CHESSNOID

This recession keeps getting worse every month and the experts who denied it existed for the past year are now saying it will last at least until 2010.  We have a new Democrat President with a new administration.  Both the House and Senate are also Democratically controlled which makes is scarier because I believe the wrong plans and actions are being implemented.

Currently, the housing bust is still in the middle of its collapse.  It’s not a pretty sight but that is what happens in a recession trying to regain balance from a speculative bubble popping.  Trying to prevent this by excessive deficit spending like the previous Bush administration will continue to make things worse.  Unfortunately, that is what the Obama administration and the Democratic Congress is repeating.

The new Obama administration believes in Bernanke and that is where it falls apart. This is our smartest government financial expert but he has been wrong at every turn and refused to say we were in a recession or maybe Bernanke couldn’t tell we were already in one.

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You can google him saying a year ago the US economy was strong and would barely be affected by the housing market.Under the Bush administration, Bernanke was allowed to manipulate the interest rates and keep them artificially low which helped to extend the bubble and create the beginnings of the worse recession since the Great Depression.  He committed a moral hazard by helping Paulson create multiple bailouts that the majority of taxpayers were against.

WASHINGTON (AP) –

The nation’s banks lost $26.2 billion in the last three months of 2008, the first quarterly deficit in 18 years, as the housing and credit crises escalated.

The Federal Deposit Insurance Corp. said Thursday that U.S. banks and thrifts also more than doubled the amount they set aside to cover potential loan losses, to $69.3 billion in the fourth quarter from $32.1 billion a year earlier.

Rising losses on loans and eroding values of assets “overwhelmed” banks’ revenues in the fourth quarter, the FDIC said. More than two-thirds of all banks and thrifts turned a profit in that period but their earnings were outstripped by large losses at a number of major banks.

Regulators said there were 252 banks in trouble at the end of 2008, up from 171 in the third quarter.

For all of last year, the banking industry earned $16.1 billion, the smallest annual profit since 1990, according to the FDIC.

The fourth-quarter loss was the biggest in the 25 years that the agency has been compiling quarterly results. It compared with a $575 million profit in the fourth quarter of 2007.

FDIC Chairman Sheila Bair, reaching for a silver lining in the dismal picture, noted that total bank deposits increased in the October-December period by $307.9 billion, or 3.5 percent — the largest rise in 10 years. Deposits in domestic bank offices rose $274.1 billion, or 3.8 percent.

That showed confidence in the banking system and deposit insurance, Bair said. But she acknowledged that “the fourth quarter was a tough end to a tough year for the banking industry.”

The latest indications of financial distress came as the Obama administration proposed boosting the federal deficit by an additional $250 billion this year, enough to support as much as $750 billion in increased spending under the government’s rescue program for banks and other financial institutions. That would more than double the $700 billion bank bailout passed by Congress last October that has provided aid to Citigroup Inc., Bank of America Corp. and hundreds more financial institutions of all sizes.

These same bankrupt companies keep coming back and asking for another bailout because they expect it.  The companies should be allowed to fail and the resources spent elsewhere.  Better yet, don’t spend what we don’t have.  Every single company that should have been allowed to fail and go bankrupt keep coming back to the government and asking more taxpayer money.

WASHINGTON (AP) –

Fannie Mae said Thursday it needs $15.2 billion in government aid — though that figure is expected to grow — because it lost nearly $59 billion last year as the foreclosure crisis mushroomed.

The Washington-based mortgage finance company hemorrhaged $25.2 billion, or $4.47 per share, in the fourth quarter. That compares with a loss of $3.6 billion, or $3.80 a share, in the year-ago period.

Fannie’s net worth — the value of its assets minus the value of its liabilities — fell below zero at the end of the quarter, forcing the company to request funding from the government for the first time.

The government seized control of Fannie Mae and its sibling Freddie Mac in September and last week doubled their lifelines to $200 billion each to guarantee they would never fail.

Treasury Secretary Timothy Geithner said the increase in cash is “not a judgment about the expected losses ahead. It’s just a way to make sure people understand that they will be able to play this role going forward.”

Today, we have Obama committing to even bigger deficit spending and bigger bailouts.  The US economy will see the worse of times under the actions of our new administration.  In simple terms, when an individual continues to spend or borrow more than he or she earns, they will soon become bankrupt and will not be able to repay it debts.  This is no different for our government and another one of the reasons why this recession is so severe.

The administration estimates that the deficit for fiscal year 2009 will reach $1.75 trillion, or 12.3% of U.S. gross domestic product. That’s a record in dollar terms and is the highest as a share of GDP since World War II.

“We will each and every one of us have to compromise on certain things we care about, but which we simply cannot afford right now. That’s a sacrifice we’re going to have to make,” Obama said. “What I won’t do is sacrifice investments that will make America stronger, more competitive and more prosperous in the 21st century.”

The White House is calling for $3.6 trillion in spending in 2010, when it estimates that $2.4 trillion in revenue will be collected.

All estimates in the budget request are based on a set of economic assumptions made by Christina Romer, who heads the White House Council of Economic Advisers. She assumed real GDP would fall 1.2% this year — with a significant drop in the first quarter. But she expects GDP growth of 3.2%, 4.0% and 4.6% over the next three years.

Romer believes unemployment will hit 8.1% this year and be only slightly less (7.9%) in 2010. But then she expects it to fall to 5% by 2014.

Obama’s outline also reveals how much more money he and his economic team are setting aside to stabilize the financial system. Their estimate: $250 billion, which they believe would be the net cost of investing up to $750 billion in troubled assets. That would be on top of the $700 billion already authorized by Congress under the Troubled Asset Relief Program.