Greenspan says U.S. "on the edge" of recession

NF Reporter · 02-14-2008, 10:51 PM

Reuters - Former U.S. Federal Reserve Chairman Alan Greenspan on Thursday said the U.S. economy is "clearly on the edge" of a recession.

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waltky · 02-15-2008, 08:20 PM

Car Repos Soar as Owners Default on Loans...

Beware the Tow Truck: Repo Lots Overflow With Cars
Feb. 15, 2008 - Car Repossessions Head for a Record High as More Owners Default on Loans

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Car and truck repossessions this year are headed for the highest level in at least a decade, thanks to easy credit and a faltering economy, says an economist for one of the largest wholesale auto auction services. So many vehicles are being snatched from owners who stop making payments that some repo operators and auto auctioneers say lots are overflowing.

This year's predicted 10% rise in vehicle repos to 1.6 million would be a third higher than 10 years ago, says Thomas Webb, chief economist for a unit of Atlanta-based Manheim, which sells cars to dealers worldwide. The increase comes atop a 10% rise in repos last year. Webb blames overly "generous" auto loans in the past couple of years as a key factor in driving up defaults that lead to repossessions. He says the rate might be even higher if employment hadn't remained strong despite the slowing economy.

An executive at another big auto auctioneer says that easy subprime car loans in recent years are a big reason for the flood of repossessed cars. "We're experiencing significant growth in repo volume to the point where we're using additional lots to store them," says Tom Kontos, executive vice president of Indiana-based Adesa Auctions. "Our inventories are growing to record levels," caused by repos on top of a glut of cars coming off leases and out of rental service. While the nation has been transfixed by rising home foreclosures, scant attention has been paid to what is usually a consumer's second-largest purchase: their car or truck.

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waltky · 06-05-2008, 10:45 PM

Foreclosures Hit a Record High and More Coming

Home Foreclosures Set Record in First Quarter
More Americans are struggling to pay their mortgages; Foreclosures surge to a record high - late payments, too, signaling worse to come

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The foreclosure hammer is hitting ever harder. People lost their homes at the highest rate on record in the first three months of the year, and late payments soared to a new high, too — an alarming sign that the housing crisis and its damage to the national economy may only get worse. Dumping more empty homes on an already glutted market also is likely to put a further drag on home prices — extending a vicious cycle. Slumping home values are being blamed in large part for the rising tide of foreclosures. Troubled borrowers are left owing more to the bank than their homes are worth. They can't sell without taking a huge financial hit, so they just walk away.

In fact, Americans' equity in their homes — usually their single biggest asset — now has dropped to the lowest level on record in figures going back to the end of World War II. Homeowners' portion of equity fell to 46.2 percent, which means the amount of debt tied up in their homes exceeds the equity they have built up. Watching their home values sink, consumers have pulled back on spending, a factor in the economy's slowdown. Buoyed by rebate checks, shoppers did get back in the buying groove in May, but analysts predict that consumers — pounded by galloping gasoline prices — will still be cautious.

"The economy is treading water, and the housing market is one of the undercurrents trying to pull it down," said Stuart Hoffman, chief economist at PNC Financial Services Group. Nearly 1 percent, or roughly 447,723 loans, fell into foreclosure during the January-to-March period, the Mortgage Bankers Association said Thursday in its quarterly snapshot of the mortgage market. That surpassed the previous high of 0.83 percent over the last three months in 2007.

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waltky · 11-10-2008, 05:08 AM

Oh, so now he's finally catching on...

Greenspan Sees Steep Decline In U.S. GDP
Nov. 7, 2008 : Ex-Fed Chair Has No Doubt About Global Recession, Predicts Big Drop In Gross Domestic Product

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Former Federal Reserve Chairman Alan Greenspan said Friday there is no doubt the world economy is in a very severe recession and that U.S. gross domestic product will decline significantly in the last three months of the year. Speaking at a business lunch in Toronto, Greenspan said the economy is not quite in a free fall but something close to it. "That we are in a recession, very severe, there's no question," Greenspan said. "Gross domestic product in the United States in the fourth quarter is going to be down significantly."

The former Fed chairman said early data for October show the GDP in a severe contraction that could top a 3 percent annual rate of decline. "We know we are going down and there's very little we can do about that," Greenspan said. U.S. home prices and stock prices are critical, he noted. Housing values might have another 5 to 10 percent to decline before they bottom, which could come sometime in the first half of next year, he said. "It's important to recognize we are not in quite a free fall but something close to it," Greenspan said. "This economy, and indeed the world economy, has tilted over and is moving down fairly aggressively, pretty much across the board."

On Wall Street Friday buyers returned after two days of heavy losses, mindful of the economy's growing problems but attracted by stocks' lower prices. Analysts said the advance, which also came amid relief that a bad report on unemployment wasn't worse and followed dour third-quarter reports from Ford and General Motors, was to be expected as Wall Street experiences a rocky recovery from October's devastating selling. The major indexes jumped more than 2 percent, including the Dow Jones industrial average, which rose 250 points in light trading. For the week, the Dow and broader benchmarks like the Standard & Poor's 500 index lost about 4 percent after surging 10 percent or more last week.

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