<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0><TBODY><TR>Where's the umbrella when Sporns need it most? Yep, it's pawned off by the CCB Familee in the form of $260B losses and counting! Not only that, what's left is now being used to finance the perpetuation of 1-Familee rule and subsidize their FTrash pets!
Recovery plan may be too bullish
</TR><!-- headline one : end --><TR>US budget projects robust economic growth that doesn't gel with grim realities </TR><!-- show image if available --></TBODY></TABLE>
<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->New York - The US economy is spiralling down at an accelerating pace, threatening to undermine the Obama administration's spending plans, which anticipate vigorous rates of growth in years to come.
A sense of disconnect between the projections by the White House and the grim realities of everyday American life was enhanced last Friday as the Commerce Department gave a harsher assessment for the last three months of last year.
In place of an initial estimate that the economy contracted 3.8 per cent - already abysmal - the government said the pace of decline was actually 6.2 per cent, making it the worst quarter since 1982.
The chief economist at T. Rowe Price, Mr Alan Levenson, said the weakening economy was destroying demand for goods and services even faster than the US$787 billion (S$1.2 trillion) stimulus programme could replace it.
As troubled banks remain hesitant to lend, even healthy companies are laying off workers. As more Americans lose jobs, they are cutting spending, depriving businesses of revenues and falling behind on house, car and credit card payments, multiplying losses in the financial system.
As more homes land in foreclosure and would-be buyers fail to secure mortgages, housing prices fall further, adding to the losses of the banks.
Disturbing portents were also underscored as the Treasury announced that it was drastically expanding its stake in Citigroup to 36 per cent, from 8 per cent.
The fortunes of the US economy have grown so alarming and the pace of the decline so swift that economists are now straining to describe where events are headed, dusting off a word that has not been used since the 1940s: depression.
Economists are not making comparisons with the Great Depression of the 1930s, when the unemployment rate reached 25 per cent. Current conditions are not even as poor as during the twin recessions of the 1980s, when unemployment exceeded 10 per cent, though many experts assert this downturn is on track to be significantly worse.
Rather, economists are using the word 'depression' to describe a condition of broad and extreme economic distress that remains stubbornly in place for much longer than a typical downturn.
Chief economist of Moody's Economy.com Mark Zandi now places the odds of 'a mild depression' at 25 per cent, up from 15 per cent three months ago.
In that view, the unemployment rate would reach 10.5 per cent by the end of 2011, up from 7.6 per cent at the end of January; average home prices would fall 20 per cent on top of the 27 per cent they have plunged already; and losses in the financial system would swell to US$3.7 trillion, more than triple the US$1.1 trillion written off so far.
The chief global economist at the research firm Decision Economics, Mr Allen Sinai, sees a 20 per cent chance of 'a depression-like possibility', up from 15 per cent a week ago. 'In the housing market, the financial system and the stock market, we're already there,' he said. 'It is a depression.'
Yet, in drawing up the budget, the White House assumed the economy would expand by a robust 3.2 per cent next year, with growth accelerating to 4 per cent over the next three years.
If, as is widely anticipated, the economy grows more slowly than the White House assumes, revenues will be lower, forcing the government to cut spending, raise taxes or run larger deficits.
Economists also criticised as unrealistically hopeful the assumptions by the Federal Reserve as it began so-called stress tests to gauge the health of the nation's largest banks. The harshest scenario regulators are testing entails the jobless rate topping out at 10.3 per cent - awful, but hardly the worst case.
Co-director Dean Baker of the Centre for Economic and Policy Research in Washington reckons the unemployment rate may exceed 12 per cent - the highest level since tracking began in 1948.
Many economists expect that the labour data to be released this Friday will show that up to 700,000 jobs disappeared last month, lifting the unemployment rate near 8 per cent and pushing total job losses to more than 4 million since the recession began in December 2007. New York Times
Recovery plan may be too bullish
</TR><!-- headline one : end --><TR>US budget projects robust economic growth that doesn't gel with grim realities </TR><!-- show image if available --></TBODY></TABLE>
<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->New York - The US economy is spiralling down at an accelerating pace, threatening to undermine the Obama administration's spending plans, which anticipate vigorous rates of growth in years to come.
A sense of disconnect between the projections by the White House and the grim realities of everyday American life was enhanced last Friday as the Commerce Department gave a harsher assessment for the last three months of last year.
In place of an initial estimate that the economy contracted 3.8 per cent - already abysmal - the government said the pace of decline was actually 6.2 per cent, making it the worst quarter since 1982.
The chief economist at T. Rowe Price, Mr Alan Levenson, said the weakening economy was destroying demand for goods and services even faster than the US$787 billion (S$1.2 trillion) stimulus programme could replace it.
As troubled banks remain hesitant to lend, even healthy companies are laying off workers. As more Americans lose jobs, they are cutting spending, depriving businesses of revenues and falling behind on house, car and credit card payments, multiplying losses in the financial system.
As more homes land in foreclosure and would-be buyers fail to secure mortgages, housing prices fall further, adding to the losses of the banks.
Disturbing portents were also underscored as the Treasury announced that it was drastically expanding its stake in Citigroup to 36 per cent, from 8 per cent.
The fortunes of the US economy have grown so alarming and the pace of the decline so swift that economists are now straining to describe where events are headed, dusting off a word that has not been used since the 1940s: depression.
Economists are not making comparisons with the Great Depression of the 1930s, when the unemployment rate reached 25 per cent. Current conditions are not even as poor as during the twin recessions of the 1980s, when unemployment exceeded 10 per cent, though many experts assert this downturn is on track to be significantly worse.
Rather, economists are using the word 'depression' to describe a condition of broad and extreme economic distress that remains stubbornly in place for much longer than a typical downturn.
Chief economist of Moody's Economy.com Mark Zandi now places the odds of 'a mild depression' at 25 per cent, up from 15 per cent three months ago.
In that view, the unemployment rate would reach 10.5 per cent by the end of 2011, up from 7.6 per cent at the end of January; average home prices would fall 20 per cent on top of the 27 per cent they have plunged already; and losses in the financial system would swell to US$3.7 trillion, more than triple the US$1.1 trillion written off so far.
The chief global economist at the research firm Decision Economics, Mr Allen Sinai, sees a 20 per cent chance of 'a depression-like possibility', up from 15 per cent a week ago. 'In the housing market, the financial system and the stock market, we're already there,' he said. 'It is a depression.'
Yet, in drawing up the budget, the White House assumed the economy would expand by a robust 3.2 per cent next year, with growth accelerating to 4 per cent over the next three years.
If, as is widely anticipated, the economy grows more slowly than the White House assumes, revenues will be lower, forcing the government to cut spending, raise taxes or run larger deficits.
Economists also criticised as unrealistically hopeful the assumptions by the Federal Reserve as it began so-called stress tests to gauge the health of the nation's largest banks. The harshest scenario regulators are testing entails the jobless rate topping out at 10.3 per cent - awful, but hardly the worst case.
Co-director Dean Baker of the Centre for Economic and Policy Research in Washington reckons the unemployment rate may exceed 12 per cent - the highest level since tracking began in 1948.
Many economists expect that the labour data to be released this Friday will show that up to 700,000 jobs disappeared last month, lifting the unemployment rate near 8 per cent and pushing total job losses to more than 4 million since the recession began in December 2007. New York Times
