CHESSNOID

Last week we had a good bounce in the stock market after treading into bear territory. That bounce was caused by better than expected expectations from bank’s performance (although, I feel they are cooking the books) and a decline in crude oil from the record highs 3 days straight.

The Dow Jones industrial average ended last week up 3.57 percent; the Standard & Poor’s 500 index rose 1.95 percent; and the Nasdaq composite index rose 1.71 percent.

This week, investors will be curious to see whether oil prices keep falling — they closed below $130 a barrel Friday — and if other earnings are coming in strong. Hoards of major companies release their quarterly reports this week, including Bank of America Corp., American Express Co., Merck & Co., Pfizer Inc., Caterpillar Inc., United Parcel Service Inc., Yahoo Inc., Boeing Co., McDonald’s Corp., Pulte Homes Inc., and 3M Co.

We still have more news to report in this coming week. I think most economists now will agree that our housing market bust will determine when the market will flatten out.

According to Bloomberg:

The biggest housing recession in a generation, now being exacerbated by a tightening in credit as financial losses spread, threatens to stall economic growth. The surge in raw-material costs and slowing demand will likely prompt companies to keep reducing investment in a bid to protect profits.

“Stress in financial markets and curtailment in lending are going to make it more difficult to buy homes,” said David Resler, chief economist at Nomura Securities International Inc. in New York. “Manufacturers that produce for homebuilders or homeowners are being hurt by the slump in housing.”

The National Association of Realtors’ report on sales of existing homes is due July 24. Purchases declined to a 4.93 million annual pace from 4.99 million in May, according to the survey median. Sales reached a 4.89 million pace in April, the fewest since comparable records began in 1999.

A day later, the Commerce Department is forecast to report that sales of new houses dropped to an annual pace of 503,000 from 512,000 in May, according to survey estimates. Sales of existing and new homes are down 35 percent from their July 2005 peak.

Construction Drops

Reacting to the weak sales, builders in June began work on the fewest single-family homes since 1991, the Commerce Department reported last week. That signals that home construction will continue to weigh on the economy after subtracting from growth since the first quarter of 2006.

More Americans are walking away from their homes as property values tumble and borrowing costs on adjustable-rate mortgages reset higher. Bank seizures increased a record 171 percent from a year ago and foreclosure filings rose 53 percent in June, RealtyTrac Inc., a seller of default data, said July 10.

Stricter lending regulations and the drop in home prices make it harder for Americans to tap home equity for extra cash. Consumer spending in the first quarter grew at the slowest pace since the 2001 recession and is likely to keep slowing later this year, according to economists surveyed this month by Bloomberg.

This particular story is just a repeat of last month but with worse numbers. It will probably be the same story every month until the new year with numbers continuing to go in the wrong direction. At this current time, I am sure we all know someone who is under financial duress and yet because we are all one paycheck from being in the same situation it is difficult to extend much help.

I actually get tired of listening to our current President talking about not having a magic wand, and I am tired of both Obama and McCain pandering for votes.  I really would like all of them in there current and future positions in our government to start making changes that will help all Americans.  Up until recently, Bush, Bernanke, and Paulson refused to believe that our economy would collapse the way it has.  They have all done a poor job and them denying we are in a recession or financial mess doesn’t help solve the economic crisis.

The economic downturn will end when everyone who wants a job can actually get a job, when everyone can  afford to buy gas, groceries, pay the rent and support their families, and when we everyone has a little bit left over after the bills are paid to enjoy life (even if it’s just for the weekends). This may happen when our leaders stop talking nonsense and start taking positive action to get our economy moving in the right direction.  Unfortunately, this probably won’t happen until we get a new president.