Treasury official says economic effect of mortgage crisis, market turmoil 'far from over'

[Purveyor]

Source: Associated Press

WASHINGTON - The full impact of the upheaval in financial markets "has yet to play out," a top administration official said Wednesday, while stressing that the effect will be dampened somewhat by solid economic growth.
Robert Steel, Treasury undersecretary for domestic finance, appeared before a House committee as the worst housing slump in 16 years and roller coaster financial markets cast a shadow on the economy.

"What we have is a severe lack of investor confidence," said Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee. He said he hopes that Congress and the administration will work together on solutions for the mortgage squeeze.

--
In his testimony, Steel told lawmakers, "The ultimate impact of these events on the economy has yet to play out. ... These events have occurred during a time of solid domestic and global growth, helping to mute some of the impact of this turbulence.

"I do want to caution policymakers that this process is far from over," he said.


Read more: http://www.mercurynews.com/breakingnews/ci_6807816

[Hydra]

1. What solid domestic growth?

As far as I can tell, we were floating on the now sinking home market.

[tanyev]

5. The solid domestic growth touted by all of the White House press releases for the last 6 years?

:shrug:

[Hydra]

6. Ah, that's why I missed it

As Keith says, anything that comes out of the WH is pure BS

[truthisfreedom]

2. "What we have is a severe lack of investor confidence."

You got that right, Mr. Congressman.

[Gregorian]

3. It's my opinion that economic growth takes time to get rolling.

I was doing some nostalgic studying of the personal computer history last night. It was the mid 70's when things really just started. Apple was a shoe box being built by a couple of kids in an old rented store front in Menlo Park. Intel was just doing it's first run of chips. Which all came out defective.

It took at least a decade for that economy to happen. If not, much longer. After all, it was an evolution from the diode and then some.

I don't even see a new economy. Of course alternative to petroleum energy is the next thing. And it's pretty well on it's way. But we are far from the sole leader like we were in the PC market. China is already flying away with it.

And the energy economy is going to take money, and an infrastructure. And it's not a new market. It only replaces an old market. Dependency on petroleum.

We aren't going anywhere for a while. And I worry that knowing that will make us even more dependent upon then munitions related industry.

[Javaman]

4. I love these reports...

They always temper them in someway, because if they told the truth that the economy is fucked, people would be pissed off. It's only now that the people who 1)deal with the economy, stocks and investing 2)people who read DU 3)people who dig a little and don't take things at face value 4)those that got fucked by the mortgage bust, are all in the know. Most of the rest of the nation is just putting along in their gas fueled dreams of security complaining about how they have to pay more at the pump and how the price of milk has gone up, but rarely if ever to they look deeper.

Most people choose not to look into the abyss.

[Nay]

7. What we have is a severe lack of money in consumers' hands.

If they don't have any money, they can't spend it, fools. You've cut their wages, outsourced their jobs, refused to announce the REAL inflation rate, and now even the idiots who refinanced to pull money out of their houses so they could go on a spree at the mall--well, now even THOSE morons are tapped out.

The savings rate is in NEGATIVE numbers. It will be interesting to see how our economic masters plan to extract even more money and wealth out of people who are already down to nothing. It had to come to this, and that's a fact.

[Hydra]

8. You've hit the nail on the head

now the real question is, since they knew this already, why did they do it?

I doubt I'm going to like the answer.

[fasttense]

9. A list of interesting statistical comments.

People are saving at the lowest level since the Great Depression, and that could be a problem for the millions of baby boomers getting ready to retire.
http://www.msnbc.msn.com/id/16922582/

The median U.S. price for an existing home hasn't fallen since the Great Depression in the 1930s, says Lawrence Yun, an economist with the association. That's the estimate cited by economists, based on extrapolations from the group's home price data, the oldest set, going back to 1968.
http://www.bloomberg.com/apps/news?pid=20601109&sid=a4Naw1mqxCRw&refer=home

The US financial industry displayed fresh signs of distress from the credit crunch afflicting global money markets yesterday, with one mortgage provider describing lending conditions as the worst since the Great Depression of the 1930s.
http://www.guardian.co.uk/usa/story/0,,2159716,00.html

Greenspan pulled the whistle,
Bush rang the bell,
Wall Street gave the signal,
And the country went to hell

A little ditty from the great depression updated for the current coming economic crisis.