Wednesday, February 18, 2009

Key Economic News

by Bill McBride on 2/18/2009 08:05:00 PM

Mark Thoma at Economist's View has a summary of reactions to Obama's Housing Plan. My main objection is that part 2 of the plan bails out some homebuyers who gambled and lost by using exotic mortgages as affordability products.

The focus on subprime is misleading; the subprime crisis has peaked. Part 2 is really about Option ARMs and Alt-A mortgages in mid-priced neighborhoods. Update: There is a limit: Only owner-occupied homes qualify; no home mortgages larger than the Freddie/Fannie conforming limits will be eligible. Oh well, we're all subprime now! (Tanta Vive)

In other news, "record low" was the phrase of the day ...

Housing starts hit another record low.

The Architecture Billings Index hit another record low.

And Capacity Utilization and Industrial Production continued off the cliff, including another record low in the factory sector for capacity utilization:

Capacity utilization in the factory sector alone fell to 68% in January, a record low for the index that goes back to 1948.