By Ki Gray
Is the worst still to come? That is the $789 billion dollar question. Or in the case of Treasury Secretary Timothy Geithner, the 2.5 trillion dollar question. Despite Congress getting ready to vote on the stimulus bill compromise, the Treasury Department getting back to work on the banking system and President Obama’s declarations that swift action will avert disaster, Americans seem short on hope and long on financial worries. Are bad economies like bad marriages–throwing money at them doesn’t necessarily solve the problem?
It is now largely believed that the recession began in the fall of 2007, although Central Texans didn’t begin to feel the financial squeeze until much later in 2009. In fact, Texas has even experienced job growth in the last year. But this doesn’t mean Austin is immune to the difficulties of a bad economy. The ripple effect felt across the country is making waves here with job cuts and budget tightening.
RealtyTrac announced this week that nationwide the number of foreclosures were down in January, falling 10 percent from December. However, the good news is often tempered with a dose of reality, as in this case the January foreclosure rate was actually 18 percent higher than a year ago. California, Florida, Arizona and Nevada are still leading the nation in foreclosure numbers, but states with previously stable housing markets like Oregon are racking up foreclosures, as well.
Will a stimulus package and a better bank bailout change things soon? The drop in foreclosures is an indication that government and big bank intervention can have a positive effect. According to the Associated Press, “Contributing to the monthly drop was a decision by government-controlled mortgage finance companies Fannie Mae and Freddie Mac to suspend foreclosure sales during the winter holidays. Plus, Florida Gov. Charlie Crist brokered a deal in which lenders in that state agreed to a 45-day halt to new foreclosure petitions.”
The issue at hand is how much government intervention will help and how long will it take to turn the economy around. The current economic climate is often compared to the Great Depression, which started in America in 1929, but was felt worldwide into the 1940s. It wasn’t until after World War II that the economy began to change drastically. Obviously, no one wants another World War to turn the economy around.
Is the worst over? Most analysts seem to think things may not get better until sometime in 2010. As Sheila Bair, the chairwoman of the FDIC, wrote in Fortune, “We need to return to the culture of thrift that my mother and her generation learned the hard way through years of hardship and deprivation.” Hopefully it won’t be too many more years of hardship. That is certainly what the Obama administration is hoping with the implementation of the stimulus package.
Posted by The Transition Companies
The Transition Companies Economy Turnaround
