Another Record Plunge In Home PricesOctober 28, 1998 14:46 Home prices fell in August for the 25th consecutive month and prices in 10 major markets plunged a record 17.7% year over year, according to a key index of real estate values released Tuesday.
The S&P Case-Shiller Home Price 10-city index dropped 1.1% for the month.
The 20-city index recorded a record year-over-year decline of 16.6% with a 1% fall in August.
"It's Economics 101," said Jared Bernstein, senior economist with the Economic Policy Institute. "You have a huge speculative bubble leading to a severe inventory overhang. And now home prices will have to decline accordingly."
That inventory overhang includes many vacant homes. The U.S. Census Bureau reported on Tuesday that the number of vacant homes on the market held steady in the third quarter, at about 2.8% of all housing. That's 65% higher than the long-term historic rate of 1.7%, and represents an excess inventory of nearly a million homes.
This number is critical to home price trends since owners of vacant properties - especially banks - will slash their prices to get deals done. That pushes prices down even more.
The Case-Shiller indexes compare the sale prices of the same homes each year to determine price trends and are considered one of the most accurate home price gauges.
The hardest hit of all 20 cities on a year-over-year basis was Phoenix, where prices plummeted 30.7% during the past 12 months. Las Vegas prices plunged 30.6% and Miami sank 28.1%.
Consumer Confidence Index At All-Time LowOctober 28, 1998 14:44 A key measure of consumer confidence fell to an all-time low in October as the financial crisis weighed on American household budgets.
The Conference Board, a New York-based business research group, said Tuesday that its Consumer Confidence Index plummeted to 38 in October from an upwardly revised reading of 61.4 in September.
Last month's decline brings the index to its lowest level since its inception in 1967.
"Consumers certainly appear to think the sky is falling," said Adam York, economic analyst at Wachovia Economics Group, in a research note.
Economists were expecting the index to have declined to 52, according to a survey by Briefing.com.
"The impact of the financial crisis over the last several weeks has clearly taken a toll on consumers' confidence," said Lynn Franco, director of the Conference Board Consumer Research Center, in a statement.
President Bush Signs Obama's Mercury Export Ban Into LawOctober 16, 1998 13:06 A bill introduced by Senator Barack Obama that will help protect Americans and people around the world from mercury poisoning by banning the export of elemental mercury from the United States, was signed into law last night by President George W. Bush.
Senator Obama, the Democratic presidential candidate, said, "The president's approval of this bipartisan bill is an important victory for millions of the world's most vulnerable citizens who are exposed to the harmful effects of mercury every day."
"Exposure to mercury leads to serious developmental problems in children as well as problems affecting vision, motor skills, blood pressure, and fertility in adults," said Obama. "Despite our country's improved efforts to contain and collect mercury over the years, we remain one of the world's leading exporters of this dangerous product, so I am proud this bill will finally ban mercury exports."
S. 906, the Mercury Export Ban Act of 2008, prohibits the transfer of elemental mercury by federal agencies, bans U.S. export of elemental mercury by 2013, and requires the Department of Energy to designate and manage an elemental mercury long-term disposal facility.
The Mercury Export Ban Act won support from a wide spectrum of interests, from environmentalists to the American Chemistry Council.
"Today we have won a momentous victory for public health that will save lives both here and abroad," said Susan Keane, a scientist for the Natural Resources Defense Council. "Banning the export of mercury will substantially reduce mercury contamination in fish, prevent the contamination of our water, and shield our children from a dangerous chemical."
Federal Deficit Hits Record $455 BillionOctober 14, 1998 21:09 Compounding terrible economic news, budget officials announced Tuesday that the federal deficit has soared to a record $455 billion, injecting new urgency into the closing days of the presidential campaign about spending in Washington, including efforts to stem the financial disaster.
The final accounting for fiscal 2008 produced a larger shortfall than had been projected, reflecting the start of federal efforts to address the economic emergency. It is certain to become a significant issue in the campaign, confronting the candidates with new questions about their growing slate of proposals for new spending and tax cuts at a time when red ink is surging.
"The reality is that the next president will be inheriting a fiscal and economic mess of historic proportions -- the legacy of President Bush's failed policies," said Sen. Kent Conrad (D-N.D.), chairman of the Senate Budget Committee. "It will take years to dig our way out."
