Is it just me or are things getting worse again?

There seems to be a significant uptick in negative financial news and reports the past week, and not just about the market being down. Here are a few tidbits just from this morning:

Existing Home Sales Down 16.7%

Now some of this is likely due to the buy-it-forward situation, i.e. buyers lured into buying a home by the first time home buyer's credit. That program has been extended and expanded, but still we are seeing the biggest drop in existing home sales in 40 years.

http://www.marketwatch.com/story/existing-home-sales-plummet-167-in-december-2010-01-25-10100?reflink=MW_news_stmp

To add to the home buyer problems, the NY Times has a piece in its Business section on why homeowners who are under water should perhaps simply walk away. It gives some pretty compelling reasons - though it ignores some potentially nasty tax issues. Still, if jingle-mail becomes more common place, as the article suggests and/or as option ARM resets might promote, then the housing note above is even more serious.

http://www.nytimes.com/2010/01/24/business/economy/24view.html

Debt Bomb!

I have written quite a bit on individual and government debt here in the U.S., as does Forbes in the linked article below. What the article does a nice job discussing is how the U.S. looks darn right rosy compared to some (okay, many) other countries. If Europe and Japan are in worse shape than the U.S., I am not seeing a global recovery any time soon. This bomb is ticking and there is no where to hide.

http://www.forbes.com/forbes/2010/0208/debt-recession-worldwide-finances-global-debt-bomb.html

And if you think China is your port in the storm, think again. Banks there are being downgraded, the government is increasing capital ratios and things are just a tad skittish (that is a financial term of art) at the moment.

http://www.bloomberg.com/apps/news?pid=20601087&sid=azhfGjKbslLc&pos=1

http://www.bloomberg.com/apps/news?pid=20601087&sid=aRCLJIpY19XI&pos=4

But Fear Not!!

Help is on the way. Word has it that the troops are on the way. Yes another stimulus plan is in the works. The Senate is considering an $80 billion jobs bill.

http://www.bloomberg.com/apps/news?pid=20601087&sid=abTQEDZlLMpg&pos=8

Hey, the last stimulus worked so well at creating jobs, why not? Well, I will tell you why not. As government debt climbs closer to 90% of GDP it will have a significantly escalating negative effect on economic growth. Seriously, studies show this. Not to mention that we will be leaving our kids with a whole lot of debt just as we are approaching predicted crises in Social Security and Medicare to finance. Oh, we have so much to look forward to - NOT.

Disclosures: None.