CHESSNOID

I watched ABC news last night and 2 more financial experts said the economy has seen the worst and we will recover by summer or fall.  I just can’t understand where they get this optimism from. They covered housing, stocks, and jobs and said because the reports are bad but not as bad as the previous month or quarter which means to them the economy has recovered.

I like the idea of being positive and looking for the best in everything, but I believe you can be positive and realistic at the same time.   Only when we recognize that there is a problem can we truly work on a solution.  These experts are hopeful but living in denial and trying to preach to the masses that everything is OK when it is not.

CNN. Money:

…March existing home sales fell to a 4.57 million unit annual rate from a 4.71 million unit annual rate in February. Economists surveyed by Briefing.com thought sales would fall to a 4.65 million unit annual rate.

The report countered bets that the housing market is nearing a bottom. Such bets were sparked by February housing market reports that showed smaller-than-expected declines in sales and productions.

…Jobs: The number of Americans filing new claims for unemployment rose last week to 640,000 from a revised 613,000 the previous week, topping economists’ estimates.

The stock markets have come back over 20% in the last 6 weeks consistently. I think this might be their main source of enthusiasm. Some of the companies produced real profits, but I think the majority of them did magical accounting to cook their books. There are only a few companies that do well in a recession.

What is peculiar is that the banks that reported profits because of deceptive albeit legal accounting practices will probably be asking for more bailout money in the near future.

April 23 (Bloomberg) —

U.S. banks may need another $1 trillion in capital to cushion losses as unemployment rises and borrowers fall behind on payments, KBW Inc. analysts led by Frederick Cannon said today.

The estimate is based on the analysts’ own “stress test” of the strength of top U.S. lenders, Cannon wrote. The government is also evaluating the ability of banks to withstand a deepening recession. Bank of America Corp., the largest U.S. lender by assets, may be forced by the government to accept additional aid by converting preferred shares into common stock, Cannon said.

Bankers may get their first look tomorrow at results of the tests, which are being conducted on 19 of the biggest U.S. financial companies. The examinations will compel lenders to raise more capital by selling shares, converting government stakes to common stock or by seeking more taxpayer funds, according to a person familiar with the matter.

Investors and analyst have been debating which lenders will need the help without knowing exactly how the institutions will be judged. The Federal Reserve is scheduled to release the methods used to calculate the exams tomorrow.

Based on the reports coming out of higher foreclosures, higher unemployment, and companies’ true earning (or losses), the banking industry (stress test) problems, and the increased wasteful government spending of tax money on fraudulent bailouts, I doubt this recession will be ending this year.