stave off as damaging a downturn in the future.
Read the rest of this entry »

The Federal Reserve is set to soon publish proposed tighter rules for big financial firms that pose a risk to the economy, Fed Chairman Ben Bernanke will tell a Senate panel on Thursday.

As part of the financial law approved by Congress almost a year ago, the Fed is working on more stringent rules for large banks and financial companies, including “enhanced” standards on capital and leverage requirements, Bernanke is slated to tell U.S. senators. A package of proposed rules is set to be released this summer ahead of a Jan. 2012 implementation deadline.
Read the rest of this entry »

Falling home prices may threaten the economic recovery.

Home prices have been falling in many markets for several months. The most recent data from Case-Shiller show that home prices declined in every one of the 20 cities included in their index—except Detroit.

This will very likely mean that consumer spending will contract, perhaps resulting in a much more sluggish economy and more unemployment.

The connection between falling home prices and consumer spending is abundantly clear. Just last month, Karl Case, Robert Shiller and John Quigley published a study that looked at housing markets and consumption over 31 years. They found that “variations in housing market wealth have important effects on consumption.” (And, yes, the first two authors are the “Case-Shiller” guys.)
Read the rest of this entry »

Twenty-three thousand loans—$3.3 trillion worth: That is what it took in terms of hard currency for the Federal Reserve to stop the financial meltdown of the United States. Yet where has this huge amount of money gotten America? Is the system fixed? Or is the Fed’s latest disclosure actually evidence that the economy is far more precarious than anyone admits?

The Federal Reserve finally made available details concerning its massive Wall Street bailout, corporate bailout, and—as it turns out—foreign central bank bailout. Although everyone knew the Fed went to extremes to prop up the banking system during the tense days of 2008, few knew just how far it had actually gone.
Read the rest of this entry »