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Wednesday, January 9, 2008

US recession is already here, warns Merrill

By James Quinn, Wall Street Correspondent as published in
Last Updated: 12:05am GMT 08/01/2008

I find it interesting to read publications from around the world concerning the U. S. In this case, a Wall Street reporter is reporting on the economic views of Merrill Lynch's David Rosenberg, the bank's chief North American economist.

In the article Mr. Rosenberg states that based on the four major economic indicators for November and December, the U. S. economy is not only headed for a recession but the recession has begun.

Mr Rosenberg, who is well-respected on Wall Street, argues: "According to our analysis, this [recession] isn't even a forecast any more but is a present day reality."

I reference this article as I see very little in the way of truth being reported. Much of what I read says things are getting better, the housing market will recover in the first quarter, recession MAY be a possibility.

I have had many arguments on this topic. Recently, I questioned an article and its' author in a web publication, Realty Times. In piece by Kenneth R. Harney, Real Estate Outlook: Will Housing Turn Around?, he quotes two economists as saying there will be improvement in 2008. One claim made is that housing sales will graduallly rise over last year.

Now here is my problem with reports like this. The economists quoted are employed by The National Association of Home Builders and the other by The National Association of Realtors. Both would appear to be biased towards their constituents. Don't get me wrong, I AM in the mortgage business, I NEED housing sales to increase as much as they do. Without the builders and the realtors I don't have a business. Realty Times is a good informative publication geared primarily towards realtors. It contains much good information and most often statistically correct. But in this case, saying things are getting better gives everyone a false hope. It tends to cloud our thinking and most important our planning process.

My position has always been that until we recognize and admit to the reality of the situation, we will never begin to take the proper actions to correct and improve it.

If I know something is broken then I can fix it, but if I am told it is not broken or is being fixed then why should I bother to do anything.

But this crisis will take all of us working to fix it. After all it was ALL of US that contributed to it.
Wall Street, banks, foreign banks, foreign investors, builders, developers, realtors, mortgage professionals, buyers and sellers. Our combined greed kept the market growing and inflating as our government sat back and enjoyed their free economic ride.

I don't believe that government regulation and more legislation will fix the problem. In fact, it may do more damage before it does any good. Sure there is some regulation that is needed to level the playing field and perhaps equalize the process nationwide but the ultimate fix rests in our hands.

We need to know what the situation really is not what someone believes it to be. I am not an economist nor some economic guru, I am just an individual who can see the lack of liquidity in the economy, the continued slow down of sales (November was the lowest level of real estate sales in 12 years) and the overall increase in prices on staples. My business has decreased, many of my friends and associates in both real estate and mortgages are out of work or out of business. The picture is not rosey.

If indeed we are in a recession, then it is time we pull together as a nation, work together to limit the number of foreclosures thereby stemming the declining values and keeping people in their homes. I am not saying that everyone should get a "free ride", there is no free lunch but working together can make a difference. We don't need government subsidies we just need for the owners of all that mortgage paper to maybe say getting paid something is better then getting paid nothing.

We have a lot of work to do in 2008 and for years to come. The sooner we begin the sooner it will turn around.

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