The deficit is likely to be even bigger next year as the country copes with the worst financial crisis since the Depression.
The new figure breaks the previous record deficit of $413 billion in 2004 and more than doubles the 2007 deficit of $162 billion. It has focused new attention on government spending, coming just days after the National Debt Clock in New York City ran out of digits to record the overall national debt, which passed $10 trillion.
In Congress, the record deficit is likely to intensify debate over Democrats' efforts to pass another economic stimulus package, perhaps worth $150 billion, and over the issue of fiscal discipline.
Administration officials blamed the deficit in a large part on the nation's economic troubles, which produced lower than expected tax revenues and led to passage of an economic stimulus package that included tax rebates.
Treasury Chief Says Banks Must Deploy New CapitalOctober 14, 1998 08:52 Describing the government’s financial bailout plan as “extensive, powerful and transformative,” Treasury Secretary Henry M. Paulson Jr. said Tuesday that the injection of $250 billion into the nation’s banks was needed to restore confidence and avoid a collapse of the financial system.
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Gerald Herbert/Associated Press
Treasury Secretary Henry M. Paulson Jr., speaking in Washington on Tuesday morning, described the government’s bank plan as “extensive, powerful and transformative.”
The Rescue Plan and Its Largest Recipients
Intervention Is Bold, but Has a Basis in History (October 14, 2008)
Both Sides of the Aisle See More Regulation (October 14, 2008)
CNBC Video: Bush Discusses Move to Aid Banks
Treasury Department News Release on Program to Aid Banks
Joint Statement by Treasury, Federal Reserve and F.D.I.C. on Latest Steps to Ease Crisis
Treasury News Release on Executive Compensation Rules Under the Emergency Economic Stabilization Act
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Doug Mills/The New York Times
“This is an essential short-term measure to ensure the viability of the American banking system,” President Bush said from the Rose Garden on Tuesday morning.
Speaking shortly after President Bush used similar terms to describe the proposal, Mr. Paulson said the Treasury would make $250 billion available to banks to help recapitalize those banks and to get them lending again, among themselves and to businesses and consumers.
Us Debt Clock Runs Out Of DigitsOctober 09, 1998 10:21 The US government's debts have ballooned so badly the National Debt Clock in New York has run out of digits to record the spiralling figure.
The digital counter marks the national debt level, but when that passed the $10 trillion point last month, the sign could not display the full amount.
The board was erected to highlight the $2.7 trillion level of debt in 1989.
The clock's owners say two more zeros will be added, allowing the clock to record a quadrillion dollars of debt.
Douglas Durst, son of the late Seymour Durst - the clock's inventor - hopes to replace the Manhattan clock with its lengthier replacement early next year.
For the time being, the Times Square counter's electronic dollar sign has been replaced with the extra digit required.
In Bailout, Bush Will Allow Oil Company Tax He OpposesOctober 03, 1998 13:22 President Bush has long opposed singling out oil and gas companies for higher taxes.
But today he signed a bill that will do just that.
The massive financial bailout package approved by the House today — supported by the administration and now heading for the president's desk — blocks oil and gas companies from enjoying nearly $5 billion in anticipated tax cuts, while raising nearly $4 billion more in new taxes to help fund tax breaks for renewable energy.
The legislation freezes the tax deduction oil and gas companies receive for their domestic manufacturing operations at 6 percent, while other American manufacturers will see that deduction rise to 9 percent in 2010. That provision will raise $4.9 billion over 10 years.
The legislation would raise another $2.2 billion by tightening the rules applying to oil and gas companies' taxes on income earned overseas.
And the bill would raise $1.7 billion by increasing what producers must pay to the Oil Spill Liability Trust Fund from 5 cents per barrel to 8 cents per barrel starting in 2009 and then 9 cents a barrel in 2017.
Oil industry leaders were opposed to those provisions.
Reversal Of Fortune: House Approves $700-Billion Bailout BillOctober 03, 1998 13:18 The House today approved a $700-billion financial rescue plan -- sweetened by $110 billion in tax cuts -- on a 263-171 vote four days after rejecting it in a move that stunned both Wall Street and Washington.
"We've made this bill better," said House Republican leader John Boehner of Ohio. "Is it perfect? No. But it clearly is better than it was a week ago."
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